Principles of Mgt_Jun10 Edn1

8/6/2019 Principles of Mgt_Jun10 Edn1

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PPrinciplesrinciples && PPracticeracticeofofMManagementanagement

Reference Text:Reference Text: Essentials of Management aEssentials of Management aglobal perspectiveglobal perspective Wiehrich & KoontzWiehrich & Koontz(7th Edn; Tata Mcgraw Hill)

Course Facilitator:Course Facilitator: Bijoy S GuhaBijoy S Guha


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About the facilitatorAbout the facilitator JoinedJoined Philips IndiaPhilips India as a Management Traineeas a Management Trainee (1969)(1969)

After O-J-T of 18 months, became aAfter O-J-T of 18 months, became a SectionSection In-charge in a factoryIn-charge in a factory 18 months later, become18 months later, become ShopShop

In-chargeIn-charge

24 months later, took over as I/C Engineering &24 months later, took over as I/C Engineering & Customer SupportCustomer Sup

port 18 months later,18 months later, ProjectProj

ect 22ndnd I/C for new FactoryI/C for new Factory

18 months later, Manager18 months later, ManagerQualityQuality

ControlControl

42months later, Manager42months later, ManagerInnovationInnovation GroupGroup 42 months later seconded to Philips42 months later seconded to Philips GermanyGermany

24 months later returned as24 months later returned as FactoryFactory

Manager, Luminaire Centre/CalcuttaManager, Luminaire Centre/Calcutta

36 months later took over as36 months later took over as PlantPlant Manager, Kalwa Lamp Factories/Manager, Kalwa Lamp Factories/Thane the largest Philips Production complex first Indian ManagerThane the largest Philips Production complex first Indian Manager

54 months later took over as54 months later took over as SBUSBU head- Professional Lighting/Indiahead- Professional Lighting/India 36 months later took over as Head,36 months later took over as Head, CorporateCorp

orate Purchasing/India for 12Purchasing/India for 12months;months;

Started (1998) up aStarted (1998) up ajoint-venture

joint-venture between Tata AutoComp & Yazakibetween Tata AutoComp & YazakiCorp/Corp/JapanJap

an for Auto EDCS (for Auto EDCS (C.E.O,C.E.O,

Tata-YazakiTata-Yazaki) and steered it for 60

) and steered it for 60

months;months; Retired from Tata-Yazaki to start a second career as a Teacher.Retired from Tata-Yazaki to start a second career as a Teacher.(2003)(2003)


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At the end of section (4/5 lectures),At the end of section (4/5 lectures),discussion topics will be given indiscussion top

ics will be given in

advanceadvance as home assignment, to beas home assignment, to beprepared for a class discussion:prepared for a class discussion: Individuals will be selectedIndividuals will be selected at randomat random toto

answer/explain questionsanswer/explain questions -- thesethese beingbeing

recorded for Internal Marksrecorded for Internal Marks , so be, so bekeen to participate!keen to participate!

You need to use all acquired knowledge toYou need to use all acquired knowledge tobe a Manager. Dont forget what you havebe a Manager. Dont forget what you have

learnt in earlier years; build on it bylearnt in earlier years; build on it byenquiring interact, question & challenge!enquiring interact, question & challenge!

Standard internal tests (MCQ & written)Standard internal tests (MCQ & written)

will be held, withwill be held, with

little noticelittle notice

be be

re ared!

prepared!


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PPM 1PPM 1Management: Definitions, Roles &Management: Definitions, Roles &

SkillsSkills


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Management: definitions by the Class

Get jobs done by others:Get jobs done by others:

Motivate/Lead/Direct/Coach/Guide etc.Motivate/Lead/Direct/Coach/Guide etc. Sharing in a group to achieve objectiveSharing in a group to achieve objective

EmpowerEmpower

Structured approach to get goal:Structured approach to get goal: 5 Ws & 1H5 Ws & 1H

Rules, regulations, processes etc.Rules, regulations, processes etc.

Making Profits & growingMaking Profits & growing Meeting Budgets and TargetsMeeting Budgets and Targets

Increasing firms valueIncreasing firms value

Resource & cost controlsResource & cost controls Innovate & compete for BusinessInnovate & compete for Business

PlanningPlanning OrganizingOrganizing StaffingStaffing Directing: forDirecting: forachieving resultsachieving results

Great!Le

ts

Explo

re&

Expa

nd


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Management:Management: DefinitionsDefinitions

Management is theManagement is theprocessprocess of designing andof designing and

maintaining anmaintaining an environmentenvironmentin which individuals,in which individuals,working together in groupsworkingtogether in groups, efficiently accomplish, efficiently accomplishselected aim(s)selected aim(s) viz. to create a surplus(s). .viz. to create a surplus(s). .Weihrich & KoontzWeihrich & Koontz

Management is not an absolute; rather it is sociallyManagement is not an absolute; rather it is sociallyand culturally determined. Across all cultures and inand culturally determined. Across all cultures and inall societies, people coming together toall societies, people coming together toperformperformcertain collective actscertain collective acts encounter common problemsencounter common problems

having to do with establishing direction, coordinationhaving to do with establishing direction, coordinationand motivation. Culture affects how these problemsand motivation. Culture affects how these problemsare perceived and resolved. are perceived and resolved. The Art of JapaneseThe Art of JapaneseManagement by R. Pascale & A. AthosManagement by R. Pascale & A. Athos ..


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ManagementManagement: Definition: Definitionctd. Applies to and through any kind of organization:

collective, cohesive and consistent human effort towards

accomplishing a common objective.

Applies to people at all levels

Concerned with Doing the right things right at all times:

1. Effectiveness: Achievement of objectives (Right Things);2. Efficiency: Achieving those objectives with least amount/

sacrifice of resources (Things Right);

3. Continuous Improvement: in creating increasing surplus

(at all times); Improve or die = survival of the fittest

what gets measured, gets managed and improved e.g.

Productivity=Output / Input ratio


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Management: Definition ctd.

ORGANIZATION

Economic

Political

Regulatory

Societal

Technological

Globalization

Doing right things right

is affected by forces

of environment:

For creating a surplus


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ManagementManagement: The Art & Science: The Art & Science

Evolution of Management-Evolution of Management- Two dominant trends: fromTwo dominant trends: from

AgricultureAgriculture ManufacturingManufacturing ServicesServices

LocalLocal NationalNational Multi-NationalMulti-National GlobalGlobal

Industrial Revolution & Factory SystemIndustrial Revolution & Factory System

Information Technology & societal maturityInformation Technology & societal maturity

Breaking-down of barriers: Global VillageBreaking-down of barriers: Global Village

From inside-out to outside-inFrom inside-out to outside-in

Impact of speed: 24x7 mindsetImpact of speed: 24x7 mindset


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ManagementManagement: The Art & Science: The Art & Science

Contribution of Dominant Personalities (20Contribution of Dominant Personalities (20thth

Century):Century): F.W.TaylorF.W.Taylor& the scientists& the scientists (20s)(20s)

Fayol/Peter DruckerFayol/Peter Drucker& the rationalists& the rationalists (40s)(40s)

Maslow/HerzbergMaslow/Herzberg& the Humanists& the Humanists (50s)(50s)

DemmingDemming& the Quality crusaders& the Quality crusaders (60s)(60s)

HofsteedHofsteed& the Culture club& the Culture club (70s)(70s)

Tom PetersTom Peters & the excellence brigade& the excellence brigade (80s)(80s)

Michael PorterMichael Porter& the value drivers& the value drivers (80s)(80s) Prahalad/ReisPrahalad/Reis & the focus specialists& the focus specialists (90s)(90s)

HammerHammer& the change and reengineer& the change and reengineerdynamosdynamos (00s(00s))


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Management Approach, Roles & Skills:Management Approach, Roles & Skills:

Fredrick TaylorsFredrick Taylors path-breaking path-breaking scientificscientific

approachapproach

Henri FayolsHenri Fayols classical definition ofclassical definition offunctionsfunctions,,

and process:and process:PlanPlan OrganizeOrganize LeadLead ControlControl

MintzbergsMintzbergs map of managerialmap of managerial rolesroles::

Interpersonal + Informational + DecisionalInterpersonal + Informational + Decisional KatzsKatzs interpretation ofinterpretation ofskillsskills::

Technical / Human / ConceptualTechnical / Human / Conceptual

ManagementManagement: The Art & Science: The Art & Sciencectdctd


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Management Approach, Roles & Skills:Management Approach, Roles & Skills:

Human get things done through others:Human get things done through others:

Leadership: The ability to influence a group towardsLeadership: The ability to influence a group towards

achievement of goalsachievement of goals (works of(works ofFielder, BlanchardFielder, Blanchard et al)et al)

Motivation: The willingness to exert high level ofMotivation: The willingness to exert high level of

effort towards goalseffort towards goals (works of(works ofMaslow, Herzberg, MayoMaslow, Herzberg, Mayo

etc.)etc.)

