BHMCT 606 PPM Notes

PRINCIPLES OF MANAGEMENT

BHMCT 606

Question Answer Bank

Q1. Discuss and illustrate the meaning, definition and characteristics of management in modern organizations.

Briefly discuss the nature and scope of Management.

Ans. Meaning: Management is understood in different ways by different people. Economists regard it as a factor of production. Sociologists see it as a class or group of persons while practitioners of management treat it as a process. For our understanding, management may be viewed as what a manager does in a formal organization to achieve the objectives. In the words of Mary Parker Follet management is “the art of getting things done through people”. This definition throws light on the fact that managers achieve organizational goals by enabling others to perform rather than performing the tasks themselves.

Definition:

Henry Fayol, "To mange is to forecast and plan, to organize, to compound, to co-ordinate and to control."

Harold Koontz says, "Management is the art of getting things done through and within formally organized group."

“Management is the process of planning, organizing, leading and controlling the efforts of organization members and of using all other organizational resources to achieve stated organizational goals”.

CHARACTERISTICS OF MANAGEMENT

Management is a distinct activity having the following salient features:

1. Economic Resource : Management is one of the factors of production together with land, labour and capital. As industrialization increases, the need for managers also increases. Efficient management is the most critical input in the success of any organized group activity as it is the force which assembles and integrates other factors of production, namely, labour, capital and materials. Inputs of labour, capital and materials do not by themselves ensure production, they require the catalyst of management to produce goods and services required by the society. Thus, management is an essential ingredient of an organization.

2. Goal Oriented : Management is a purposeful activity. It coordinates the efforts of workers to achieve the goals of the organization. The success of management is measured by the extent to which the organizational goals are achieved. It is imperative that the organizational goals must be well-defined and properly understood by the management at various levels.

3. Distinct Process : Management is a distinct process consisting of such functions as planning, organizing, staffing, directing and controlling. These functions are so interwoven that it is not possible to lay down exactly the sequence of various functions or their relative significance.

4. Integrative Force : The essence of management is integration of human and other resources to achieve the desired objectives. All these resources are made available to those who manage. Managers apply knowledge, experience and management principles for getting the results from the workers by the use of non-human resources. Managers also seek to harmonize the individuals' goals with the organizational goals for the smooth working of the organization.

5. System of Authority : Management as a team of managers represents a system of authority, a hierarchy of command and control. Managers at different levels possess varying degree of authority. Generally, as we move down in the managerial hierarchy, the degree of authority gets gradually reduced. Authority enables the managers to perform their functions effectively.

6. Multi-disciplinary Subject : Management has grown as a field of study (i.e. discipline) taking the help of so many other disciplines such as engineering, anthropology, sociology and psychology. Much of the management literature is the result of the association of these disciplines. For instance, productivity orientation drew its inspiration from industrial engineering and human relations orientation from psychology. Similarly, sociology and operations research have also contributed to the development of management science.

7. Universal Application : Management is universal in character. The principles and techniques of management are equally applicable in the fields of business, education, military, government and hospital. Henri Fayol suggested that principles of management would apply more or less in every situation. The principles are working guidelines which are flexible and capable of adaptation to every organization where the efforts of human beings are to be coordinated.

Q2. “Management is oldest of the arts and youngest of the sciences”. Discuss

"Management is both a science and an art". Discuss this statement, giving suitable examples.

Ans. Management as a Science : Development of management as a science is of recent origin, even though its practice is ages old. Fredrick W. Taylor was the first manager-theorist who made significant contributions to the development of management as a science. He used the scientific methods of analysis, observation and experimentation in the management of production function. A perceptive manager, as he was, he distilled certain fundamental principles and propounded the theory and principles of scientific management. His work was followed by many others including Gantt, Emerson, Fayol, Barnard, etc. During the last few decades, great strides have been made in the development of management as a systematized body of knowledge which can be learnt, taught and researched. It has also provided powerful tools of analysis, prediction and control to practicing managers. The scientific character of management has been particularly strengthened by management scientists who have developed mathematical models of decision making.

Another characteristic of science in management is that it uses the scientific methods of observation, experimentation and laboratory research. Management principles are firmly based on observed phenomena, and systematic classification and analysis of data. These analyses and study of observed phenomena are used for inferring cause-effect relationships between two or more variables. Generalizations about these relationships result in hypotheses. The hypotheses when tested and found to be true are called principles. These principles when applied to practical situations help the practitioner in describing and analyzing problems, solving problems and predicting the results.

Even though management is a science so far as to possess a systematized body of knowledge and uses scientific methods of research, it is not an exact science like natural sciences. This is simply because management is a social science, and deals with the behaviour of people in organization. Behaviour of people is much more complex and variable than the behaviour of inanimate things such as light or heat. This makes controlled experiments very difficult. As a result, management principles lack the rigour and exactitude which is found in physics and chemistry. In fact, many natural sciences which deal with living phenomena such as botany and medicine are also not exact. Management is a social science like economics or psychology, and has the same limitations which these and other social sciences have. But this does not in any way diminish the value of management as a knowledge and discipline. It has provided powerful tools of analysis, prediction and control to practicing managers and helped them in performing their material tasks more efficiently and effectively.

Management as an art : Just as an engineer uses the science of engineering while building a bridge, a manager uses the knowledge of management theory while performing his managerial functions. Engineering is a science; its application to the solution of practical problems is an art. Similarly, management as a body of knowledge and a discipline is a science; its application to the solution of organizational problems is an art. The practice of management, like the practice of medicine, is firmly grounded in an identifiable body of concepts, theories and principles. A medical practitioner, who does not base his diagnosis and prescription on the science of medicine, endangers the life of his patient. Similarly, a manager who manages without possessing the knowledge of management creates chaos and jeopardizes the well-being of his organization.

Principles of management like the principles of medicine are used by the practitioner not as rules of thumb but as guides in solving practical problems. It is often said that managerial decision making involves a large element of judgement. This is true too. The raging controversy whether management is a science or an art is fruitless. It is a science as well as an art. Developments in the field of the knowledge of management help in the improvement of its practice; and improvements in the practice of management spur further research and study resulting in further development of management science.

Q3. Discuss basic principles of Management along with their significance.

What is Management? Explain the principles and functions of management with suitable illustrations.

Ans. PRINCIPLES OF MANAGEMENT

A body of principles of management has been developed by Henri Fayol, the father of modern management. Fayol wrote perceptibly on the basis of his practical experience as a manager. Although, he did not develop an integrated theory of management, his principles are surprisingly in tune with contemporary thinking in management theory.

Fayol held that there is a single "administrative science", whose principles can be used in all management situations no matter what kind of organization was being managed. This earned him the title of "Universality". He, however, emphasized that his principles were not immutable laws but rules of thumb to be used as occasion demanded.

Fayol held that activities of an industrial enterprise can be grouped in six categories : (i) technical (production), (ii) commercial (buying, selling and exchange), (iii) financial (search for and optimum use of capital), (iv) security (protection of property and persons), (v) accounting (including statistics); and (vi) managerial. However, he devoted most of his attention to managerial activity. He developed the following principles underlying management of all kinds of organizations :

1. Authority and Responsibility are Related : Fayol held that authority flows from responsibility. Managers who exercise authority over others should assume responsibility for decisions as well as for results. He regarded authority as a corollary to responsibility. Authority is official as well as personal. Official authority is derived from the manager's position in organizational hierarchy and personal authority is compounded of intelligence, experience, moral worth, past services, etc.

A corollary of the principle that no manager should be given authority unless he assumes responsibility is that those who have responsibility should also have commensurate authority in order to enable them to initiate action on others and command resources required for the performance of their functions. This aspect of relationship between responsibility and authority is particularly relevant in India where authority tends to be concentrated in higher echelons of management.

2. Unity of Command : This principle holds that one employee should have only one boss and receive instructions from him only. Fayol observed that if this principle is violated authority will be undermined, discipline will be jeopardy, order will be disturbed and stability will be threatened. Dual command is a permanent source of conflict. Therefore, in every organization, each subordinate should have one superior whose command he has to obey.

3. Unity of Direction : This means that all managerial and operational activities which relate a distinct group with the same objective should be directed by "one head and one plan. According to Fayol, there should be, "one head and one plan for a group of activities having the same objective". It, however, does not mean that all decisions should be made at the top. It only means that all related activities should be directed by one person. For example, all marketing activities like product strategy and policy, advertising and sales promotion, distribution channel policy, product pricing policy, marketing research, etc., should be under the control of one manager and directed by an integrated plan. This is essential for the "unity of action, coordination of strength and focusing of effort". Violation of this principle will cause fragmentation of action and effort, and wastage of resources.

4. Scalar Chain of Command : According to Fayol scalar chain is the chain of superiors ranging from the ultimate authority to the lowest ranks. The line of authority is the route followed via every link in the chain by all communication which start from or go to the ultimate authority.

5. Division of Work : This is the principle of specialization which, according to Fayol, applies to all kinds of work, managerial as well as technical. It helps a person to acquire an ability and accuracy with which he can do more and better work with the same effort. Therefore, the work of every person in the organization should be limited as far as possible to the performance of a single leading function.

6. Discipline : Discipline is a sine qua non for the proper functioning of an organization. Members of an organization are required to perform their functions and conduct themselves in relation to others according to rules, norms and customs. According to Fayol, discipline can best be maintained by : (i) having good superiors at all levels; (ii) agreements (made either with the individual employees or with a union as the case may be) that are as clear and fair as possible; and (iii) penalties judiciously imposed.

7. Subordination of Individual Interest to General Interest : The interest of the organization is above the interests of the individual and the group. It can be achieved only when managers in high positions in the organization set an example of honesty, integrity, fairness and justice. It will involve an attitude and a spirit of sacrificing their own personal interests whenever it becomes apparent that such personal interests are in conflict with organizational interests. It may, however, be emphasized that social and national interests should have precedence over organizational interests whenever the two run counter to each other.

8. Remuneration : Employees should be paid fairly and equitably. Differentials in remuneration should be based on job differentials, in terms of qualities of the employee, application, responsibility, working conditions and difficulty of the job. It should also take into account factors like cost of living, general economic conditions, demand for labour and economic state of the business.

9. Centralisation : Fayol believed in centralisation. He, however, did not contemplate concentration of all decision making authority in the top management. He, however, held that centralisation and decentralisation is a question of proportion. In a small firm with a limited number of employees, the owner-manager can give orders directly to everyone. In large organizations, however, where the worker is separated from the chief executive through a long scalar chain, the decision making authority has to be distributed among various managers in varying degrees. Here one generally comes across a situation of decentralisation with centralised control. The degree of centralisation and decentralisation also depends on the quality of managers.

10. Order : Order, in the conception of Fayol, means right person on the right job and everything in its proper place. This kind of order, depends on precise knowledge of human requirements and resources of the concern and a constant balance between these requirements and resources.

11. Equity : It means that subordinates should be treated with justice and kindliness. This is essential for eliciting their devotion and loyalty to the enterprise. It is, therefore the duty of the chief executive to instill a sense of equity throughout all levels of scalar chain.

12. Stability of Tenure of Personnel : The managerial policies should provide a sense of reasonable job security. The hiring and firing of personnel should depend not on the whims of the superiors but on the well-conceived personnel policies. He points out that it takes time for an employee to learn his job; if they quit or are discharged within a short time, the learning time has been wasted. At the same time those found unsuitable should be removed and those who are found to be competent should be promoted. However, "a mediorce manager who stays is infinitely preferable to outstanding managers who come and go".

13. Initiative : It focuses on the ability, attitude and resourcefulness to act without prompting from others. Managers must create an environment which encourages their subordinates to take initiative and responsibility. Since it provides a sense of great satisfaction to intelligent employees, managers should sacrifice their personal vanity in order to encourage their subordinates to show initiative. It should, however, be limited, according to Fayol, by respect for authority and discipline.