Communication:The transference andCommunication:The transference and

understanding of meaningunderstanding of meaning

Will be done in detail in Organizational BehaviourWill be done in detail in Organizational Behaviour

ManagementManagement: The Art & Science: The Art & Sciencectdctd


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Managerial Roles - 10 (Mintzberg)

Role Description ExamplesInterpersonalFigurehead symbolic head; required to show Ceremonial,

face in social & legal conditions. Civic etc.Leader Motivating & directing subordinates project plan

Liaison Networking outside for information Industry -& favours group meetsInformationalMonitor nerve centre and interpretator ReportsDisseminator networking within the organization Meetings etc.Spokesperson Transmit intent to outsiders; expert Board Meets

DecisionalEntrepreneur Opportunity finding& reacting Strategy PlanTrouble shooter Handling unexpected disturbance ContingencyResource allocator Initiating/approving changes Budgeting

Negotiator Getting best deal for Organization Contracts

ManagementManagement: The Art & Science: The Art & Science ctdctd


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Managerial Skills(Managerial Skills(Katz & others)Katz & others)

Technical SkillsTechnical Skills::

Application of specializedApplication of specialized

knowledge or expertiseknowledge or expertise

acquired though formalacquired though formal

training & its use.training & its use.

Human Skills:Human Skills:

Ability to work with people,Ability to work with people,

understand and motivateunderstand and motivate

groups & individuals.groups & individuals. Conceptual Skills:Conceptual Skills:

Mental ability to recognize,Mental ability to recognize,

analyze, diagnose and thinkanalyze, diagnose and think

through complex situations.through complex situations.

Skills NeededSkills Needed

Board

Exec.

Mgr.

Supr.

HUMAN

Concep

tual

Technical



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SYSTEMS

MAN

MONEY

HARD SOFT

H R ToolsMarketing Tools

LawsMethod Study

Etc.

RelationshipMotivation

Goal CongruenceBrandEtc.

AccountingOprn. Research

Portfolio ManagementFin. Management

Etc.

Investment Decisions

Stakeholder RelationsInternational Business

Etc.

Analytica Judgmental


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Different Doors to Management

Cooperative Social Systems

Group/InterpersonalBehaviour

7-S Framework

Total Quality Managemen

Applied SystemsTheory

Socio-technicalTheory

Reengineering

Contingency/Situational Theory

Rational choice/Decision Theory

Mathematical Modeling

SYSTEMApproach


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Class Discussion 1Class Discussion 1

Contributions to Management thought:Contributions to Management thought:

F.W.Taylor father of Scientific ManagementF.W.Taylor father of Scientific Management

Henri Fayol father of Systems ManagementHenri Fayol father of Systems Management

Deming Quality ManagementDeming Quality Management

Maslow Humanistic ApproachMaslow Humanistic Approach

Drucker the all time greatDrucker the all time great


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Evolution of ManagementEvolution of Management

Management, as a concept as we know it today, isManagement, as a concept as we know it today, isassociated with mass consumption leading toassociated with mass consumption leading to

production of standardized goods in large volumes;production of standardized goods in large volumes;

Prior to the Industrial Revolution, man madePrior to the Industrial Revolution, man made

devices were in use in sizeable numbers but oftendevices were in use in sizeable numbers but often

one of a kind and crafted rather than manufacturedone of a kind and crafted rather than manufactured

e.g watches and clocks. However, many of thee.g watches and clocks. However, many of the

supportive processes can be traced to early roots:supportive processes can be traced to early roots:

logistics, scheduling e.g. boat building; automationlogistics, scheduling e.g. boat building; automation

(use of m/cs) e.g. printing;(use of m/cs) e.g. printing;

The advent of the management as a science canThe advent of the management as a science can

therefore be traced to late 18therefore be traced to late 18thth /early 19/early 19thth century.century.


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Elements of modern management, with a focus on man i.e.HR concepts first began to appear in the West around the sametime:

as a reaction to the harsh behaviourof autocratic businessmenlike Henry Ford. It evolved through (labour) Welfare, IndustrialRelations, Personnel Management to its current form. (Marxismwas becoming a recognizable philosophy in Europe!); as a need to utilize human resource betterdue the adversesupply-demand situation. Employment in the industry hadovertaken agricultural labour. This was aggravated in Europe, byWW I.

In the 20s, Rationalization & Efficiencywere the buzz-words (Taylor, Fayol etc.), calling for a scientific approach toselection and work allocation the corner-stones of modernproduction management:

Standardization of parts and work elements resulted in ability

to make work repetitive for individuals (do-ers)

Evolution of Management ctdEvolution of Management ctd


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End of WW II brought in an era of un-sated demand, resulting in a

boom for production activity more of everything was required.Quantity backed by efficiencywere the guiding principles: an era ofOptimization driven by suppliers choice rather than customerswants. However, some people notably Japan restarted their devastated

economy with different orientation: Quality. The key was trueeconomy of all resources with the customer as the focal point sincethey did not have the luxury of a surplus funded, hungry market.

By the late 60s, demand tended to slow down and the growing

competition gave customers greater choice quality as an important

buying criterion emerged. OPEC crisis in mid-70s turned the world around on its head! Energy

the prime mover of industrial world became very expensive. The

demand boom faded with customers demanding quality and lower

prices and better service.



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First inventions of mass production were linked to textileFirst inventions of mass production were linked to textile

manufacturing (Spinning Jenny/ Hargreaves) which combined withmanufacturing (Spinning Jenny/ Hargreaves) which combined withuse of water power (Arkwright), made a powerful social impact in theuse of water power (Arkwright), made a powerful social impact in thelate 1700s; Watts steam engine completely revolutionizedlate 1700s; Watts steam engine completely revolutionizedharnessing of mechanical powerharnessing of mechanical powerfor production (first to use werefor production (first to use werecotton mills) and transport;cotton mills) and transport;

Poor Reliability of early machines led to the creation of machinePoor Reliability of early machines led to the creation of machinetools the Lathe (Maudslay) in 1790, with which to turnouttools the Lathe (Maudslay) in 1790, with which to turnout parts toparts tocloser tolerances and fit. This led to creation ofcloser tolerances and fit. This led to creation ofinterchangeableinterchangeablepartsparts and the first uses were in manufacture of muskets and and the first uses were in manufacture of muskets andpistols!pistols!

These were theThese were the triggers fortriggers formass productionmass production:: mechanicalmechanicalpower &power &interchangeable partsinterchangeable parts; leading to production moving away from; leading to production moving away fromhomes and craft-shops to work-shopshomes and craft-shops to work-shops//factories.factories.

By 1900 (in the West),By 1900 (in the West), nearlynearly everything was being produced by theeverything was being produced by the

factory system.factory system.



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Division of Labour: under this principle, work could beorganized/grouped into a set of specific, related tasks which wererepetitive in nature. Man could be trained to perform this set of tasksonly, so that efficiencyof task performance was maximized.

When extended throughout the organization, this took the formofSpecialization - with the organization benefiting from themaximum use of specialist skills. Both economically and undersupply-shortage conditions, this worked well. Much of this was an extension of trade/craft skill-groupsorganization (guilds) which was the hallmark of pre-industrialproduction.Till the end of the 30s, these fundamentals were refined,polished(e.g. Organization structures) and extended ( e.g. work-measurements) in a relentless focus on efficiency.

With WW II, a furtherneed for reliabilitygave birth to theprinciples of sampling & inspection statistical methods were

introduced to regulate quality of output.



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Evolution of Management ctdEvolution of Management ctd This brought to the forefront the philosophy and practice ofTotal Qualityas the guiding force for manufacturing later tospread into management of operations and enterprises:

Central to this theme is the dominance of the Customer;Customers were any person or person receiving goods and/orservices internal or external; Quality was redefined as fitness for use elevated from the

narrow confines of conformance to specifications;Continuous improvementwas the key to continuity andsuccess against demands of customer and competition;importantly, everybody could contribute quality is every- bodysbusiness;

Particularly, for production, quality means best products at leastcost reduced waste of all resources, spawning a host of(linked) programs to conserve time, money & effort:

Just in Time, SMED/OTED; Lean manufacturing; Q-circles/Kaizen/6-sigma;

5-S, TPM, DoE;


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Principles ofPrinciples of

Management 2Management 2Management: A SystemsManagement: A Systems

ApproachApproach


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Systems approach to Management

Organization as a System receives Input, Transforms it

through a Process forOutput and operates in an

Environment (economic, regulatory and other forces)

Transformation

processinput output

Feedback (Re-energizing/setting the system)

ENVIRONMENT

System Boundary


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Systems approach to ManagementSystems approach to Management ctd.ctd.

Systems Concepts

System Boundaries and SubsystemsSystems often consist of numerous

subsystems.

Subsystems perform specialized tasks forthe overall system.

A subsystem has own activities, objectives

& interacts with other subsystems.

Sub-System 2e.g. Production

Sub-System 3

e.g. SalesSub-System 1e.g. Purchasing


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StakeStake: Something wagered or risked; an interest in an: Something wagered or risked; an interest in an

enterprise with contingent gain or loss enterprise with contingent gain or loss Webster s dictionaryWebster s dictionary

HoldersHolders who have stake in Business: who have stake in Business: Shareholders:Shareholders: are the owners. They have put in their money inare the owners. They have put in their money in

the enterprise, expecting better returns from it than from otherthe enterprise, expecting better returns from it than from other

ventures;ventures;

Society:Society:includes the State, provincial and local governmentsincludes the State, provincial and local governmentsfor the improvement of quality of life of its citizens;for the improvement of quality of life of its citizens;

Suppliers:Suppliers: continuity of their enterprise depends on thecontinuity of their enterprise depends on thesuccess of the customer enterprise;success of the customer enterprise;

Customers:Customers: require the goods and services provided by therequire the goods and services provided by theenterprise, better than those from its competitors. Theenterprise, better than those from its competitors. Theenterprise is, in turn, a supplier to its customers;enterprise is, in turn, a supplier to its customers;

Employees:Employees: livelihood depends on the health, progress andlivelihood depends on the health, progress andsuccess of the employing enterprise;success of the employing enterprise;

Output for Stake-holders in Business:


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Systems approach to ManagementSystems approach to Management ctd.ctd.Outputs and Inputs

Systems produce Outputs from Inputs i.e. theInputs are converted to Outputs.

Outputs of one subsystem become inputs to anothersubsystem.

Outputs must adhere to standards to be useful oracceptable to the next subsystem.

System Environment Environment consists of people, organizations and

other entities that supply data to or that receive datafrom the system

An open system interacts with the environment; a

closed system does not.

S h M d


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Systems approach to ManagementSystems approach to Management ctd.ctd.Inputs: 5 Ms of ManagementInputs: 5 Ms of Management

Inputs or theInputs or the resourcesresources managers deal with are:managers deal with are:ManMan:: human resources, bothhuman resources, both insideinside andand outsideoutside, connected, connected

with an organization;with an organization;

Materials:Materials: goodsgoods (hard & software, processed or semi-(hard & software, processed or semi-

finished) andfinished) and servicesservices required to create the sellable endrequired to create the sellable endproduct;product;

Machines:Machines: technology and expertise deployed towards thetechnology and expertise deployed towards the

transformation process;transformation process;

Methods:Methods: systems, procedures and processes seamlesslysystems, procedures and processes seamlesslyput together for the transformation;put together for the transformation;

Measurement:Measurement: score-keeping and in-process monitoringscore-keeping and in-process monitoring

continuously with due feedback to keep on-course on time.continuously with due feedback to keep on-course on time.


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Inputs: 5 Ms of ManagementInputs: 5 Ms of Management

MoneyMoneyis required for generating allis required for generating all

theses Ms managers need to acquire,theses Ms managers need to acquire,deploy, generate and distribute moneydeploy, generate and distribute moneyas a primary need for business!as a primary need for business! Money is the common measure orMoney is the common measure or

language the of all resources convertedlanguage the of all resources convertedto costs.to costs.


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There is a freedom of choice (for association)There is a freedom of choice (for association)between each of these stake-holders and thebetween each of these stake-holders and theenterprise in the longer term:enterprise in the longer term: But they sink or swim together in the shorter termBut they sink or swim together in the shorter term

Length of term definition varies with individuals!Length of term definition varies with individuals! They have varied interests in terms of specificThey have varied interests in terms of specific

outcomes,outcomes, e.g. Society in Ethics & Environmente.g. Society in Ethics & Environment, and, andoften prioritize differently even divergently,often prioritize differently even divergently, e.g.e.g.

Shareholder on higher Profit & Employees on higher Wages.Shareholder on higher Profit & Employees on higher Wages. Managers need to balance different interests, fine-Managers need to balance different interests, fine-

tuning thetuning the Business ProcessesBusiness Processes towards stakeholdertowards stakeholdersatisfaction.satisfaction.

Output for Stake-holders in Business ctd.


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Business processA business process orbusiness method

is a collection of related, structured and

sequenced activities or tasks thatproduce a specific service or product

(serve a particular goal) for a particular

stakeholder. It often can be visualizedwith a flowchart(of activities) repeated

over time for same outcome.


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There are three types of business processes:

>Management processes, that govern the operation

of a system. Typical management processes are "

Corporate Governance" & "Strategic Management".

> Operational processes: constitute the

core business and create the primary value stream.

Typical operational processes are Purchasing,

Manufacturing, Marketing & Sales.

> Supporting processes, which support the core

processes. E.g. Accounting, Recruitment,

Technical support.
http://en.wikipedia.org/wiki/Corporate_Governancehttp://en.wikipedia.org/wiki/Strategic_Managementhttp://en.wikipedia.org/wiki/Core_businesshttp://en.wikipedia.org/wiki/Purchasinghttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Marketinghttp://en.wikipedia.org/wiki/Saleshttp://en.wikipedia.org/wiki/Accountinghttp://en.wikipedia.org/wiki/Recruitmenthttp://en.wikipedia.org/wiki/Technical_supporthttp://en.wikipedia.org/wiki/Technical_supporthttp://en.wikipedia.org/wiki/Recruitmenthttp://en.wikipedia.org/wiki/Accountinghttp://en.wikipedia.org/wiki/Saleshttp://en.wikipedia.org/wiki/Marketinghttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Purchasinghttp://en.wikipedia.org/wiki/Core_businesshttp://en.wikipedia.org/wiki/Strategic_Managementhttp://en.wikipedia.org/wiki/Corporate_Governance


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Planning (What, where & when to do?)

+ Organizing (How to do?)

+ Staffing (who to do?)

+ Leading (same direction?)

+ Controlling (OK?)

to accomplish certain pre-determined,(asderived from stakeholder needs)goals or

objectives i.e. outcomes


Management as a system transforms inputs as a

whole & in each type of Business Process by:

Systems approach to ManagementSystems approach to Management ctdctd


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Inputs(Goal

Oriented)

Outputs(External

ToOrgnzn.)