14. Esprit de Corps : Cohesiveness and team spirit should be encouraged among employees. It is one of the chief characteristics of organized activity that a number of people work together in close coopearation for the achievement of common goals. An environment should be created in the organization which will induce people to contribute to each other's efforts in such a way that the combined effort of all together promotes the achievement of the overall objectives of enterprise.

SIGNIFICANCE OF MANAGEMENT

The significance of management in business activities is relatively greater. The inputs of labour, capital and raw material never become productive without the catalyst of management. It is now widely recognized that management is an important factor of growth of any country. The following points further highlight the significance of management :

1. Achievements of group goals : Management makes group efforts more effective. The group as a whole cannot realise its objectives unless and until there is mutual co-operation and co-ordination among the members of the group. Management creates team work and team spirit in an organization by developing a sound organization structure. It brings the human and material resources together and motivates the people for the achievement of the goals of the organization.

2. Optimum utilization of resources : Management always concentrates on achieving the objectives of the enterprise. The available resources of production are put to use in such a way that all sort of wastage and inefficiencies are reduced to a minimum. Workers are motivated to put in their best performance by the inspiring leadership. Managers create and maintain an environment conducive to highest efficiency and performance. Through the optimum use of available resources, management accelerates the process of economic growth.

3. Minimisation of cost : In the modern era of intense competition, every business enterprise must minimise the cost of production and distribution. Only those concerns can survive in the market, which can produce goods of better quality at the minimum cost. A study of the principles of management helps in knowing certain techniques used for reducing costs. These techniques are production control, budgetary control, cost control, financial control, material control, etc.

4. Change and growth : A business enterprise operates in a constantly changing environment. Changes in business environment create uncertainties and risk and also produce opportunities for growth. An enterprise has to change and adjust itself in the everchanging environment. Sound management moulds not only the enterprise but also alters the environment itself to ensure the success of the business. Many of the giant business corporations of today had a humble beginning and grew continuously through effective management.

5. Efficient and smooth running of business : Management ensures efficient and smooth running of business, through better planning, sound organization and effective control of the various factors of production.

6. Higher profits : Profits can be enhanced in any enterprise either by increasing the sales revenue or reducing costs. To increase the sales revenue is beyond the control of an enterprise. Management by decreasing costs increases its profits and thus provides opportunities for future growth and development.

7. Provide innovation : Management gives new ideas, imagination and visions to an enterprise.

8. Social benefits : Management is useful not only to the business firms but to the society as a whole. It improves the standard of living of the people through higher production and more efficient use of scarce resources. By establishing cordial relations between different social groups, management promotes peace and prosperity in society.

9. Useful for developing countries : Management has to play a more important role in developing countries, like India. In such countries, the productivity is low and the resources are limited. It has been rightly observed, "There are no under-developed countries. They are only under-managed ones".

10. Sound organization structure : Management establishes proper organization structure and avoids conflict between the superiors and subordinates. This helps in the development of spirit of cooperation and mutual understanding, and a congenial environment is provided in the organization.

MANAGEMENT FUNCTIONS /PROCESS OF MANAGEMENT

There is enough disagreement among management writers on the classification of managerial functions. Newman and Summer recognize only four functions, namely, organizing, planning, leading and controlling.

Henri Fayol identifies five functions of management, viz. planning, organizing, commanding, coordinating and controlling. Luther Gulick states seven such functions under the catch word "POSDCORB' which stands for planning, organizing, staffing, directing, coordinating, reporting and budgeting. Warren Haynes and Joseph Massie classify management functions into decision-making, organizing, staffing, planning, controlling, communicating and directing. Koontz and O'Donnell divide these functions into planning organizing, staffing, directing and controlling.

For our purpose, we shall designate the following six as the functions of a manager: planning, organizing, staffing, directing, coordinating and controlling.

1. Planning : Planning is the most fundamental and the most pervasive of all management functions. If people working in groups have to perform effectively, they should know in advance what is to be done, what activities they have to perform in order to do what is to be done, and when it is to be done. Planning is concerned with 'what', 'how, and 'when' of performance. It is deciding in the present about the future objectives and the courses of action for their achievement. It thus involves:

(a) determination of long and short-range objectives;

(b) development of strategies and courses of actions to be followed for the achievement of these objectives; and

management. It is performed in all kinds of organizations by all managers at all levels of hierarchy.

2. Organizing : Organizing involves identification of activities required for the achievement of enterprise objectives and implementation of plans; grouping of activities into jobs; assignment of these jobs and activities to departments and individuals; delegation of responsibility and authority for performance, and provision for vertical and horizontal coordination of activities. Every manager has to decide what activities have to be undertaken in his department or section for the achievement of the goals entrusted to him. Having identified the activities, he has to group identical or similar activities in order to make jobs, assign these jobs or groups of activities to his subordinates, delegate authority to them so as to enable them to make decisions and initiate action for undertaking these activities, and provide for coordination between himself and his subordinates, and among his subordinates. Organizing thus involves the following sub-functions :

(a) Identification of activities required for the achievement of objectives and implementation of plans.

(b) Grouping the activities so as to create self-contained jobs.

(d) Delegation of authority so as to enable them to perform their jobs and to command the resources needed for their performance.

(e) Establishment of a network of coordinating relationships.

3. Staffing : Staffing is a continuous and vital function of management. After the objectives have been determined, strategies, policies, programmes, procedures and rules formulated for their achievement, activities for the implementation of strategies, policies, programmes, etc. identified and grouped into jobs, the next logical step in the management process is to procure suitable personnel for manning the jobs. Since the efficiency and effectiveness of an organization significantly depends on the quality of its personnel and since it is one of the primary functions of management to achieve qualified and trained people to fill various positions, staffing has been recognized as a distinct function of management. It comprises several subfunctions :

(a) Manpower planning involving determination of the number and the kind of personnel required.

(b) Recruitment for attracting adequate number of potential employees to seek jobs in the enterprise.

(d) Placement, induction and orientation.

(e) Transfers, promotions, termination and layoff.

(f) Training and development of employees.

4. Directing : Directing is the function of leading the employees to perform efficiently, and contribute their optimum to the achievement of organizational objectives. Jobs assigned to subordinates have to be explained and clarified, they have to be provided guidance in job performance and they are to be motivated to contribute their optimum performance with zeal and enthusiasm. The function of directing thus involves the following sub-functions :

(a) Communication

(b) Motivation

5. Coordination : Coordinating is the function of establishing such relationships among various parts of the organization that they all together pull in the direction of organizational objectives. It is thus the process of tying together all the organizational decisions, operations, activities and efforts so as to achieve unity of action for the accomplishment of organizational objectives.

The significance of the coordinating process has been aptly highlighted by Mary Parker Follet. The manager, in her view, should ensure that he has an organization "with all its parts coordinated, so moving together in their closely knit and adjusting activities, so linking, interlocking and interrelation, that they make a working unit, which is not a congeries of separate pieces, but what I have called a functional whole or integrative unity". Coordination, as a management function, involves the following sub-functions:

(a) Clear definition of authority-responsibility relationships

(b) Unity of direction

(d) Effective communication

(e) Effective leadership

6. Controlling : Controlling is the function of ensuring that the divisional, departmental, sectional and individual performances are consistent with the predetermined objectives and goals. Deviations from objectives and plans have to be identified and investigated, and correction action taken. Deviations from plans and objectives provide feedback to managers, and all other management processes including planning, organizing, staffing, directing and coordinating are continuously reviewed and modified, where necessary.

Controlling implies that objectives, goals and standards of performance exist and are known to employees and their superiors. It also implies a flexible and dynamic organization which will permit changes in objectives, plans, programmes, strategies, policies, organizational design, staffing policies and practices, leadership style, communication system, etc., for it is not uncommon that employees failure to achieve predetermined standards is due to defects or shortcomings in any one or more of the above dimensions of management.

Q4. Write a note on the evolution of management thought. What are the recent trends in management thoughts?

Ans. A FRAMEWORK FOR THE MANAGEMENT THOUGHTS

The evolution of management thoughts might be better approached through the framework as depicted in Figure. In the beginning there were two classical schools of management thoughts. These were- the scientific management school and the organizational school. Later on, behavioural school and the quantitative school came into existence. These four schools merged into integration school which led to the contemporary school of management thoughts.

CONTRIBUTION OF LEADING THINKERS

1. Classical School: The classical development of management thoughts can be divided into- the scientific management, the organizational management, the behavioural management and the quantitative management. The first two (scientific management school and organizational) emerged in late 1800s and early 1900s were based on the management belief that people were rational, economic creatures choose a course of action that provide the greatest economic gain. These schools of management thoughts are explained as below:

(A) Scientific Management School: Scientific management means application of the scientific methods to the problem of management. It conducts a business or affairs by standards established by facts or truth gained through systematic observation, experiments, or reasoning.

(B) Organizational School: The organizational school of management placed emphasis on the development of management principles for managing the complete organization.

(C) Behavioural School: The school of behavioural management theory involved in recognition on the importance of human behaviour in organization.

(D) Quantitative School: With the revolutionary change in the application of information technology came the quantitative school of thoughts, which finds its foundation in decision theory, the application of statistics in decision making and the evolution of mathematical/econometric models that are nurtured by computer technology. This approach is based upon the assumption that mathematical techniques can help the manager in solution of problems.

2. Integration School:

In recent years, an attempt has been made to integrate the classical theories with the modern behavioural and quantitative theories into an overall framework that use the best of each approach. These approaches assumed that there is no best way to manage, and all theories have application to the practice of management. Two such integrative developments are explained as follows:

I. Contingency Theory: It is based on the notion that the proper management technique in a given situation depends upon the nature and conditions of that situation. Along with this organizational understanding comes the development of unique behaviours that have proven successful in particular situations. However, there are no universal solution techniques because every problem situation is unique in itself.

II. Systems Theory:

3. Contemporary School:

The contemporary school of management thoughts outlines the framework for studying the more recent trends in management practices, such as the impact of global business, Theory Z concepts, McKinsey 7-S approach, the search for excellence, and the concern for quality and productivity. These are explained as follows:

I Global: The recent emergence of a truly global economy is affecting every manager in the world. In today’s environment, success in the long run demands that the manager think globally, even if he can still limit his actions to local market.

II Theory Z: These firms are those which are highly successful American firms that use many of the Japanese management practices. The Type Z firm features long-term employment with a moderately specialized career path and slow evaluation and promotion. Lifetime employment would not

CONTINGENCY VIEW Organizational phenomena exist in logical patterns. Managers devise and apply similar responses to common types of problems

“There is one best way”

“Every situation is unique” be especially attractive to America’s mobile work force and the slow evaluation and promotion processes would not meet the high expectations of American workers.

APPROACHES TO THE STUDY OF MANAGEMENT

A. Classical Approach: The classical approach is also known as traditional approach, management process approach or empirical approach. The main features of this approach are as follows:

• It laid emphasis on division of labour and specialization, structure, scalar and functional processes and span of control. Thus, they concentrated on the anatomy of formal organization.

• Management is viewed as a systematic network (process) of interrelated functions. The nature and content of these functions, the mechanics by which each function is performed and the interrelationship between these function is the core of the classical approach.

• It ignored the impact of external environment on the working of the organization. Thus, it treated organization as closed system.

• On the basis of experience of practicing managers, principles are developed. These principles are used as guidelines for the practicing executive.

• Functions, principles and skills of management are considered universal. They can be applied in different situations.

• The integration of the organization is achieved through the authority and control of the central mechanism. Thus, it is based on centralization of authority.