Planning

Organizing

Staffing

Leading

Controlling

Product/Services,Profits, Customer &

Societal satisfaction,

Other Long-term Goals

Man, Machine

Material,

Methods,

Measurement

Stake holder Feedback (reenergizing the system)

EXTERNAL ENVIRONMENT(Opportunities,Constraints)

Stakeholders

Shareholders;Society; Customers;

Employees; Suppliers

Systems approach to ManagementSystems approach to Management ctd.ctd.A FlowchartA Flowchart

Mgt

Core

Sup


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Management 3Management 3Management ProcessManagement Process

First Step: PlanningFirst Step: Planning


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PlanningPlanning

Planning involves selectingPlanning involves selectingobjectivesobjectives or goals and defining theor goals and defining the

course of actionscourse of actions to achieve them:to achieve them:

Provides theProvides the road-maproad-map to take us fromto take us fromwhere we are to where we want to go;where we are to where we want to go;

Is aIs a rational approachrational approach to achievingto achievingpre-selected objectives - based onpre-selected objectives - based on

innovation, knowledge and purpose;innovation, knowledge and purpose; Decision makingDecision making in choosing the bestin choosing the best

from alternative courses of action isfrom alternative courses of action is

integral to planning;integral to planning;

Plans as foundation ofPlans as foundation of


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Plans as foundation ofPlans as foundation ofManagementManagement

Planningrequires asking& answering:

Where to?

Seeing & living the future but

not fortune telling!Dreams backed by clear actions toachieve them (Ws & Hs) People must know what they are

expected to accomplish, to make the

group effort effective. without a plan any road leads you to

nowhere! Finally, the plan serves as the basis

for control.

What kind ofresourcesneeded?

?

What kind of people

& org. structureto have?

?

How & Who to leadthemto reachplanned goals?

?

How & when tocontrol incase ofDeviation from plan

?


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Types of PlansTypes of Plans

Mission / PurposeMission / PurposeTheThe basic functionbasic function or reason foror reason for

existence of an enterprise/existence of an enterprise/

organization, e.g.organization, e.g.

Wal-Mart: "To give ordinary folk the chanceto buy the same thing as rich people."

Mary Kay Cosmetics: "To give unlimited

opportunity to women."Merck: "To preserve and improve human

life."

Walt Disney: "To make people happy."


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Types of Plans (contd)Types of Plans (contd)


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Types of Plans (contd)Types of Plans (cont d)

Business PoliciesBusiness Policies

Plans that are general directional statements (orPlans that are general directional statements (orunderstandings) that guide/help in decision making:understandings) that guide/help in decision making:

Repeat decisions taken reflexively;Repeat decisions taken reflexively;

Delegation of tasks without loss of control.Delegation of tasks without loss of control.

Some discretion is permissible depending onSome discretion is permissible depending oncircumstances thus encouragingcircumstances thus encouraging initiative withininitiative within

limitslimits and situational adjustments;and situational adjustments;

Issues with PolicyIssues with Policy

Seldom documented in writingSeldom documented in writing

Subject to interpretationsSubject to interpretations

T f Pl ( td)Types of Plans (contd)


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Types of Plans (contd)Types of Plans (contd)ProceduresProcedures Plans that are chronological sequences ofPlans that are chronological sequences of

required actions: task-oriented in nature;required actions: task-oriented in nature;

Cuts across department boundaries (sub-Cuts across department boundaries (sub-systems) in an organization: e.g. customersystems) in an organization: e.g. customercomplaint handling procedure;complaint handling procedure;

Procedures and policies are inter related:Procedures and policies are inter related:e.g. authorization for paid leavee.g. authorization for paid leave

PolicyPolicy governs quota, responsible authority etc.governs quota, responsible authority etc. ProcedureProcedure governs application, grant and record-keeping.governs application, grant and record-keeping.

RulesRules Specific actions or non-actions allowingSpecific actions or non-actions allowing nono

discretiondiscretion Caution:Caution: rules (and procedures too) limit initiativerules (and procedures too) limit initiative!!


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Types of Plans (contd)Types of Plans (contd)ProgramsPrograms

Action plans (mainly non-routine or forAction plans (mainly non-routine or forchanged activities) including, taskchanged activities) including, taskassignments, steps to be taken, resourcesassignments, steps to be taken, resourcesto be deployed etc. to achieve ato be deployed etc. to achieve a

(new/renewed) goal;(new/renewed) goal;Primary program mayPrimary program may requirerequire supportingsupporting

programs, spreading across the enterprise;programs, spreading across the enterprise;Perfect coordination between supporting &Perfect coordination between supporting &

primary programs essential to avoid delays,primary programs essential to avoid delays,unnecessary costs and expected roll-out.unnecessary costs and expected roll-out.

Programs can be a complex of (sub)goals,Programs can be a complex of (sub)goals,policies, rules and other elementspolicies, rules and other elementsnecessary for the course of action e.g.necessary for the course of action e.g.

obtaining ISO certification.obtaining ISO certification.


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Types of Plans (contd)Types of Plans (contd)

BudgetsBudgets A statement of expected results expressed inA statement of expected results expressed in

Numerical termsNumerical terms e.g. financial operatinge.g. financial operatingbudget = profit plan;budget = profit plan;

Budgets enforce precision in thinking:Budgets enforce precision in thinking:Making a budget is planning by itself;Making a budget is planning by itself;

Encourages innovation a different way to workEncourages innovation a different way to work

Budgets serve for Control:Budgets serve for Control:

Enforces discipline in execution of plans;Enforces discipline in execution of plans;Instills cost consciousness;Instills cost consciousness;

Makes people (constantly) plan!Makes people (constantly) plan!


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Hierarchy of Objectives & OrgHierarchy of Objectives & Org


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Hierarchy of Objectives & Org.Hierarchy of Objectives & Org.

LevelsLevels

Mission

OverallObjectives &Key result areas.

Divisional objectives

Departmental objectives

Individual objectives

Board ofDirectors

CEO

DivisionHead

Product X

DivisionHead

Product Y

Sales & MktgDept

Production Dept

Sales Manager A Sales Manager B

Objectives set end results they need to be supported by a hierarchy ofObjectives set end results they need to be supported by a hierarchy of

sub-objectives, dulysub-objectives, duly networkednetworked through the organization tothrough the organization to avoid discordavoid discord andand

wasted effortwasted effort.. Management must ensure that the components of the networkManagement must ensure that the components of the network fitfit eacheach

other. This is the other. This is the Cascade PrincipleCascade Principle..


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ann ng rem sesann ng rem ses


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ann ng rem sesann ng rem sesStrategiesStrategies

Setting Goals/Objectives

What to accomplish& when

Planning premises

Identifyingalternatives

Comparing &choosing analternative

Decisionmaking

Strategic Planning/formulating ProcessStrategic Planning/formulating Process

trategytrategy= determination of the purpose / the basic long-teobjectives; the adoption of courses of action andallocation of resources required to achieve the ai

Steps in (Business) PlanningSteps in (Business) Planning


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Evaluation

and Controland ControlStrategy

FormulationStrategy

Implementation

Mission

Objectives

Strategies

Policies

Feedback/Learning

Environmenta

l

Scanning

Societal

Environment

General Forces

TaskEnvironment

Industry Analysis

Structure

Chain of Command

Resources

Assets, Skills

Competencies,

Knowledge

Culture

Beliefs, Expectations,

Values

Reason for

existence

What

results toget & when

Plan to

achieve the

mission &

objectives

Programs

Activities

needed to

accomplish

a plan

Budgets

Cost of theprograms Procedures

Sequence

of steps

needed to

do the job

Process to check

performance &

take appropriate

action: corrective

& preventive.

Performance

External

Internal

Evaluation

and Control

Broad guide

to decision

making

A Contemporary Model:

Steps in (Business) PlanningSteps in (Business) Planning


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Guidelines for settingGu e nes or sett ng


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Guidelines for settingGu e nes or sett ngObjectivesObjectives

Clear & VerifiableClear & Verifiable

Clarity scores over precision approximately rightClarity scores over precision approximately rightover accurately wrong!over accurately wrong!