• Formal education and training is emphasized for developing managerial skills in would be managers. Case study method is often used for this purpose.

Emphasis is placed on economic efficiency and the formal organization structure.

• People are motivated by economic gains. Therefore, organization controls economic incentives. The Classical approach was developed through three mainstreams- Taylor’s Scientific Management, Fayol’s Administrative Management and Weber’s Ideal Bureaucracy. All the three concentrated on the structure of organization for greater efficiency.

Merits of Classical Approach

• The classical approach offers a convenient framework for the education and training of managers. • The observational method of case study is helpful in drawing common principles out of past experience with some relevance for future application

• It focuses attention on what managers actually do.

• This approach highlights the universal nature of management.

• It provides scientific basis for management practice.

• It provides a starting point for researchers to verify the validity and to improve the applicability of management knowledge. Such knowledge about management is effectively presented. Shortcomings of Classical Approach

• Weber’s ideal bureaucracy suggested strict adherence to rules and regulations, this lead to redtapism in the organization.

• It offers a mechanistic framework that undermines the role of human factor. The classical writers ignored the social, psychological and motivational aspect of human behaviour.

• The environmental dynamics and their effect on management have been discounted. Classical theory viewed organization as closed system i.e. having no interaction with environment.

There is positive danger in relying too much on past experiences because a principle or technique found effective in the past may not fit a situation of the future.

• The classical principles are mostly based on the personal experience and limited observations of the practitioners. They are not based on personal experience.

• The totality of real situation can seldom be incorporated in a case study.

B. Scientific Management Approach: The impetus for the scientific management approach came from the first industrial revolution. Because it brought about such an extraordinary mechanization of industry, this revolution necessitated the development of new management principles and practices. The concept of scientific management was introduced by Frederick Winslow Taylor in USA in the beginning of 20th century. He defined scientific management as,” Scientific management is concerned with knowing exactly what you want men to do and then see in that they do it in the best and cheapest way”. Elements and Tools of Scientific Management: The features of various experiments conducted by Taylor are as follows: • Separation of Planning and doing: Taylor emphasized the separation of planning aspects from actual doing of the work. The planning should be left to the supervisor and the workers should emphasize on operational work. • Functional Foremanship: Separation of planning from doing resulted into development of supervision system that could take planning work adequately besides keeping supervision on workers. Thus, Taylor evolved the concept of functional foremanship based on specialization of functions.

• Job Analysis: It is undertaken to find out the best way of doing things. The best way of doing a job is one which requires the least movement consequently less time and cost. • Standardization: Standardization should be maintained in respect of instruments and tools, period of work, amount of work, working conditions, cost of production etc. • Scientific Selection and Training of Workers: Taylor has suggested that the workers should be selected on scientific basis taking into account their education, work experience, aptitudes, physical strength etc. • Financial Incentives: Financial incentives can motivate workers to put in their maximum efforts. Thus, monetary (bonus, compensation) incentives and non monetary (promotion, upgradation) incentives should be provided to employees.

Criticism of Scientific Management: The main grounds of criticism are given below: • Taylor advocated the concept of functional foremanship to bring about specialization in the organization. But this is not feasible in practice as a worker can’t carry out instructions from eight foremen. • Workers were hired on a first-come, first-hired basis without due concern for workers ability or skills. • Scientific management is production oriented as it concentrates too much on the technical aspects of work and undermines the human factors in industry. It resulted in monotony of job, loss of initiative, over speeding workers, wage reductions etc. • Training was haphazard at best, with only minimal use of basic apprentice system. • Tasks were accomplished by general rule of thumb without standard times, methods or motion. • Managers worked side-by-side with the workers, often ignoring such basic managerial function of planning and organizing.

C. Administrative Approach to Management: The advocates of this school perceive management as a process involving certain functions such as planning, organizing, directing and controlling. That’s why it is called as ‘functional approach’ or ‘management process’ approach. Fayol’s contributions were first published in book form titled ‘Administration Industrielle at Generale’ in French Language, in 1916. He defined management in terms of certain functions and then laid down fourteen principles of management which according to him have universal applicability. Thus, he was a pioneer in the field of management education. In brief, Fayol’s views on management command acceptability even today because they are much in tune with the requirements of management in the present day world.

Fayol’s General Principles of Management

• Division of Work: The object of division of work is to produce more and better work with the same effort. It is accomplished through reduction in the number of tasks to which attention and effort must be directed.

• Authority and Responsibility: Authority is defined as ‘the right to command and the power to make oneself obeyed’. Responsibility coexists with authority and is its other side. Fayol made a distinction between official authority and personal authority, the latter stemming from the manager’s own intelligence, integrity, experience, personality, knowledge and skills.

• Discipline: It implies respect for agreements designed to secure obedience. It must prevail throughout an organization to ensure its smooth functioning. Discipline requires clear and fair agreements, good supervision and judicious application of penalties.

• Unity of Command: Every employee should receive orders and instruction from only one superior and a subordinate should be accountable to only one superior.

• Unity of Direction: Each group of activities having one objective should be unified by having one plan and one head.

• Subordination of Individual to General Interest: The interest of any one employee or group of employees should not take precedence over the interests of the organization as a whole.

• Remuneration of Personnel: The amount of remuneration and the methods of payment should be just and fair and should provide maximum possible satisfaction to both employees and employers.

• Centralisation: It refers to the degree to which subordinates are involved in decision making. Whether decision making is centralized (to management) or decentralized (to subordinates) is a question of proper proportion. The task is to find the optimum degree of centralization for each situation.

• Scalar Chain: The scalar chain is the chain of superiors ranging from the ultimate authority to the lowest ranks. Communication should follow this chain. However, if following the chain creates delays, cross-communications can be followed if agreed to by all parties and superiors are kept informed.

• Order: It is a rational arrangement for things and people. Fayol emphasized both material order and human order. In material order, there should be a place for everything and everything should be in its proper place. In human order, there should be an appointed place for everyone and everyone should be in his and her appointed place.

• Equity: Managers should be kind and fair to their subordinates. The application of equity requires good sense, experience and humanistic attitude for soliciting loyalty and devotion from subordinates.

• Stability of Tenure: High employee turnover is inefficient. Management should provide orderly personnel planning and ensure that replacements are available to fill vacancies. • Initiative: Subordinates should be provided with an opportunity to show their initiative as a way to increase their skills and to inculcate a sense of participation.

• Espirit de Corps: Union is strength, and it comes from the harmony and mutual understanding of the personnel. Management should not follow the policy of ‘divide and rule’. Rather it should strive to maintain team spirit and co-operation among employees so that they can work together as a team for the accomplishment of common objectives.

Criticism: Fayol’s work has been criticized on the following grounds:

• His theory is said to be too formal. There is no single classification of managerial functions acceptable to all the functional theorists. There is also lack of unanimity about the various terms such as management, administration etc.

• He did not pay adequate attention to workers.

• The fundamentalists considered their principles to be universal in nature. But many of the principles have failed to deliver the desired results in certain situations.

D. Human Relation Approach to Management: The criticism of the Scientific and Administrative Management as advocated by Taylor and Fayol, respectively, gave birth to Human Relation Approach. The behavioural scientists criticized the early management approaches for their insensitiveness to the human side of organization. The behavioural scientists did not view the employees mechanically in work situation, but tried to show that the employees not only have economic needs but also social and psychological needs like need for recognition, achievement, social contact, freedom, and respect. Human relations school regards business organization as a psycho-social system. Elton Mayo of Harvard and his associates conducted a famous study on human behaviour at the Hawthorne plant of the Western Electric Company and this study formed the foundation of this school of management thoughts. The basic hypotheses of this study as well as the basic propositions of the Human Relation Approach are the following:

• The business organization is a social system.

• The employees not only have economic needs but also psychological needs and social needs, which are required to be served properly to motivate them.

• Employees prefer self-control and self-direction.

E. Social System Approach to Management: It is developed during social science era, is closely related to Human Relation Approach. It includes those researchers who look upon management as a social system. Chester I. Barnard is called as the spiritual father of this approach. According to this approach, an organization is essentially a cultural system composed of people who work in cooperation. The major features of this approach are as follows:

• Organization is a social system, a system of cultural relationships.

• Relationships exist among the external as well as internal environment of the organization.

• Cooperation among group members is necessary for the achievement of organizational objectives.

• For effective management, efforts should be made for establishing harmony between the goals of the organization and the various groups therein.

Q5. “F.W.Taylor is said to be the father of scientific management and Henri Fayol, the father of principles of management”. Critically examine the statement.

Ans. Fredrick W. Taylor (1856-1915): He is known as ‘father of scientific management’. His ideas about management grew out of his wide-ranging experience in three companies: Midvale Steel Works, Simonds Rolling Mills and Bethlehem Steel Co.

TAYLOR’S FOUR PRINCIPLES OF SCIENTIFIC MANAGEMENT

Taylor’s Principle Related Management

1. Develop a science for each job with standardized work implements and efficient methods for all to follow.

2. Scientifically select workers with skills and abilities that match each job, and train them in the most efficient ways to accomplish tasks.

3. Ensure cooperation through incentives and provide the work environment that reinforces optimal work results in a scientific manner.

4. Divide responsibility for managing and for working, while supporting individuals in work groups for what they do best. Some people are more Complete time-and-motion study to determine the best way to do each task.

Scientific management is concerned with knowing exactly what you want men to do and then see in that they do it in the best and cheapest way”. Elements and Tools of Scientific Management: The features of various experiments conducted by Taylor are as follows:

• Separation of Planning and doing: Taylor emphasized the separation of planning aspects from actual doing of the work. The planning should be left to the supervisor and the workers should emphasize on operational work.

• Functional Foremanship: Separation of planning from doing resulted into development of supervision system that could take planning work adequately besides keeping supervision on workers.

Thus, Taylor evolved the concept of functional foremanship based on specialization of functions. This involve activities of workers as :

• Job Analysis: It is undertaken to find out the best way of doing things. The best way of doing a job is one which requires the least movement consequently less time and cost.

• Standardization: Standardization should be maintained in respect of instruments and tools, period of work, amount of work, working conditions, cost of production etc.

• Scientific Selection and Training of Workers: Taylor has suggested that the workers should be selected on scientific basis taking into account their education, work experience, aptitudes, physical strength etc.

• Financial Incentives: Financial incentives can motivate workers to put in their maximum efforts. Thus, monetary (bonus, compensation) incentives and non monetary (promotion, upgradation) incentives should be provided to employees.

Fayol’s General Principles of Management

• Unity of Command: Every employee should receive orders and instruction from only one superior and a subordinate should be accountable to only one superior.

• Unity of Direction: Each group of activities having one objective should be unified by having one plan and one head. • Subordination of Individual to General Interest: The interest of any one employee or group of employees should not take precedence over the interests of the organization as a whole.

• Remuneration of Personnel: The amount of remuneration and the methods of payment should be just and fair and should provide maximum possible satisfaction to both employees and employers.

• Stability of Tenure: High employee turnover is inefficient. Management should provide orderly personnel planning and ensure that replacements are available to fill vacancies.

• Initiative: Subordinates should be provided with an opportunity to show their initiative as a way to increase their skills and to inculcate a sense of participation.

Q6. What do you understand by planning? Define its objectives and assess its importance. What should be done to overcome its limitations?

Ans. Definition of Planning: Planning is the process of deciding in advance what is to be done, who is to do it, how it is to be done and when it is to be done. It is the process of determining a course of action, so as to achieve the desired results. It helps to bridge the gap from where we are, to where we want to go. It makes it possible for things to occur which would not otherwise happen. Planning is a higher order mental process requiring the use of intellectual faculties, imagination, foresight and sound judgment. According to Koontz, O'Donnell and Weihrich, "Planning is an intellectually demanding process; it requires the conscious determination of courses of action and the basing of decisions on purpose, knowledge and considered estimates".

Planning is thus deciding in advance the future state of business of an enterprise, and the means of attaining it. Its elements are :

1. What will be done – what are the objectives of business in the short and in the long run?

2. What resources will be required – This involves estimation of the available and potential resources, estimation of resources required for the achievement of objectives, and filling the gap between the two, if any.

3. How it will be done – This involves two things : (i) determination of tasks, activities, projects, programmes, etc., required for the attainment of objectives, and (ii) formulation of strategies, policies, procedures, methods, standard and budgets for the above purpose.

4. Who will do it – It involves assignment of responsibilities to various managers relating to contributions they are expected to make for the attainment of enterprise objectives. This is preceded by the breaking down of the total enterprise objectives into segmental objectives, resulting into divisional, departmental, sectional and individual objectives.

5. When it will be done – It involves determination of the timing and sequence, if any, for the performance of various activities and execution of various projects and their parts.

IMPORTANCE OF PLANNING

Some of the reasons as to why planning is considered a vital managerial function are given below :

1. Planning is essential in modern business : The growing complexity of the modern business with rapid technological changes, dynamic changes in the consumer preferences and growing tough competition necessities orderly operations, not only in the current environment but also in the future environment. Since planning takes a future outlook, it takes into account the possible future developments.

2. Planning affects performance : A number of empirical studies provide evidence of organizational success being a function of formal planning, the success being measured by such factors as return on investment, sales volume, growth in earnings per share and so on. An investigation of firms in various industrial products as machinery, steel, oil, chemicals and drugs revealed that companies that engaged in formal planning consistently performed better than those with no formal planning.

3. Planning puts focus on objectives : The effectiveness of formal planning is primarily based upon clarity of objectives. Objectives provide a direction and all planning decisions are directed towards achievement of these objectives. Plans continuously reinforce the importance of these objectives by focusing on them. This ensures maximum utility of managerial time and efforts.

4. Planning anticipates problems and uncertainties : A significant aspect of any formal planning process in collection of relevant information for the purpose of forecasting the future as accurately as possible. This would minimize the chances of haphazard decisions. Since the future needs of the organization are anticipated in advance, the proper acquisition and allocation of resources can be planned, thus minimizing wastage and ensuring optimal utility of these resources.

5. Planning is necessary to facilitate control : Controlling involves the continual analysis and measurement of actual operations against the established standards. These standards are set in the light of objectives to by achieved. Periodic reviews of operations can determine whether the plans are being implemented correctly. Well developed plans can aid the process of control in two ways.

6. Planning helps in the process of decision making : Since planning specifies the actions and steps to be taken in order to accomplish organizational objectives, it serves as a basis for decision-making about future activities. It also helps managers to make routine decisions about current activities since the objectives, plans, policies, schedules and so on are clearly laid down.

ADVANTAGES AND LIMITATIONS OF PLANNING

The importance of formal planning has already been discussed. A vigorous and detailed planning programme helps managers to be future oriented. It gives the mangers some purpose and direction. A sound blue print for plans with specific objective and action statements has numerous advantages for the organization which are as follows :

1. Focuses Attention on Objectives : Since all planning is directed towards achieving enterprise objectives, the very act of planning focuses attention on these objectives. Laying down the objectives is the first step in planning. If the objectives are clearly laid down, the execution of plans will also be directed towards these objectives.

2 Ensures Economical Operation : Planning involves a lot of mental exercise which is directed towards achieving efficient operation in the enterprise. It substitutes joint directed effort for uncoordinated piecemeal activity, even flow of work for uneven flow, and deliberate decisions for snap judgement costs. This helps in better utilization of resources and thus minimizing costs.

3. Reduces Uncertainty : Planning helps in reducing uncertainties of future because it involves anticipation of future events. Effective planning is the result of deliberate thinking based on facts and figures. It involves forecasting also. Planning gives an opportunity to a business manager to foresee various uncertainties which may be caused by changes in technology, taste and fashion of the people, etc. Sufficient provision is made in the plans to offset these uncertainties.

4. Facilitates Control : Planning helps the managers in performing their function of control. Planning and control are inseparable in the sense that unplanned action cannot be controlled because control involves keeping activities on the predetermined course by rectifying deviations from plans. Planning helps control by furnishing standards of control. It lays down objectives and standards of performance which are essential for the performance of control function.

5. Encourages Innovation and Creativity : Planning is basically the deciding function of management. It helps innovative and creative thinking among the managers because many new ideas come to the mind of a manager when he is planning. It creates a forward looking attitude among the managers.

6. Improves Motivation : A good planning system ensures participation of all managers which improves their motivation. It improves the motivation of workers also because they know clearly what is expected of them. Moreover, planning serves as a good training device for future managers.

7. Improves Competitive Strength : Effective planning gives a competitive edge to the enterprise over other enterprises that do not have planning or have ineffective planning. This is because planning may involve expansion of capacity, changes in work methods, changes in quality, anticipation tastes and fashion of people and technological changes, etc.

8. Achieves Better Coordination : Planning secures unity of direction towards the organizational objectives. All the activities are directed towards the common goals. There is an integrated effort throughout the enterprise. It will also help in avoiding duplication of efforts. Thus, there will be better coordination in the organization.

Limitations of Planning : Sometimes, planning fails to achieve the expected results. There are many causes of failure of planning in practice. These are discussed below :

1. Lack of reliable data : There may be lack of reliable facts and figures over which plans may be based. Planning loses its value if reliable information is not available or if the planner fails to utilize the reliable information. In order to make planning successful, the planner must determine the reliability of facts and figures and must base his plans on reliable information only.

2. Lack of initiative : Planning is a forward looking process. If a manager has a tendency to follow rather than lead, he will not be able to make good plans. Therefore, the planner must take the required initiative. He should be an active planner and should take adequate follow up measure to see that plans are understood and implemented properly.

3. Costly process : Planning is time consuming and expensive process. This may delay action in certain cases. But it is also true that if sufficient time is not given to the planning process, the plans so produced may prove to be unrealistic. Similarly, planning involves costs of gathering and analyzing information and evaluation of various alternatives. If the management is not willing to spend on planning, the results may not be good.

4. Rigidity in organizational working : Internal inflexibility in the organization may compel the planners to make rigid plans. This may deter the managers from taking initiative and doing innovative thinking. So the planners must have sufficient discretion and flexibility in the enterprise. They should not always be required to follow the procedures rigidly.

5. Non-acceptability of change : Resistance to change is another factor which puts limits on planning. It is a commonly experienced phenomenon in the business world. Sometimes, planners themselves do not like change and on other occasions they do not think it desirable to bring change as it makes the planning process ineffective.

6. External limitations : The effectiveness of planning is sometimes limited because of external factors which are beyond the control of the planners. External strategies are very difficult to predict. Sudden break-out of war, government control, natural havocs and many other factors are beyond the control of management. This makes the execution of plans very difficult.

7. Psychological barriers : Psychological factors also limit the scope of planning. Some people consider present more important than future because present is certain. Such persons are psychologically opposed to planning. But it should not be forgotten that dynamic mangers always look ahead. Long-range wellbeing of the enterprise cannot be achieved unless proper planning is done for future.

MEASURES TO OVERCOME LIMITATIONS OF PLANNING

Some people say that planning is a mere ritual in the fast changing environment. This is not a correct assessment on managerial planning. Planning may be associated with certain difficulties such as non-availability of data, lethargy on the part of the planners, rigidity of procedures, resistance to change and changes in external environment. But these problems can be overcome by taking the following steps :

1. Setting Clear-cut Objectives : The existence of clear-cut objectives is necessary for efficient planning. Objectives should not only be understandable but rational also. The overall objectives of the enterprise must be the guiding pillars for determining the objectives of various departments. This would help in having coordinated planning in the enterprise.

2. Management Information System : An efficient system of management information should be installed so that all relevant facts and figures are made available to the mangers before they perform the planning function. Availability of right type of information will help in overcoming the problems of complete understanding of the objectives and resistance to change on the part of the subordinates.

3. Carefully Premising : The planning premises constitute a framework within which planning is done. They are the assumptions of what is likely to happen in future. Planning always requires some assumptions to be made regarding future happenings

4. Business Forecasting : Business is greatly influenced by economic, social, political and international environment. The management must have a mechanism of forecasting changes in such environment. Good forecasts will contribute to the effectiveness of planning.

5. Dynamic Managers : The persons concerned with the task of planning should be dynamic in outlook. They must take the required initiative to make business forecasts and develop planning premises. A manager should always keep in mind that planning is looking ahead and he is making plans for future which is highly uncertain.

6. Flexibility : Some element of flexibility must be introduced in the planning process because modern business operates in an environment which keeps on changing. For achieving effective results, there should always be a scope to make necessary addition, deletion, or alternation in the plans as is demanded by the circumstances.

7. Availability of Resources : Determination and evaluation of alternatives should be done in the light of resources available to the management. Alternatives are always present in any decision problem. But their relative plus and minus points are to be evaluated in the light of the resources available. The alternative which is chosen should not only be concerned with the objectives of the enterprise, but also capable of being accomplished with the help of the given resources.

8. Cost-Benefit Analysis : The planners must undertake cost-benefit analysis to ensure that the benefits of planning are more than the cost involved in it. This necessarily calls for establishing measurable goals, clear insight to the alternative courses of action available, premising reasonable and formulation of derivative plans keeping in view the fact that environment is fast changing.

Q7.Describe in detail the steps involved in the planning process.

Ans. ESSENTIAL STEPS IN PLANNING

The steps generally involved in planning are as follows :

1. Establishing Verifiable Goals or Set of Goals to be Achieved : The first step in planning is to determine the enterprise objectives. These are most often set by upper level or top managers, usually after a number of possible objectives have been carefully considered. There are many types of objectives managers may select: a desired sales volume or growth rate, the development of a new product or service, or even a more abstract goal such as becoming more active in the community. The type of goal selected will depend on number of factors: the basic mission of the organization, the values its managers hold, and the actual and potential ability of the organization.

2. Establishing Planning Premises : The second step in planning is to establish planning premises, i.e. certain assumptions about the future on the basis of which the plan will be intimately formulated. Planning premises are vital to the success of planning as they supply economic conditions, production costs and prices, probable competitive behaviour, capital and material availability, governmental control and so on.

3. Deciding the planning period : Once upper-level managers have selected the basic long-term goals and the planning premises, the next task is to decide the period of the plan. Business varies considerably in their planning periods. In some instances plans are made for a year only while in others they span decades. In each case, however, there is always some logic in selecting a particular time range for planning. Companies generally base their period on a future that can reasonably be anticipated. Other factors which influence the choice of a period are as follows: : (a) lead time in development and commercialization of a new product; (b) time required to recover capital investments or the pay back period; and (c) length of commitments already made.

4. Findings Alternative Courses of Action : The fourth step is planning is to search for and examining alternative courses of action. For instance, technical know-how may be secured by engaging a foreign technician or by training staff abroad. Similarly, products may be sold directly to the consumer by the company's salesmen or through exclusive agencies. There is seldom a plan for which reasonable alternatives do not exit, and quite often an alternative that is not obvious proves to be the best.

5. Evaluating and Selecting a Course of Action : Having sought alternative courses, the fifth step is to evaluate them in the light of the premises and goals and to select the best course or courses of action. This is done with the help of quantitative techniques and operations research.

6. Developing Derivative plans : Once the plan has been formulated, its broad goals must be translated into day-to-day operations of the organization. Middle and lower-level managers must draw up the appropriate plans, programmes and budgets for their sub-units. These are described as derivative plans. In developing these derivative plans, lower-level managers take steps similar to those taken by upper-level managers – selecting realistic goals, assessing their sub-units particular strength and weaknesses and analyzing those parts of the environment that can affect them.