Expressed in Quantitative termsExpressed in Quantitative terms

FiguresFigures

PercentagePercentage

Time frame (by which date)Time frame (by which date)

Should cover main deliverables of the job/ functionShould cover main deliverables of the job/ function

Challenging yet reasonable: S.M.A.R.TChallenging yet reasonable: S.M.A.R.T

Guidelines for setting ObjectivesGuidelines for setting Objectives


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Guidelines for setting ObjectivesGuidelines for setting Objectives

(Contd)(Contd) Identification of assumptions underlying theIdentification of assumptions underlying the

objectivesobjectivesConsistency of:Consistency of: objectives with those of superiors, Organization &objectives with those of superiors, Organization &

other departmentsother departments

Short time action-plans with Long-term objectivesShort time action-plans with Long-term objectives Inclusion of personal growth, developmentInclusion of personal growth, development

and improvement targetsand improvement targetsEnsuring availability of and access to neededEnsuring availability of and access to needed

resourcesresourcesDocumentation and communication ofDocumentation and communication ofobjectives to concerned personsobjectives to concerned persons

fi f


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Benefits of MBOBenefits of MBO

Result oriented planning of goals,Result oriented planning of goals,

resources, organizationresources, organization

Setting of standards for ControlSetting of standards for Control

Decentralization of Management andDecentralization of Management and

clarification of Organizational roles &clarification of Organizational roles &

responsibilities:responsibilities:

Accountabilty & commitment of employeesAccountabilty & commitment of employees

Enables timely corrective actions (as required)Enables timely corrective actions (as required)

W k f MBOWeaknesses of MBO


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Weaknesses of MBOWeaknesses of MBO

Emphasis on:Emphasis on:

short term at the expense of long termshort term at the expense of long term

Results over ProcessResults over Process

Individual over collective effortIndividual over collective effort

Failure to grasp and deploy the concept ofFailure to grasp and deploy the concept of

seamless cascadeseamless cascade

Difficulty in setting agreed, harmonizedDifficulty in setting agreed, harmonized

goalsgoals

Danger of inflexibilityDanger of inflexibility

Steps in OrganizationalSteps in Organizational


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Planning premisesInternal & externalEnvironment/conditions

Being aware of

challenges

Market, Customerswants, Competition,Own strengths

& weakness

Setting Goals/Objectives

What to accomplish& when

Identifyingalternatives

FormulatingSupporting

plans

e.g., plan to buy material,recruit & train employees,

Comparing &

choosing analternative

Decision Making,Key SuccessFactors

Budgeting(Numberizing Plans)

e.g., Sales budget, OperationalExpense budget, Capital expenditure

Steps in OrganizationalSteps in Organizational

PlanningPlanning

SS


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ScanScan

Planning Premises: IndustryPlanning Premises: Industry


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Planning Premises: IndustryPlanning Premises: IndustryAnalysisAnalysis

Porters Five Forces : anModel for analysis of the

External environment.

Planning Premises forecastPlanning Premises: forecast


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Planning Premises: forecastPlanning Premises: forecast

Forecasting Techniques:Forecasting Techniques:

ExtrapolationExtrapolation Time-seriesTime-series statistically project demand analyzingstatistically project demand analyzing

historical data;historical data;

Causal methodCausal method seek co-relation on cause and effectseek co-relation on cause and effect

basis between two (or more) variables to quantifybasis between two (or more) variables to quantify

demand;demand;

Statistical modelingStatistical modeling

BrainstormingBrainstorming

Expert opinionExpert opinion

Scenario writing:Scenario writing: Coping with uncertaintiesCoping with uncertainties

Sensitivity analysis & What if scenarios (trust instinct!);Sensitivity analysis & What if scenarios (trust instinct!);

Planning for contingencies with defined cut-in milestones.Planning for contingencies with defined cut-in milestones.

Un-quantifiable factors e.g.national pride

Quality of assumptions

Excessive data required (often

unobtainable) to make accurate

forecasts

Environmental changes:

Technology, Gov. Policy, Global

alignments, New materials/sources

etc.

P ann ng Prem sesann ng rem ses


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P ann ng Prem sesann ng rem sesStrategiesStrategies

Stakeholder

Wishes &Shareholderdemands

ManagementOrientation

EnterpriseProfile

Purpose &Major objectivesof enterprise

CurrentExternalsituation

Current

resourcesituation

ForecastExternalsituation

ExternalOpportunity& Threat

Internal

Strengths &Weakness

Key success factors &Alternative Strategies

Strategicchoice

The Strategic Planning/formulating Process

The SWOT analysis & StrategyThe SWOT analysis & Strategy


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y gyy gyformulationformulation

W/T StrategyW/T Strategy(mini-mini)(mini-mini)

take cover fortake cover for

bothboth

weaknesses &weaknesses &threatsthreats

S/T StrategyS/T Strategy(maxi-mini)(maxi-mini)

using strengthsusing strengths

to avoid orto avoid or

overcomeovercomethreatsthreats

TThreatshreatse.g.e.g.

competition,competition,

new entrants,new entrants,

reduction ofreduction of

W/O StrategyW/O Strategy(mini-maxi)(mini-maxi)

overcomingovercoming

weakness toweakness to

leverageleverage

opportunityopportunity

S/O StrategyS/O Strategy(maxi-maxi)(maxi-maxi)

using strengthsusing strengths

to leverageto leverage

opportunitiesopportunities

OOpportunitiepportunitiess

e.g. economice.g. economicupturns,upturns,

political/ socialpolitical/ socialchanges etc.changes etc.

WWeaknesseseaknesses

e.g. areas note.g. areas notshowing up inshowing up in

strengths boxstrengths box

SStrengthstrengths

e.g. strengthse.g. strengthsin R&D,in R&D,

knowledge,knowledge,finance etc.finance etc.

InternalInternal

FactorsFactors

ExternalExternal

FactorsFactors

Generic StrategyGeneric Strategy


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Generic StrategyGeneric Strategy

Relationship

Bmarking Partnering

Company

Customer

CompetitorSupplier

Ultimate competitive position:- position w.r.t major Customers- K.S.Fs of Competitors

- leveraging of suppliers

CompetitiveCompetitive

AdvantageAdvantage

1. Cost Leadership:To continually work reducingthe cost prices of products.Supplier Q-C-D has very highpriority.

2. Differentiation:To constantly offer

innovativeand unique solutions.

Suppliertechnology & quality has

focus.

3. Customization:To offer required services in

the

Generic Strategy: BCG MatrixGeneric Strategy: BCG Matrix


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gygyRed: Marketing PerspectiveRed: Marketing Perspective; Blue: Financial Perspective; Blue: Financial Perspective

Cash Source

CashUse

Hi

Hi Lo

Lo

Marke

tGro

wthrate

Relative Market Share

Hi

Hi Lo

Lo

STAR

Hold

???

Build

Cash Cow

Harvest

DOGS

Divest

P ann ng Prem ses & Strateg esann ng rem ses trateg es


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g gg gctd.

ecision Making = is the core of the planning process; a pla

does not come into being unless a decision i.e. certaincommitments of resources, managerial time and moneyare made and risks are taken.aution: A Plan is not intentions and should not suffer fro

Analysis Paralysis.

Comparing &choosing analternative

Decision

making

Budgeting( Numberizing Plans)

Say, Sales budgetOperational Expense

budget,Capital expenditurebudget

FormulatingSupporting

plans

Say, plan to buyEquipment, recruit & train

Employees, develop productetc

Deployment (MBO etc.)

ann ng rem ses ra eg es td


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DeploymentDeployment

Mission

OverallObjectives &Key result areas.

Divisional objectives

Departmental objectives

Individual objectives

Board ofDirectors

CEO

DivisionHead

Product X

DivisionHead

Product Y

Sales & MktgDept

Production Dept

Sales Manager A Sales Manager B

This is the This is the Cascade PrincipleCascade Principle, discussed earlier., discussed earlier.

While setting Objectives, ideally, Top Management should getWhile setting Objectives, ideally, Top Management should get

information / buy-in from lower levels to setinformation / buy-in from lower levels to set tough buttough but

achievable goalsachievable goals for a good result.for a good result.

Bottom-up

Response

g gctd.