7. Measuring and Controlling the Progress :Obviously, it is foolish to let a plan run its course without monitoring its progress. Hence the process of controlling is a critical part of any plan. Managers need to check the progress of their plans so that they can (a) take whatever remedial action is necessary to make the plan work, or (b) change the original plan if it is unrealistic.

Q8. Explain the various steps in the process of organizing.

Ans. "It is grouping of activities necessary to attain enterprise objectives and the assignment of each grouping to a manager with authority necessary to supervise it". Koontz and O'Donnel

"The process of identifying and grouping the work to be performed, defining and delegating responsibility and authority and establishing relationship for the purpose of enabling people to work more effectively together in accomplishing objects". Louis A. Allen

"The structure and process by which a cooperative group of human beings allocates its tasks among its members, identifies relationship, and integrates its activities towards common objectives". Joseph L. Massive

STEPS IN THE PROCESS OF ORGANISING

The managerial function of organizing may be called as the 'process of organizing'. When the objectives have been set and policies framed, the necessary infrastructure of organization has to be built up. The concentration goes to activities and functions. These form 'the building blocks' of the organizational structure. There are no such rules as to which will lead to the best organizational structure. But the following steps can be of great help in the designing a suitable structure, which will laid in achieving enterprise objectives :

1. Clear definition of objectives : The first step in developing an organizational structure is to lay down its objectives in very clear terms. This will help in determining the type, stability and basic characteristics of the organization. In fact, organization activities are detailed in terms of objective to be achieved.

2. Determining activities : In order to achieve the objectives of the enterprise, certain activities are necessary. The activities will depend upon the nature and size of the enterprise. For example, a manufacturing concern will have production, marketing and other activities. There is no production activity in retail establishment. Each major activity is divided into smaller parts. For instance, production activity may be further divided into purchasing of materials, plant layout, quality control, repairs and maintenance, production research etc.

3. Assigning duties : The individual groups of activities are then allotted to different individuals according to their ability and aptitude. The responsibility of every individual should be defined clearly to avoid duplication and overlapping of efforts. Each person is given a specific job suited to him and he is made responsible for its execution. Right man is put in the right job.

4. Delegating authority : Every individual is given the authority necessary to perform the assigned activity effectively. By authority we mean power to take decisions, issue instructions, guiding the subordinates, supervise and control them. Authority delegated to a person should commensurate with his responsibility. An individual cannot perform his job without the necessary authority or power. Authority flows from top to bottom and responsibility from bottom to top.

5. Coordinating activities : The activities and efforts of different individuals are then synchronized. Such coordination is necessary to ensure effective performance of specialized functions. Interrelationship between different job and individuals are clearly defined so that everybody knows from whom he has to take orders and to whom he is answerable.

6. Providing physical facilities and right environment : The success of an organization depends upon the provision of proper physical facilities and right environment. Whereas it is important to have right persons on right jobs, it is equally important to have right working environment. This is necessary for the smooth running and the prosperity of the enterprise.

7. Establishment of structural relationship for overall control : It is very essential to establish well defined clear-cut structural relationships among individuals and groups. This will ensure overall control over the working of all departments and their coordinated direction towards the achievements of predetermined goals of business.

Q9. What do you mean by (a) line organization and (b) line and staff organization. Discuss their respective merits and demerits.

Ans. FORMS OF ORGANISATION STRUCTURE

Organization requires the creation of structural relationship among different departments and the individuals working there for the accomplishment of desired goals. The establishment of formal relationships among the individuals working in the organization is very important to make clear the lines of authority in the organization and to coordinate the efforts of different individuals in an efficient manner. In order to organize the efforts of individuals, any of the following types of organization structures may be set up : (i) Line organization, (ii) Line and staff organization, (iii) Functional organization, (iv) Committee organization, (v) project Organization, and (vi) Matrix organization. The nature, merits and demerits of line organization, and line and staff organization are discussed as under :

Line Organization

The line organization represents the structure in a direct vertical relationship through which authority flows. It is the simplest from of organization structure and is also known as scalar or military organization.

Under this, the line of authority flows vertically downward from top to bottom throughout the organization. The quantum of authority is highest at the top and reduces at each successive level down the hierarchy. Every person in the organization is in the direct chain of command.

Advantages of Line Organization

(i) It is very easy to establish line organization and it can be easily understood by the employees.

(ii) If facilitates unity of command and thus conforms to the scalar principle of organization.

(iii) There is clear-cut identification of authority and responsibility relationship. Employees are fully aware of the boundaries of their jobs.

(iv) It ensures excellent discipline in the enterprise because every individual knows to whom he is responsible.

(v) It facilitates prompt decision-making because there is definite authority at every level. An executive cannot shift his decision making to others, nor can the blame be shifted.

Disadvantages of Line Organization

(i) With growth, the line organization makes the superiors too overloaded with work. If the executive try to keep up with every activity, they are bogged down in myriad details and are unable to pay proper attention to each one. It will hamper their effectiveness.

(ii) There is concentration of authority at the top. If the top executives are not capable, the enterprise will not be successful.

(iii) Line organization is not suitable to big organizations because it does not provide specialists in the structure. Many jobs require specialized knowledge to perform them.

(iv) There is partially no communication from bottom upwards because of concentration of authority at the higher levels. If superiors take a wrong decision, it would be carried out without anybody having the courage to point out its deficiencies.

In spite of these drawbacks, the line organization structure is very popular particularly in small organizations where there are less number of levels of authority and a small number of people. A modification of this structure is line and staff organization under which specialists are attached to line executives to provide them specialized assistance on matters of great importance to be enterprise.

Line and Staff Organization

The line executive is often described as the individual who stands in the primary chain of command and is directly concerned with the accomplishment of primary objectives. Line organization provides decision-making authority to the individuals at the top of the organization structure and a channel for the flow of communication through a scalar chain of authority. Line executives are generalists and do not possess specialized knowledge which is a must to tackle complicated problems. With a view to give specialist aid to line executives, staff positions are created throughout the structure. Staff elements bring expert and specialized knowledge to provide advice to line managers so that they may discharge their responsibilities successfully.

In line and staff organization, the line authority remains the same as it does in the line organization. Authority flows from top to bottom. The main difference is that specialists are attached to line managers to advise them on important matters. These specialists stand ready with their specialty to serve line men as and when their services are called for to collect information and to give help which will enable the line officials to carry out their activities better. The staff officers do not have any power of command in the organization as they are employed to provide expert advice to the line officers. Staff means a supporting function intended to help the line manager. Specialized staff positions are created to give counsel and assistance in each specialized field of effort .

Advantages of Line and Staff Organization

(i) Specialized knowledge. Line managers get the benefit of specialized knowledge of staff specialists at various levels.

(ii) Reduction of burden. Staff specialists relieve the line managers of the botheration of concentrating on specialized functions like accounting, selection and training, public relations, etc.

(iii) Proper weightage. Many problems that are ignored or poorly handled in the line organization can be properly covered in the line and staff organization by the use of staff specialists.

(iv) Better decisions. Staff specialists help the line executives in taking better decisions by providing them with adequate information of right type at the right moment and expert advice.

(v) Flexibility. Line and staff organization is more flexible as compared to the line organization. General staff can be employed to help line managers at various levels.

(vi) Unity of command. Under this system, the experts provide special guidance without giving orders. It is the line manager who only has got the right to give orders. The result is that the enterprises takes advantage of functional organization while maintaining the unity of command i.e., one subordinate receiving orders from one boss only.

Demerits of Line and Staff Organization

Line and staff organization suffers from the following drawbacks :

(i) There is generally a conflict between the line and staff executives. There is a danger that the staff may encroach on the line authority. Line managers feel that staff specialists do not always give right type of advice, and staff officials generally complain that their advice is not properly attended to.

(ii) The allocation of duties between the line and staff executives is generally not very clear. This may hamper coordination in the organization.

(iii) Since staff men are not accountable for the results, they may not be performing their duties well.

(iv) There is a wide difference between the orientation of the line and staff men. Line executives’ deals with problems in a more practical manner. But staff officials who are specialists in their fields tend to be more theoretical.

Superiority of Line and Staff Organization over Line Organization

Line and staff organization is considered better than the line organization because of the following reasons :

(i) Staff makes available expert advice to line executives. This is necessary to deal with complex problems of management. For instance, personnel department is established as a staff department to advise the top executives and other line executives on personnel matters.

(ii) Better decisions are ensured in line and staff organization as compared to a simple line organization.

(iii) Line and staff structure is more suitable for large organizations as expert advice is always available. The line managers can make use of the knowledge of staff specialists to deal with complicated problems. Therefore, line and staff organization is certainly better than line organization.

Q10. “Control is a fundamental management function that ensures work accomplishment according to plans." Analyse this statement and outline the various steps in control process.

Ans. “Controlling is determining what is being accomplished, that is evaluating the performance and, if necessary, applying corrected measures so that the performance takes place according to plan.” Based on the definition of control, its following features can be identified:

1. Control is forward looking because one can control future happenings and not the past. However, on control process always the past performance is measured because no one can measure the outcome of a happening which has not occurred. In the light of these measurements, managers suggest corrective actions for future period.

2. Control is both an executive process and, from the point of view of the organisations of the system, a result. As an executive process, each manager has to perform control function in the organisation. It is true that according to the level of a manager in the organisation, the nature, scope, and limit of his control function may be different as compared to a manager at other level. The word control is also preceded by an adjective to designate a control problem, such as, quality control, inventory control, production control, or even administrative control. In fact, it is administrative control, which constitutes the most comprehensive control concept. All other types of control may be subsumed under it.

3. Control is a continuous process. Though managerial control enables the manager to exercise control at the point of action, it follows a definite pattern and timetable, month after month and year after year on-a continuous basis.

4. A control system is a coordinated-integrated system. This emphasises that, although data collected for one purpose may differ from those with another purpose, these data should be reconciled with one another. In a sense, control system is a single system, but it is more accurate to think of it as a set of interlocking sub-systems.

STEPS IN CONTROLLING

The various steps in controlling may broadly be classified into four parts: (i) establishment of control standards; (ii) measurement of performance, (iii) comparison between' performance and standards and the communication, and (iv) correction of deviations from standards.

1. Establishment of Control Standards: Every function in the organisations begins with plans, which are goals, objectives, or targets to be achieved. In the light of these, standards are established which are criteria against which actual results are measured. For setting standards for control purposes, it is important to identify clearly and precisely the results which are desired. Precision in the statement of these standards is important In many areas, great precision is possible. However, in some areas, standards are less precise. Standards may be precise if they are set in quantities - physical, such as volume of products, man-hour or monetary, such as costs, revenues, and investment. They may also be in other qualitative terms, which measure performance. After setting the standards, it is also important to decide about the level of achievement or performance, which will be regarded as good or satisfactory.

2. Measurement of Performance: The second major step in control process is the measurement of performance. The step involves measuring the performance in respect of a work in terms of control standards. The presence of standards implies a corresponding ability to observe and comprehend the nature of existing conditions and to ascertain the degree of control being achieved. The measurement of performance against standards should be on a future basis, so that deviations may be detected in advance of their actual occurrence and avoided by appropriate actions: Appraisal of actual or expected performance becomes an easy task, if standards are properly determined and methods of measuring performance which can be expressed in physical and monetary terms, such as production units, sales volume, profits, etc. can be easily and precisely measurable.

3. Comparing Actual, and Standard Performance: The third major step in control process is the comparison of actual and standard performance. It involves two steps: (i) finding out the extent of deviations, and (ii) identifying the causes of such deviations. When adequate standards are developed and actual performance is measured accurately, any variation will be clearly revealed. Management may have information relating to work performance, data, charts, graphs and written reports, besides personal observation to keep itself informed about performance in different segments of the organisation. Such performance is compared with the standard one to find out whether the various segments and individuals of the organisation are progressing in the right direction. When the standards are achieved, no further managerial action is necessary and control process is complete. However, standards may not be achieved in all cases and the extent of variations may differ from case to case.

4. Correction of Deviations: This is the last step in the control process, which requires that actions should be taken to maintain the desired degree of control in the system or operation. An organisation is not a selfregulating system such as thermostat which operates in a state of equilibrium put there by engineering design. In a business organisation this type of automatic control cannot be established because the state of affairs that exists is the result of so many factors in the total environment. Thus, some additional actions are required to maintain the control. Such control action may be (i) review of plans and goals and change therein on the basis of such review; (ii) change in the assignment of tasks; (iii) change in existing techniques of direction; (iv) change in organisation structure; provision for new facilities, etc. In fact, correction of deviation is the step in management control process, which may involve either all or some of the managerial functions. Due to this, many persons hold the view that correcting deviations is not a step in. the control process. It is the stage where other managerial functions are performed. Koontz and O’Donnell have emphasised that the overlap of control function with the other merely demonstrates the unity of the manager’s job. It shows the managing process to be an integrated system.

Q11. Explain the importance of control in a business organisation. What are the requirements of an effective control system?

Ans. IMPORTANCE OF CONTROL

Organisations try to achieve their objectives through various actions. From this point of view, all the objectives lead to the achievement of organisational objectives. However, the organisations must also monitor whether they are achieving their objectives or-not. Thus control is an integrated action of an organisation or manager. It offers help in the following directions:

1. Adjustments in Operations: A control system acts as an adjustment in organisational operations. Every organisation has certain objectives to achieve which becomes the basis for control. It is not only sufficient to have objectives but also to ensure that these objectives are being achieved by various functions. Control provides this clue by finding out whether plans are being observed and suitable progress towards the objectives is being made, and acting, if necessary, to correct any-deviation. This may result into taking actions more suitable for the achievement of organisational objectives.

2. Policy Verification: Various policies on the organisation generate the need for control. For organisational functioning, managers set certain policies and other planning elements, which later become the basis and reason for control. They become basis in the sense that organisational performance is reviewed in these lights. They also become the reason for control because through these, an organisation tries that its various individuals adhere to such framework. In this process, the organisation and its management can verify the quality of various policies.

3. Managerial Responsibility: In every organisation, managerial responsibility is created through assignment of activities to various individuals. This process starts at the top level and goes to the lower levels. However, when a manager assigns some activities to his subordinates, he remains responsible for that portion of activities for their ultimate performance. It is quite natural that when a person is responsible for the performance of his subordinates, he must exercise some control over them. Thus, the control is required because of the very basic nature of the organisation itself. In large organisations, many individuals contribute to the organisational objectives.

4. Psychological Pressure: Control process puts a psychological pressure on the individuals for better performance. The performance of the individuals is evaluated in the light of targets set for them. A person is likely to put better performance if he is aware that his performance will be evaluated. He may feel pressure to achieve the results according to the standards fixed for him. This is further complemented by the reward and punishment based on the performance. Since the performance measurement is one of the basic elements of the control process, it ensures that every person in the organisation contributes to his maximum ability.

5. Coordination inaction: Though coordination is the essence of management and is achieved through the proper performance of all managerial functions, control affects this aspect significantly. Control systems are designed in such a way that they focus not only on the operating responsibility of a manager but also on his ultimate responsibility. This forces a manager to coordinate the activities of his subordinates in such a way that each of them contributes positively towards the objectives of the superior. Since this follows throughout the organisation, coordination is achieved in the organisation as a whole.

6. Organisational Efficiency and Effectiveness: Proper control ensures organisational efficiency and effectiveness. Various factors of control, namely, making managers responsible, motivating them for higher performance, and achieving coordination in their performance, control ensures that the organisation works efficiently. The organisation also moves towards effectiveness because of control system. The organisation is effective if it is able to achieve its objectives. Since control focuses on the achievement of organisational objectives, it necessarily leads to organisational effectiveness. Looking into the various roles that control system plays in the organisation, the management should devise a control system which effectively meets the demands of the organisation: The manager can do this if he is aware of the essential features of effective control system.

ESSENTIALS OF EFFECTIVE CONTROL SYSTEM

Control is necessary in every organisation to ensure that everything is going properly. Every manager, therefore, should have an effective and adequate control system to assist him in making sure that events conform to plans. However, control does not work automatically, but it requires certain design. While the basic, principles involved in designing a control system in organisations may be universal; the actual system in an organisation requires some specific design. In this tailoring of Control system, there are certain requirements, which should be kept in mind.

1. Reflecting Organisational Needs: All control systems and techniques should reflect the jobs they are to perform. There may be several control techniques, which have general applicability, such as, budgeting, costing, etc. However, it should not be assumed that these might be utilised in all situations. The- managers should choose an appropriate tool for control, which helps him in controlling actions according to plans.

2. Forward Looking: Control should be forward looking. Though many of the controls are instantaneous, they must focus attention as to how future actions can be confirmed with plans. In fact the control system should be such that it provides aid in planning process. This is done in two ways: it draws situations where new planning is needed, and it provides some of the data upon which plans can be based.

3. Promptness in Reporting Deviation: The success of a thermostat lies in the fact that it points the deviation promptly and takes corrective actions immediately. Similarly, an ideal control system detects deviations promptly arid informs the manager concerned to take timely actions. This is done through designing good appraisal and information systems.

4. Pointing out Exceptions at Critical Points: Control should point exception at critical points and suggest whether action is to be taken for deviations or not Some deviations in the organisations have any impact while others, though very little in quantity may have great significance. Thus, control system should provide 'information for critical point control and control on exception.

5. Objectives: The control should be objective, definite, and determinable in a clear and positive way. The standards of measurement should be quantified as far as possible. If they are not quantifiable, such as, training effectiveness, etc. they must be determinable and verifiable. If the performance standard and measurement is not easily determinable, many subjective elements enter into the process, which catch the controller and controlled on wrong tooting.

6. Flexible: Control system should be flexible so that it remains workable in the case of changed plans, unforeseen circumstances, or outright failures. As Geotz has remarked, a control system should report such failures and should contain sufficient elements of flexibility to maintain managerial control of operations despite such failures. Having alternative plans for various probable situations can provide much flexibility in control. In fact, flexible control is normally achieved through flexible plans.

7. Economical: Control should be economical and must be worth its costs. Economy is relative, since the benefits vary with the importance of the activity the size of the operation, the expense that might be incurred in the absence of control and the contribution the control system can make. The economy of a control system will depend a great deal on the manager’s selecting for control only critical factors in areas important to him. If tailored to the job and the size of the enterprise, control will be economical. A large-sized organisation can afford highly complicated techniques, sophisticated tools of control and more elaborate system of control, but a small-sized organisation cannot afford these because of the cost factor.

8. Simple: Control system must be simple and understandable so that all managers can use it effectively. Control techniques which are complicated such as complex mathematical formulae, charts, graphs, advanced statistical methods and other techniques fail to communicate the meaning of their control data to the managers who use them. Effective control requires consistency with the position, operational responsibility, ability to understand, and needs of the individuals concerned.

9. Motivating: Control system should motivate both controller and controlled. While the planning and control are necessary for economical operations, researches in human relations show that planning and control are, more often than not, antagonistic to good human relations. Sometimes, they may even tend to deprive the people in the organisations one of man's basic needs - a sense of powerful and worthwhile accomplishment The design of control system should be such that aims at motivating people by fulfilling their needs.

10. Reflecting Organisational Pattern: The control should reflect organisational pattern by focusing attention on positions in organisation structure through which deviations are corrected. Organisation structure, a principal vehicle for coordinating the work of people, is also a major means of maintaining control.

Q12. How you will define the leadership? Discuss the main leadership styles with their application.

Ans. It is difficult to define the term “leadership”. However, as a starting point, we may proceed with the workable definition that a leader is one who leads others and is able to carry an individual or a group towards the accomplishment of a common goal. He is able to carry them with him, because he influences their behaviour. He is able to influence their behaviour, because he enjoys some power over them. They are willing to be influenced, because they have certain needs to satisfy in collaboration with him. French and Raven have proposed the following bases of power for a person exerting influence:

1. Legitimate- That the targets of influence, followers or sub-ordinates understand that the power the leader enjoys is legitimate and they should comply with his orders in order to meet their own goals.

2. Reward-That the followers know that the leader has the power to grant promotions, monetary inducements or other rewards if his orders are complied with.

3. Coercive- That the followers know that if the leader’s orders are not complied with, he has the power to hire, fire, perspire and discharge the followers.

4. Expert- That the followers know that the leader possesses specialist’s knowledge in the field they lack it.

5. Referent- That the followers feel attracted towards him because of his amiable manners, pleasing personality or they feel that he is well connected with high-ups.

It is apparent then that the first three power bases indicate positional power, which one derives from one’s position. The other two indicate personal power, which is based on the individual’s own characteristics. In any case, the leader exercises his influence because of one or more of these types of power and obtains compliance from the followers.

Leadership Styles

Leadership style is the way a managerial leader applies his influence in getting work done through his subordinates in order to achieve the organizational objectives. The main attitude or belief that influences leadership style is the perceived role of the manager versus the role of the subordinates. It depends upon the role of the leader whether he likes to work more of a colleague, facilitator and decision maker and on the other hand the response of the subordinates would determine the particular style to be in application. Broadly speaking, there are three basic leadership styles: -

1. Autocratic or Dictatorial Leadership: In this leadership style the leader assumes full responsibility for all actions. Mainly he relies on implicit obedience from the group in following his orders. He determines plans and policies and makes the decision-making a one man show. He maintains very critical and negative relations with his subordinates. He freely uses threats of punishment and penalty for any lack of obedience. This kind of leadership has normally very short life.

2. Democratic Leadership: In this case, the leader draws ideas and suggestions from his group by discussion, consultation and participation. He secures consensus or unanimity in decision-making. Subordinates are duly encouraged to make any suggestion as a matter of their contribution in decision-making and to enhance their creativity. This kind of leadership style is liked in most civilized organization and has very long life.

3. Laissez-faire Free Rein Leadership: Quite contrary to autocratic leadership style, in this leadership style the leader depends entirely on his subordinates to establish their own goals and to make their own decisions. He let them plan, organize and proceed. He takes minimum initiative in administration or information. He is there to guide the subordinates if they are in a problem. This kind of leadership is desirable in mainly professional organization and where the employees are self-motivated. Leader works here just as a member of the team. We shall now discuss the roots of such leadership styles i.e. we shall try to understand as to how these different leadership styles have been evolved by the management scholars

Q13. Define Motivation? Explain the various sources of motivation?

Ans. The word motivation is derived from motive, which is defined as an active form of a desire, craving or need, which must be satisfied. All motives are directed towards goals and the needs and desires affect or change your behaviour, which becomes goal oriented. For example, if you ordinarily do not want to work overtime, it is quite likely that at a particular time, you may need more money (desire) so you may change your behaviour, work overtime (goal oriented behaviour) and satisfy your needs. Viteles defines motivation as: “Motivation represents an unsatisfied need which creates a state of tension or disequilibria, causing the individual to move in a goal directed pattern -towards restoring a state of equilibrium, by satisfying the need.”