Top-downApproach

Management By ObjectivesManagement By Objectives


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g y jg y j(MBO)(MBO)

A comprehensive managerial system that integrates manyA comprehensive managerial system that integrates many

key managerial activities in a systematic manner and that iskey managerial activities in a systematic manner and that is

consciously directed towards the effective and efficientconsciously directed towards the effective and efficient

achievement of organizations and individual objectives:achievement of organizations and individual objectives:

Set-out bySet-out by Peter DruckerPeter Druckerin 1954; integrated to personalin 1954; integrated to personal

performance appraisal byperformance appraisal by Douglas McGregorDouglas McGregorin 1957;in 1957;

Has formed the basis for many theories on motivation;Has formed the basis for many theories on motivation; Has been criticized for introducing a short-term focus andHas been criticized for introducing a short-term focus and

undesirable (individualistic) behaviour;undesirable (individualistic) behaviour;

Currently viewed as a way of managing (deployment cascade) Currently viewed as a way of managing (deployment cascade)

not a specific tool.not a specific tool.

Decision MakingDecision Making


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Decision making is a rational choice process,Decision making is a rational choice process,

bounded by:bounded by: Limitations: time, information and logic;Limitations: time, information and logic; Behaviour: Risk averseness and biases.Behaviour: Risk averseness and biases.

A key step in the process is to identify those limitingA key step in the process is to identify those limiting

factors, road-blocks to each effective (right thing)factors, road-blocks to each effective (right thing)alternative then finding a solution with leastalternative then finding a solution with leastsacrifice of resources (thing right):sacrifice of resources (thing right): Factors: quantitative, qualitative/intangible;Factors: quantitative, qualitative/intangible;

Nature: structured/unstructuredNature: structured/unstructured

Finding solutions:Finding solutions: marginal analyses benefits with incremental inputs;marginal analyses benefits with incremental inputs;

cost-effectiveness assessment of benefits over costs;cost-effectiveness assessment of benefits over costs;

Intuitive/judgmental making connections that are notIntuitive/judgmental making connections that are not

obviousobvious

Decision MakingDecision Making

Decision Makingctd.Decision Makingctd.


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Top level

Managers

Middle level

Managers

Supervisors

Non-programmed

Decisions

Programmed

Decisions

Decision Makingctd.gNature of decision making in Organizations

Non Programmed decisions: used for unstructured, novel and ill-

defined situations of non-recurring natureProgrammed decision:is applied to structured or routine problems;

very often recurring maybe under varying circumstances

Decision Making ctdDecision Making ctd


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How to selectAmongst the

Alternatives ?

Experience: good teacher and useful when

routine/repeat situations arise under similarcircumstances. Without due analysis of theconditions, mistakes tend to repeat or a poorfit results.

Research & analysis: the approach is in at firs

understanding the problem (half the solution!then finding relations between various factorswhich hinder or foster goal attainment. This isstructured, analytical approach quantitative orotherwise.

Experimentation: arguably, the best techniquto use, particularly when either experience orrationale is lacking/limited. However is expensiand success/failures are magnified, results arsubject to interpretational errors.


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gg

Flow Charts:Flow Charts: as a process-guide to taking a decision andas a process-guide to taking a decision and

helps as a check-list of key variables, the sequence inhelps as a check-list of key variables, the sequence in

which they fall and the interrelations. Key to making awhich they fall and the interrelations. Key to making achoice or re-examining the path taken are also indicatedchoice or re-examining the path taken are also indicated

as risk-reduction devices.as risk-reduction devices.

(refer example in W & K, Management a global perspective/10(refer example in W & K, Management a global perspective/10thth edn. Figure 8-5)edn. Figure 8-5)

Decision Support Systems:Decision Support Systems: a wide variety of (proprietary)a wide variety of (proprietary)

computer based programs are available for managers tocomputer based programs are available for managers to

use their time more effectively for decision making ofuse their time more effectively for decision making ofsemi-structured tasks by providing alternativesemi-structured tasks by providing alternative

evaluations. They focus on the process of decisionevaluations. They focus on the process of decision

making, taking data provide by the managementmaking, taking data provide by the managementinformation systems in enterprises.information systems in enterprises.


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Management 4Management 4Management Process:Management Process:

Organizing for resultsOrganizing for results

Nature of OrganizingNature of Organizing


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Nature of Organizingg g OrganizingOrganizing may be broadly defined as:may be broadly defined as:

1.1.

The identification and classification ofThe identification and classification ofrequired activities;required activities;

2.2. The grouping of those activities towardsThe grouping of those activities towardsattaining their set objectives;attaining their set objectives;

3.3. The assignment of those groupings to aThe assignment of those groupings to a

responsible manager, duly empowered;responsible manager, duly empowered;4.4. The provision for coordination among, withinThe provision for coordination among, within

and across the groups in the organization.and across the groups in the organization.

Organization structuresOrganization structures are designed to:are designed to:

Clarify tasks & responsibilities,Clarify tasks & responsibilities, Remove obstacles,Remove obstacles, Furnish decision making & communicationFurnish decision making & communication

networknetwork

Support attainment of enterprise objectivesSupport attainment of enterprise objectives

Nature of Organizing ctd.Nature of Organizing ctd.The Business Organization Model: Value


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The Business OrganizationModel: ValueChain (Porter,1985)

Ma

rgin

Margin

Firm Infrastructure

Human Resource Management

Technology Development

Procurement

InboundLogistics

OperationsOutboundLogistics

Marketing& Sales

Service

SupportActiviti

es

Primary Activities

argin reflects the reward for the risks run by the company.

All activities together need to generate value greater

Nature of Organizing ctd.Nature of Organizing ctd.


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Inbound Logistics:relate to receiving, storingand disseminating inputs;

Operations:associated with transformation ofinputs into final product form;

Outbound Logistics:relate to collecting,storing and physically distributing theproducts to buyers;

Marketing & Sales:relate to advertising,Promotion, sales, distribution-channelselection & management and Pricing;

Service:associated with enhancement or

The Value Chain: Primary Activities



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Procurement: relates to the function ofpurchasing inputs used across the firmsprimary and support activities;

Technology Development: relates to know-how,processes & procedures, technologyembodied in the product design and delivery.Most activities have their own sub-set oftechnology;

Human Resource Management: directed atrecruiting, training, developing andcompensating all personnel;

The Value Chain: Support Activities

Nature of Organizing ctdNature of Organizing ctd


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Most practicing mangers would translate this valueMost practicing mangers would translate this value

chain to imply an organization as:chain to imply an organization as:

a formalized, intentional structure of roles and positionsa formalized, intentional structure of roles and positions

Thus formal organization implies the intentional structureThus formal organization implies the intentional structure

of roles in an enterprise.of roles in an enterprise.

However, in an enterprise informal organization willHowever, in an enterprise informal organization will

form, not necessarily bad and is:form, not necessarily bad and is:

a network of personal and social relations not established ora network of personal and social relations not established orrequired by formal organizations but arising spontaneouslyrequired by formal organizations but arising spontaneously

as people associate with each other.as people associate with each other.


e.g. a Footballteam

e.g.

SeniorPlayers

Nature of Organizing ctdNature of Organizing ctd


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*

*

Hierarchical levels(6)

#

*

*

Span of Management(8)

Informal OrganizationOffice Golf team

Car Pool to/from work

*C

C C C

The building block of an organizais the Department: a group char

with independent task & responsi

Sales Gr1

NCR

Goan

Car Prod

Assembly

Test

Manuf.

G Fy

Nature of Organizing ctd.Nature of Organizing ctd.D i D t t ti


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Grouping activities & people intoGrouping activities & people into departmentsdepartments

makes it conceptually possible to expandmakes it conceptually possible to expandorganizations to an infinite degree.organizations to an infinite degree.