SOURCES OF MOTIVATION

Experts in the organizational behaviour field have a divided opinion as to whether workers are motivated by factors in the external environment such as rewards or fear or whether motivation is self generated without the application of external factors. It is quite well understood that under the same set of external factors all workers are not equally motivated. Some of these motivational sources are:

Positive Motivation: Positive motivation involves proper recognition of employee, efforts and appreciation of employee contribution towards the organizational goal-achievement. Such motivations improve the standards of performance, lead to good team spirit and pride, a sense of cooperation and a feeling of belonging and happiness. Some of the positive motivators are: Praise and credit for work done. A sincere interest in the welfare of subordinates. Delegation of authority and responsibility to subordinates. Participation of subordinates in the decision making process.

Negative or Fear Motivation: This motivation is based upon the use of force, power, fear and threats. The fear of punishment or unfavourable consequences affects the behavioural changes. Some examples of negative motivation include the fear of failing in the examination, and fear of being fired or demoted. Fear of failure in the examination induces motivation in many students to work harder and pass the course. Similarly, fear of being fired keeps the workers in the line with the organizational rules and regulations as well as do a satisfactory job. While the fear of punishment and actual punishment has resulted in controlling individual misbehaviour and has contributed towards positive performance in many situations and is necessary and useful in many other situations such as disciplining a child or handling a riot. It is not recommended or considered as a viable alternative in the current business and industrial environment.

Extrinsic Motivation: This type of motivation is induced by external factors, which are primarily financial in nature. It is based upon the assumption that the behaviour, which results in positive rewards, tends to be repeated. However, the reward the desired behaviour should be sufficiently powerful and durable so that it improves the probability of occurrence' of desirable behaviour. Money is probably the most important incentive for positive behaviour since money can be used for a number of other resources. These financial incentives and rewards have been a subject of debate whether they really motivate the employees or simply move them to work and perform. These include higher pay, fringe benefits such as retirement plans, stock options, profit sharing scheme, paid vacation, health and medical insurance, sympathetic supervision and people oriented company policies.

Intrinsic Motivation: Intrinsic motivation stems from feelings of achievement and accomplishment and is concerned with the state of self actualization in which the satisfaction of accomplishing something worthwhile motivates the employee further so that this motivation is self generated and is independent of financial rewards. For example, there are many retired doctors who -work free in the hospital because it gives them a sense of accomplishment and satisfaction. Mother Teresa's work in the slums of Calcutta, India, not only motivates the people who work with her but also many others who simply hear about her work and then want to join the team. Similarly, Peace Corps workers work in uncomfortable environments at a minimal pay. Some of the intrinsic motivators are praise, recognition, responsibility, esteem, power, status, challenges and decision-making responsibility.

Q14. Explain the various theories of Motivation in detail.

Ans. THEORIES OF MOTIVATION REGARDING BEHAVIOUR

There are basically two types of theories developed that relate to and define the motivational processes. These are the "content theories" which attempt to determine and specify drives and needs that motivate people to work and "process theories" which attempt to identify the variables that go into motivation and their relationship with each other. These theories are described in greater detail. The Content Theories of Work Motivation The content theories have been developed to explain the nature of motivation in terms of types of need that people experience. They attempt to focus on factors within a person that initiate and direct a certain type of behaviour or check certain other type of behaviour. The basic idea underlying such theories is that people have certain fundamental needs, both physiological and psychological in nature, and that they are motivated to engage in activities that would satisfy these needs. Thus the nature of needs establishes the nature of motivation that results in a specific behaviour aimed at reaching the goal of satisfying such needs.

Some of the more important content theories are:

MASLOW'S MODEL

Maslow’s "needs hierarchy theory" is probably the most widely used theory of motivation in organizations. Abraham Maslow suggested that people have a complex set of exceptionally strong needs and the behaviour of individuals at a particular moment is usually determined by their strongest need. He developed his model of human motivation in 1943, based upon his own clinical experience and formulated his theory of hierarchical needs by asking the same question, what is it that makes people behave the way they do and made a list of answers from which he developed a pattern. His theory is based upon two assumptions. First those human beings have many needs those are different in nature ranging from the biological needs at the lower level, which is the level of survival, to psychological needs at the upper extreme, which is the level of growth. Second that these needs occur in an order of hierarchy so that lower level needs must be satisfied before higher level needs arise or become motivators.

These needs are explained in detail as follows:

1. Physiological needs: The physiological needs form the foundation of the hierarchy and tend to have the highest strength in terms of motivation. These are primarily the needs arising out of physiological or biological tension and they are there to sustain life itself and include the basic needs for food, water, shelter and sex. Sexual need and desire is not to be contused with love, which is at the third level. Once these basic needs are satisfied to the degree needed for the sufficient and comfortable operation of the body, then the other levels of needs become important and start acting as motivators.

2. Security and Safety needs: Once the physiological needs are gratified, the safety and security need~ become predominant. These are the needs for self-preservation as against physiological needs, which are for survival. These needs a include those of security, stability freedom from anxiety and a structured and ordered environment. These safety and security needs are really provisions against deprivation of satisfaction of physiological needs in the future. It also involves a sense of protection against threats and danger of losing the job in the future. In a civilized society such as ours, a person is usually protected from threats of violence or extremes in climate or fear of material safety, so that the safety and security needs dwell upon economic and job security, life and medical insurance and other protective measures to safeguard the satisfaction of physiological needs in the future which may be unpredictable.

3. Love and Social needs: After the needs of the body and security are satisfied, then a sense of belonging and acceptance becomes prominent m motivating behaviour. These needs include the needs for love, friendship, affection, and social interaction. We look for an environment where we are understood, respected arid wanted. That is one reason for "polarization" where people of similar background arid beliefs tend to group together. "Love thy neighbor" has perhaps a profound meaning.

4. Esteem needs: This need for esteem is to attain recognition from others, which would induce a feeling of self-worth and self-confidence in the Individual. It is an urge for achievement, prestige, status and power. Self respect is the internal recognition. The respect from others is the external recognition and an appreciation of one's individuality as well as his contribution. This would result in self-confidence, independence, status, reputation and prestige. People then would begin to feel that they are useful and have some positive effect on their surrounding environment.

5. Self-actualization needs: This last need is the need to develop fully and to realize one's capacities and potentialities to the fullest extent possible, whatever these capacities and potentialities maybe. This is the highest level of need in Maslow’s hierarchy and is activated as a motivator when all other needs have been reasonably fulfilled. At this level, the person seeks challenging work assignments that allow for creativity and opportunities for personal growth and advancement. This need is for soul searching and is inner-oriented. A self-actualized person is creative, independent, content, and spontaneous and has a good perception of reality and he is constantly striving to realize his fun potential. Thus, "what a man ‘can’ be ‘must’ be.”

ERG THEORY

The ERG need theory, developed by Clayton Alerter is a refinement of Maslow's needs hierarchy. Instead of Maslow's five needs, ERG theory condenses these five needs into three needs. These three needs are those of Existence, Relatedness and- Growth. The E, Rand G is the initials for these needs.

1. Existence needs: These needs are roughly comparable to the physiological and safety needs of Maslow's model and are satisfied primarily by material incentives. They include all physiological needs of Maslow's model and such safety needs which financial and physical conditions rather than interpersonal relations satisfy. These include the needs for sustenance, shelter and physical and psychological safety from threats to people's existence and well being.

2. Relatedness needs: Relatedness needs roughly correspond to social and esteem needs in Maslow's hierarchy. These needs are satisfied by personal relationships and social interaction with others. It involves open communication and honest exchange-of thoughts and feelings with other organizational members.

3. Growth needs: These are the needs to develop and grow and reach the full potential that a person is capable of reaching. They are similar to Maslow's self-actualization needs. These needs are fulfilled by strong personal involvement in the organizational environment and by accepting new opportunities and challenges. ERG theory differs from Maslow's theory in proposing that people may be motivated by more than one-kind of need at tile same time. While Maslow proposes that in hierarchy of needs, a person will satisfy the lower level needs before he moves up to the next level of needs and will stay at that, need until it is satisfied, ERG theory suggests that if a person is frustrated in satisfying his needs at a given level, he will move back to lower level needs. For example; assume that a manager’s existence needs are fully satisfied and he looks for more challenging tasks to satisfy his self-esteem needs.

McCLELLAND'S THEORY OF NEEDS

Since the lower level needs in Maslow's model are generally satisfied by the business, societal and legal systems, they are no longer strong motivators. Studies conducted by Harvard psychologist David McClelland concluded that from the organizational behaviour point of view the most prominent need is the need for achievement, power and affiliation. The primary motive is the "achievement motive" and is defined as a desire to succeed in competitive situations based upon an established or perceived standard of excellence." Individuals with a strong "need for achievement" (known as n Ach), ask for, accept and perform, well in challenging tasks which require creativity, ingenuity and hard work. They are constantly preoccupied with a desire for improvement and look for situations in which successful outcomes are directly correlated with their efforts so that they can claim credit for success. They take- moderate and calculated risks and prefer to get quick and precise feedback on their performance. They set more difficult but achievable goals. For themselves, because; success with easily achievable goals hardly provides a sense of achievement. They desire greater pleasure and excitement from solving a complex problem than from financial incentives or simple praise. The "need for power" (n Paw) is the desire is the desire to affect and control the behaviour of other people and to manipulate the surroundings. Power motivation when applied positively results in successful managers and leaders who prefer democratic style of leadership. Power motivation, applied-negatively tends to create arrogant autocratic leadership. The "need for affiliation" (n Aff) is related to social needs and reflects a desire for friendly and warm relationships with others. Individuals tend to seek affiliation with others who have similar beliefs, backgrounds and outlook on life. This results in information of informal groups and informal organizations. It is evident in social circles also that people mix with people of their own kind. Individuals with high "n Aff” tend to get involved in jobs that require a high amount of interpersonal contact; and relations such as jobs in teaching and public relations. From organizational behaviour point of view, these individuals are highly motivated to perform better in situations where personal support and approval are tied to performance. They tend to avoid conflict and exhibit strong conformity to the wishes of their friends

HERZBERG'S TWO-FACTOR THEORY

Fredrick Herzberg and his associates developed the two-factor theory in the late 1950s and early 1960s. As part of a study of job satisfaction, Herzberg and his colleagues conducted in-depth interviews with over 200 engineers and accountants in the Pittsburgh area. The researchers felt that a person's relation to his work is a basic one and that his attitude towards work would determine his organization related behaviour. The respondents were required to describe in detail the type of environment in which they felt exceptionally good about their jobs and the type of environment in which they felt bad about their jobs. It seems natural to believe that people who are generally satisfied with their job will be more dedicated to their work and perform it well as compared to those people who are dissatisfied with their jobs. If the logic seems justified then it would be useful to isolate those factors and conditions that produce satisfaction with the job and those factors, which produce dissatisfaction. The basic questions that were asked in the survey were the following two: What is it about your job that you like? and What is it about your job that you dislike? Based upon these answers it was concluded that there are certain characteristics or factors that tend to be consistently related to job satisfaction and there are other factors that are consistently related to job dissatisfaction. Herzberg named the factors that are related to job satisfaction as motivational factors, which are intrinsic in nature and factors related to job dissatisfaction as maintenance or hygiene 'factors which are extrinsic in nature. These factors are described in detail as follows:

1. Hygiene factors: Hygiene factors do not motivate people. They simply prevent dissatisfaction and MAINTAIN STATUS QUO. They produce no growth but prevent loss. The absence of these factors leads to job dissatisfaction. The elimination of dissatisfaction does not mean satisfaction and these factors simply maintain a “zero level of motivation.” For example: if a person indicated "low pay" as a cause of dissatisfaction, it would not necessarily identify '”high pay” as a cause of satisfaction. Some of the hygiene factors are:

Wages, salary and other types of employee benefits Company policies and administration rules that govern the working environment Interpersonal relations with peers, supervisors and subordinates Cordial relations with all will prevent frustration and dissatisfaction Working conditions and job security. The job security may be in the form of tenure or a strong union could support it. Supervisor's technical competence as well as the quality of his supervision. If the supervisor is knowledgeable about the work and is patient with his subordinates and explains and guides them well, the subordinates would not be dissatisfied in this respect. All the hygiene factors are designed to avoid damage to efficiency or morale and these are not expected to stimulate positive growth. Hawthorne experiments were highly conclusive in suggesting that improvements in working conditions or increments in financial benefits do not contribute to motivated performance. A new plant or upgraded facilities at a plant seldom motivate workers if the workers do not enjoy their work and these physical facilities are no substitute for employee feelings of recognition and achievement.