Different patterns have been successfully usedDifferent patterns have been successfully usedto group activities:to group activities: By simple nos. is a simple method works well for theBy simple nos. is a simple method works well for the

lowest levels where work is routine, uniform and non-lowest levels where work is routine, uniform and non-specialized; time-grouping is an extension of thisspecialized; time-grouping is an extension of thismethod where shift-working is required;method where shift-working is required;

By enterpriseBy enterprise functionsfunctions embodies what enterprises embodies what enterprisestypically do e.g. Production, Engineering, Sales etc.typically do e.g. Production, Engineering, Sales etc.

This method, defined by F.W.Taylor, is arguably theThis method, defined by F.W.Taylor, is arguably themost prevalent method still used.most prevalent method still used.

DepartmentationDepartmentation

Departmentation ctd.Departmentation ctd.


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By territory or geography is very common when theBy territory or geography is very common when the

geographical spread is wide. It was a device introduced to speedgeographical spread is wide. It was a device introduced to speed

up management in similar units for easy and swift communicationup management in similar units for easy and swift communication

e.g. Sales: N/E/W/S; Fire Brigade: Camp, Hinjewadi, Aundh etc.e.g. Sales: N/E/W/S; Fire Brigade: Camp, Hinjewadi, Aundh etc. By Customer/Account orientation reflecting the primary interestBy Customer/Account orientation reflecting the primary interest

in nature of markets/business/customer e.g. Banks: Institutionalin nature of markets/business/customer e.g. Banks: Institutionalbanking, Small Savings etc.banking, Small Savings etc.

By Process groups encountered primarily in specialized/By Process groups encountered primarily in specialized/

manufacturing operations where processes are vital e.g.manufacturing operations where processes are vital e.g.Advertising: Copy-writing, Creative etc.; Manufacturing: SteelAdvertising: Copy-writing, Creative etc.; Manufacturing: Steel

Melting, Wire-drawing etc.Melting, Wire-drawing etc.

By Product Lines has evolved with enterprises becoming multi-By Product Lines has evolved with enterprises becoming multi-

line with function needing adaptation/integration to suit specificline with function needing adaptation/integration to suit specific

products e.g. Tata Motors: Passenger Vehicles / Commercialproducts e.g. Tata Motors: Passenger Vehicles / Commercialvehiclesvehicles

pp


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pp

Allow for maximum flexibility and freedom of operations,Allow for maximum flexibility and freedom of operations,

especially when the products/businesses are unconnectedespecially when the products/businesses are unconnectede.g. General Electric. Generally, SBUs have:e.g. General Electric. Generally, SBUs have:

-- Their own Missions, Goals andTheir own Missions, Goals andStrategies;Strategies;

- Distinct and definable set of competitors;- Distinct and definable set of competitors;

- Deploy and manage resources in key areas;- Deploy and manage resources in key areas;- A reasonable size.- A reasonable size.

Matrix: Currently in vouge for larger organizations to capture the

advantages of both systems i.e. Functional excellence and the

Effectiveness BUs. Thus, organizations can: Avail of relevant (skill & experience) functional staff Drive for higher levels of functional excellence (Value Chain) Meet rapid shifts in relative needs of specialization,

Without sacrificing the nimbleness of BU operations.



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C.E.O

Finance Qual. HRM BU 1 BU 2

I.R.M

Recr.

T&D

G/H.R

Plant 1

G/H.R

Ind.

Sin.

I.S.O

ppExample of Grid Control & S.B.Us



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Organizing for ProjectsOrganizing for Projects

Pure Project e.g.Pure Project e.g.ConstructionConstruction

C.E.O

Housing PortsRoads

PM 1

PM 2

PM 1

PM 2

PM 1

Contractor Pool

Project Team e.g.Project Team e.g.

AutomobileAutomobile

Director

Design Markt.Manf.

Mgr 1

Mgr 2

Mgr 1

Mgr 2

Mgr 1

Mgr 2

PM

Rafting or Matrix Structure

p



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The purpose of organizing is to make humanThe purpose of organizing is to make humancooperation effective and is limited by:cooperation effective and is limited by: the number of persons a manager can supervisethe number of persons a manager can supervise

effectively and efficiently;effectively and efficiently; while the total number is dictated by the quantum ofwhile the total number is dictated by the quantum of

work/ nature of task/spread etc. Thus the twowork/ nature of task/spread etc. Thus the twodimensions, Level (depth) and Span of controldimensions, Level (depth) and Span of control(width) are interrelated .(width) are interrelated .

The reason for creating Levels of organization is theThe reason for creating Levels of organization is thelimitation in the span of control. Effective span islimitation in the span of control. Effective span is

influenced by:influenced by: Training/skill of subordinates and personal contactTraining/skill of subordinates and personal contact

required;required; Clarity of delegation of authority;Clarity of delegation of authority; Clarity of plans, use of objective standards andClarity of plans, use of objective standards and

communication techniques;communication techniques;

Span-of-ManagementSpan-of-Management


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Management 5Management 5Management Process:Management Process:

StaffingStaffing

Staffing: Human ResourcesStaffing: Human Resources


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Staffing: Human ResourcesStaffing: Human Resources

Staffing seeks to:Staffing seeks to: Put Put the Right people in the Right Job at thethe Right people in the Right Job at the

Right timeRight time

Further, the process needs to ensure that theseFurther, the process needs to ensure that these

right people are retained and enabled to performright people are retained and enabled to perform

And prepared for the right job since theseAnd prepared for the right job since these

change with the operating environment.change with the operating environment.

i.e. management of Human Resources.i.e. management of Human Resources.

St ffi H RSt ffi H R ( td)( td)


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Staffing: Human ResourcesStaffing: Human Resources (contd)(contd)

What is H.R.M?What is H.R.M?The Michigan State Univ. Model:The Michigan State Univ. Model:

Looks at employees as a means toLooks at employees as a means toachieving the organizations Strategy:achieving the organizations Strategy:

as a resource that is used in a calculative andas a resource that is used in a calculative and

mainly rational manner,mainly rational manner,

as a means towards competitive success;as a means towards competitive success;

h i ?Wh t i HRM?


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What is HRM?What is HRM? (contd)(contd)

This hard model thus proposes that increasingThis hard model thus proposes that increasingproductivity and competitiveness is the principalproductivity and competitiveness is the principal

reason for H.R.M:reason for H.R.M:

Therefore, a framework in which the needs of theTherefore, a framework in which the needs of theorganization are paramount;organization are paramount;

And Organizations exist to accomplish a mission orAnd Organizations exist to accomplish a mission or

achieve an objective, leading to 3 inter-connectedachieve an objective, leading to 3 inter-connected

issues:issues:

h i hi d l


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The Michigan ModelThe Michigan Model (contd)(contd)

Mission & Strategy

Orgn. Structure HR Management

PoliticalForces

EconomicForces

CulturalForces

Th Mi hi M d lThe Michigan Model H R


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The Michigan Model:The Michigan Model: Human ResourceHuman ResourceCycleCycle

Rewards

Development

Selection Performance Appraisal

HRM the OperatingHRM the Operatingenvironmentenvironment


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environmentenvironment

HR Strategy Recruitment Training Pay

Empl. Relations Flexibility etc.

HR Management

National Culture

Orgn: Size & Culture

Sector

CorporateStrategy

Behaviour

Performance

d lA HRM P M d l


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A HRM Process ModelA HRM Process Model

Input Transformation Output

Feedback

Challenges Resources

Education

skills

Management Recruiting Selection

Training & Dev.

Contributions Capable staff Motivated employees


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HRM Systems: SelectionHRM Systems: Selection


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The process of choosing the right ones involves a seriesThe process of choosing the right ones involves a series

of steps with multiple evaluation points which adds timeof steps with multiple evaluation points which adds timeand complexity to the hiring process:and complexity to the hiring process: Frustration among candidates/applicants,andFrustration among candidates/applicants,and

Among managers who need the job openings filled!Among managers who need the job openings filled!

But hiring is a long-term decision for the firm, whereas it isBut hiring is a long-term decision for the firm, whereas it is

at best a mid-term engagement for the applicant and theat best a mid-term engagement for the applicant and thehiring Manager.hiring Manager.

The step-wise progression in the selection process is :The step-wise progression in the selection process is :

HRM Systems: SelectionHRM Systems: Selection

# 6: Supervisory Interview

# 7: Realistic job preview

# 8:Hiring Decision

# 1: Reception of applications

# 2: Employment tests

3: Selection Interviews

4: references & background checks

5: Medical Evaluation

HRM Systems: Development &HRM Systems: Development &E l tiE aluation


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EvaluationEvaluation

hen a new employee is hired or present employee isreassigned, orientation /placementshould follow;new job-holders need to be trained to do their presentobs & developed to handle future tasks/responsibilities.

he success of the individual and of the HR process/dept.depends on the feedback about performance; through aperformance appraisal, the employee evaluatesthe degreof success.

mployers offer career planningto further encourage thedevelopment of employees.


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Development & Evaluation: Performance


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Appraisal

The basis for Appraisal must be job relatedThe basis for Appraisal must be job relatedstandards of performance; if performancestandards of performance; if performancestandards are not job related, evaluation can bestandards are not job related, evaluation can bebiased.biased.

The approach must:The approach must:

Identify performance related standards;Identify performance related standards; Measure those criteria;Measure those criteria; Give feedback to the employeeGive feedback to the employee Keep HR Dept. informed for follow-up.Keep HR Dept. informed for follow-up.

Performance Appraisal Feedback

MeasuresStandardsRecords

Interventions


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Compensation & Protection:Compensation & Protection:contd.contd.


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The major phases of compensation management are: Job-analysis comprising Position description, Job description &

job standards i.e. Identify and study jobs

Job-evaluation comprising Job ranking/job grading throughFactor comparisons or Point systems i.e. Defineinternal equity

Wages & salaries surveys Labour directorate, Employerassociations, Professional associations & (self) commissioned

surveys i.e. Establish external equity Pricing Jobs Match job evaluation worth with employment

market worth; i.e Match external and internal worth

Challenges affecting compensation are: Market forces forcing pay to be more than the relative worth;

Union interventions/interference;

Government constraints & legislation;

International wage/compensation rates: offshore challenge;

Productivity & cost constraints;

Social constraints.


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ControllingControlling


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Control Device

Controlled Entity

Detector: Information of

What is happening.

Effector: Behaviour

Alteration, if needed.

Assessor: Comparison

(With standard)

Detector: or a sensor that measures what is actually happening in the

Process being controlled.

Assessor: a device that determines the significance of what is actualsituation in comparison with some standard or expectation.

Effector: a device (often called feedback) that alters behaviour if the

Assesor indicates the need to do so.

+ a communication network that transmits information

Elements of Control

Controlling cntd.Controlling cntd.


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Management Control Focuses primarily on Strategy Implementation.Three distinct systems/activities that require planning and control can be

defined:

Strategy

FormulationGoals, Strategies, Policies

Management

ControlImplementation of Strategies

Task

Control Performance of specific Tasks

Planning

Coordinating

Communicating

Evaluating

Deciding

Influencing

Management control does not necessarily require that all actions are per

the previously determined Plan; It, however, requires inducing people to act in pursuit of own goals in ways

that organizations goal are also met: Goal Congruence.



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Management controlManagement control hinges on the ability to influencehinges on the ability to influence

humanhuman bbehaviour towards achievement of the Strategicehaviour towards achievement of the StrategicObjectivObjective, i.e.e, i.e.

What actions do control initiatives motivate people to take in

their own self interest?

Are these actions in the best interest of the Organization? Goal CongruenceGoal Congruence:: implies that actions people are led to takeimplies that actions people are led to take

in theirin theirperceived self-interestperceived self-interest are also in theare also in the interest of theinterest of the

firmfirm::

BothBoth FormalFormal andand InformalInformal processes influence human behaviourprocesses influence human behaviour

in organizations;in organizations;

Informal processesInformal processes need to be recognized since they areneed to be recognized since they are ill-ill-

defineddefined and are bothand are both intrinsic and extrinsicintrinsic and extrinsic to an Organization.to an Organization.



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Organization

Structure

(Management)

Controls

Culture

H. R.

ManagementStra

tegy

Perfo

rmance

Implementation Mechanism

Org. Structure specifies roles, reporting relationships, responsibilities that shape

decision making;

Culture refers to the set of common beliefs, attitudes that guide management actions

HR Management is related to activities which enable people to execute strategy;

Controlling cntd.Controlling cntd.Formal System


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Policies &Policies & Rules:Rules:

Organograms, protocols and defined communication structure;Organograms, protocols and defined communication structure;

Written instructions/Code of Conduct/Manuals etc.Written instructions/Code of Conduct/Manuals etc.;;

ISO and allied systems down to task control levelISO and allied systems down to task control level;;

Physical controls ePhysical controls e..g. Access cards, locked stores etc.g. Access cards, locked stores etc.

The Process:The Process:

Formal System

Analysis/

ActionsOK?

NRevision

Y

Reward

StrategicPlanning

Goals &Strategies

OtherInfo.

BudgetingDepartmentPerformance

RulesTask ControlSafeguards

Reports:

A vs P

Measurement



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Management control process is the process by

which managers at all levels ensure that peoplethey supervise implement their intended

strategies:Unlike the simpler systems, the

standard is not pre-set;Control is not automatic;Requires coordination amongst

individuals;The link between need for action and

determining the action is not always

clear;Much of control is self control.

Leading: NatureLeading: Nature


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Leading: Natureead g a u e

Leadership: The ability to influence a group towards the

achievement of goal, objective or target. Not all Leadersare Managers and not all Managers are Leaders !!

Kotter: Management is about coping with complexity,

Leadership is about coping with change;

Zalenznik: Managers adopt impersonal and passive

attitude to goals, Leaders take an active, personal attitude

towards goals.Trait theories seek to explain leadership in terms of

personality, social, physical and/or intellectual traits todifferentiate between leaders & others.

Behavioral theories propose that specific behaviorsdifferentiate leaders from non-leaders.

Leading: Nature cntd.Leading: Nature cntd.


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gg

Contingency Model (Fiedler) effective group performance

depends on the proper match between leaders style ofinteraction with subordinates & the degree to which the

situation control and influence to the leader:concept of Task

& Relationship (position/power) orientation.Task Behavior: The extent to which leaders are likely to

organize and define the role of group members, to explain

5W+1H of assigned tasks characterized by well defined

structures, channels and way of working;

Relationship Behavior: The extent to which leaders are likely

to maintain personal relationships with group members,opening up channels of communication, providing

psychological strokes and facilitating behaviors.

Hersey & Blanchards Situational Theory a contingency

theory, focusing on the followers readiness.

Hersey & Blanchards Situational Theory


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L

Delegating

Able& willing

Participating

Able & unwilling

Relation

ship

Behav

ior

Task Behavior

H

HL

Selling

Unable & willing

Telling

Unable & unwilling

Follower Readiness

Mature Immature

Leading: Nature cntd.Leading: Nature cntd.


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Path Goal Theory a leaders behavior is acceptable tosubordinates in so far as they view it as a source of either

immediate or future satisfaction. The underlying premise is thateffective leaders clarify the path to help their followers achieve ofwork goals, making the journey easier by reducing road-blocks &pitfalls: directing / supporting / participating or orienting.

Performance

&

Satisfaction

EnvironmentTask structureFormal Orgn.Work group

SubordinatesLocus of controlExperiencePerceived ability

Directive more satisfying when tasks areambiguous/stressful;

Supportive leads to higher satisfaction &performance with structured tasks;

chievement orientation increasesffort for performance in ambiguity;articipative gives satisfaction toembers with internal Locus of control.

Perceived as controlled by

Leading: Power & PoliticsLeading: Power & Politics


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Power: capacity of an individual (or group) to influence the behaviorof other(s), implying: a potential that need not be cashed-in for

effecting change & dependence as a basis of relationship. Inorganizations, there are 5 sources of power:Coercive Power that is based on fear;Reward compliance based on ability to distribute largess;Legitimate derived from (formal) hierarchical position;Expert influence based on special skills or knowledge;Referent influenced by possession of desirable objects;

Where does Power lie: Organo-gra

Principles of Mgt_Jun10 Edn1

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