2. Motivational factors These factors are related to the nature of work (job content) and are intrinsic to the job itself. These factors have a positive influence on morale, satisfaction, efficiency and higher productivity. Some of these factors are:

(i) The job itself: To be motivated, people must like and enjoy their jobs. They become highly committed to goal achievement and do not mind working late hours in order to do what is to be done. Their morale is high as evidenced by lack of absenteeism and tardiness.

(ii) Recognition: Proper recognition of an employee's contribution by the management is highly morale boosting. It gives the workers a. feeling of worth and self esteem. It is human nature to be happy when appreciated. Thus, such recognition is highly motivational.

(iii) Achievement: A goal achievement gives a great feeling of accomplishment. The goal must be challenging, requiring initiative and creativity. An assembly line worker finishing his routine work hardly gets the feeling of achievement. The opportunities must exist for the meaningful achievement; otherwise workers become sensitized to the environment and begin to find faults with it.

(i) Responsibility: It is an obligation on the part of the employee to carry out the assigned duties satisfactorily. The higher the level of these duties, the more responsible the work would feel and more motivated he would be. It is a good feeling to know that you are considered a person of integrity and intelligence to be given a higher responsibility. It is a motivational factor that helps growth.

(ii) Growth and advancement: These factors are all interrelated and are positively related to motivation. Job promotions, higher responsibility, participation in central decision-making and executive benefits are all signs of growth and advancement and add to dedication and commitment of employees.

Q15. Define Business Communication? Discuss the role of effective business communication within and outside the organization

Define Business Communication. Why Business Communication is called, “Life blood” of an organization?

Ans: Communication is defined as “The flow of material information perception, understanding and imagination among various parties”. Business includes those organizations, which are engaged in the production and distribution of goods and services to earn profit. Therefore Business communication means, “Flow of information, perception etc. either within a business organization or outside the organization among different parties”.

EXPLANATION:- We can extract the following points form the above definition;

i) Flow between two or more parties.

In business communication the material flow from one person to another person or from many persons to different people. This flow may either be inside the organization or outside the organization.

ii) Flow of information, perception, imagination etc.

Flow of information takes place when a party transfers the material to another mind. For example, when a news caster says, “Pakistan has conducted nuclear test on 28th May 1998”. This is a flow of information from news caster to the listeners.

Flow of perception means transfer of different feelings. Finally, flow of imagination that occurs when a painter conveys his/her imaginations through a portrait.

v A business Organization is a group of people associated to earn profit. Various kinds of activities have to be performed by the people of an organization so as to earn profit. These activities need an effective and systematic communication. Without efficient communication, one cannot even imagine to do work and hence will be unable to earn profit. Since the aim of business organization is to earn profit, the organization will die without profit and this death is a result of the absence of communication. This is why communication is called life blood of a business organization. We can prove this statement in the following manner.

COMMUNICATION INSIDE AN ORGANIZATION:

Different employees and officials in an organization need to communicate to each other. This internal communication with its importance is shown in the following way:

1. Setting goals and Objectives:- Mostly, the organizations have a variety of formal and informal objectives to accomplish. These objectives may be financial results, product quality, market dominance, employees satisfaction, or service to customers. So the communication enables all the persons in an organization to work towards a common purpose.

2. Making and Implementing decision:- In order to achieve the objective, people in a business organization collect facts and evaluate alternatives, and they do so by reading, asking questions, talking or by plain thinking. These thoughts are put into a written form. Once a decision has been made, it has to be implemented which requires communication.

3. Appraisal:- Having implemented the decision, management needs to determine whether the desired outcome is being achieved. Statistics on such factors as cost, sales, market share, productivity and inventory levels are compiled. This is done through computers, manual papers, memos or reports.

4. Manufacturing the products:- Getting an idea for a new product out of someone’s head, pushing it through the production process and finally getting the product also require communication. Designing the plan regarding product, introducing the workers, purchasing raw material, marketing and distributing the product all require effective communication.

5. Interaction between employer & employee:- Employees are informed about policies and decisions of employers through circulars, reports, notices etc. Employers also get in touch with employees through application, complaint etc. So, communication plays a vital role in the interaction of employer and employee.

EXTERNAL COMMUNICATION:

1. Hiring the employees:- If a company wants to hire some one, it advertises the vacancy, receives applications, calls the candidates, takes the interview and then offers job to the successful candidates. The whole process requires communication.

2. Dealing with customers:- Sales letters and brochures, advertisements, personal sales calls, and formal proposals are all used to stimulate the customer’s interest. Communication also plays a part in such customer related functions as credit checking, billing, and handling complaints and questions.

3. Negotiating with suppliers and financiers:- To obtain necessary supplies and services, companies develop written specification that outlines their requirement. Similarly, to arrange finance, they negotiate with lenders and fill out loan applications.

4. Informing the investors:- Balance sheet, income statement, and ratio analysis are used to inform the investors regarding performance of business.

5. Interacting with Govt.:- Government agencies make certain rules to regulate the economy. These rules are communicated to organizations through various papers. These organizations try to fulfill, these requirement like filling taxation form and other documents.

Q16. Explain the process of communication.

“Communication is a two way process of exchanging ideas or information between two human beings”. Explain this statement with the help of a diagram.

Ans. Communication simply means exchange of ideas & information between two persons. A person sends a message to another person and gets the response from the receiver on the message. This whole phenomenon can be explained as under.

1. Sender’s thoughts:- The very first step in the process of communication is generation of thought in the sender’s mind. These thoughts may be about a request, order, inquiry production or any other such activity.

2. Encoding / Message:- The thought generated in the mind of sender is ambiguous and unable to be communicated unless it is put into a receivable form. This step is known as encoding where the sender converts his thought into a message by means of a language. For example, a sender thinks about having a job. Now, he will put his thought on a paper. That is called job application. In his way, his thought becomes a message.

3. Transmission through media: - Once a thought is converted into message, it should be transmitted to the receiver through a suitable medium. This media might be electronic media as T.V., E-mail, radio etc. or it may be print media like newspaper, magazines, letters or merely sound that is transmitted through the medium of air.

4. Noise and Barriers: - While transmitting the information to the receiver, the sender faces lots of barriers. These noise and barriers are explained as under: (i) On sender’s side: - Noise and barriers may take place during the process of encoding. Some of them may be caused by distraction, lack of concentration, typing mistake, poor language etc. (ii) In the medium: - Some barriers are caused by medium such as poor transmission on T.V. and radio misprinting in newspapers etc. (iii) On receiver’s side:- The receiver can also create certain barriers to the receiving of message such as poor reading ability, emotions, lack of concentration etc.

5. Decoding by Receiver:- Having received the message form the sender, the receiver attempts to understand and interpret the message. This process of converting the language of message into thoughts is known as decoding. For instance, the receiver, having received job application, reads the application and understands the message conveyed by the applicant.

6. Idea Received:- As soon as the process of decoding is finished, the idea given by the sender is received by the receiver. It means the thought that was generated in the mind of sender has been transmitted to the mind of receiver. In our example, the sender wanted to inform the receiver about his thought of having a job. Now the sender has got this idea.

7. Feed back: - Process of communication is incomplete until the receiver responds to the sender. This response may be negative, positive, or for further enquiry. It means when the receiver of job application welcomes or regrets the sender, the process of communication is deemed to be complete. This whole process can be depicted through the following diagram.

Q17. What are the various Barriers to communication in the organizations and how can we overcome them?

Ans. Barriers to effective communication

A. Physical barriers

Internal structure of the organization and layout of office machines and equipments creates physical barriers in communication

a. Distance: – communication is found obstructed in long distance. Like communication between America and Nepal.

b. Noise: – it is from external sources and affects the communication process. Noise negatively affects the accuracy

c. Physical arrangement: – the physical arrangement of organizational sources like men, money, material and machine obstruct the communication process.

B. Semantic barriers

The use of difficult and multiple use of languages, words, figures, symbols create semantic barriers.

a. Language: – we can find some words having different meaning. As meaning sent by the sender can be quite different from the meaning understood by the receiver. Long and complex sentences creates problem in communication process.

b. Jargons: – technical or unfamiliar language creates barriers to communication that may be drawn from the literature. So message should be simple and condensed as far as possible so that no confusion creation will be there to the receiver.

C. Organizational barriers

It is raised from the organizational goals, regulations, structure and culture.

a. Poor planning: – it refers to the designing, encoding, channel selection and conflicting signals in the organization.

b. Structure complexities:- difficult organizational structure barrier for free flow of information. Appropriate communication process must be used.

c. Status differences: – it creates barrier for communication. Superior provides information to the subordinate about plans and policies. Different information is provided by different subordinates who create barrier in communication.

d. Organizational distance:- distance between sender and receiver also creates barriers to effective communication.

e. Information overload: – if superior provides too much information to the subordinate in short period receiver suffers from information overload which creates barriers to effective communication.

f. Timing: – communication can be obstructed if not done on time. If the information is not provided in time it creates barriers to effective communication.

D. Psychological barriers

It is the barriers to effective communication created from the lack of interest of the people from whom the communication is meant. People do not pay attention to the communication which are not interesting to them and which do not fulfill their want.

a. Perception: – it is the process of accepting and interpreting the information by the receiver. People receive things differently for a various number of reasons.

b. Filtering: – communication some time filters the negative information to make it more favorable to the receiver. In this process, knowingly or unknowingly some valuable information may be disposed.

c. Distrust: – superior provides information or message to the subordinates to their own view, ideas and opinion which create obstruction in communication.

d. Emotions: – emotion also creates barriers to effective communication like anger, het, mistrust, jealousy etc.

e. Viewpoint: – it also creates barriers to effective communication. It the receiver doesn’t clear the message and ignore without hearing, the message may create obstructions.

f. Defensiveness: – if the receiver receives the message as threat and interprets that message in the same way, it creates barriers to effective communication.

Overcoming Communication Barriers

There are a lot of communication barriers faced these days by all. The message intended by the sender is not understood by the receiver in the same terms and sense and thus communication breakdown occurs. It is essential to deal and cope up with these communication barriers so as to ensure smooth and effective communication.

1. Eliminating differences in perception: The organization should ensure that it is recruiting right individuals on the job. It’s the responsibility of the interviewer to ensure that the interviewee has command over the written and spoken language. There should be proper Induction program so that the policies of the company are clear to all the employees. There should be proper trainings conducted for required employees (for eg: Voice and Accent training).

Use of Simple Language: Use of simple and clear words should be emphasized. Use of ambiguous words and jargons should be avoided.
Reduction and elimination of noise levels: Noise is the main communication barrier which must be overcome on priority basis. It is essential to identify the source of noise and then eliminate that source.
Active Listening: Listen attentively and carefully. There is a difference between “listening” and “hearing”. Active listening means hearing with proper understanding of the message that is heard. By asking questions the speaker can ensure whether his/her message is understood or not by the receiver in the same terms as intended by the speaker.
Emotional State: During communication one should make effective use of body language. He/she should not show their emotions while communication as the receiver might misinterpret the message being delivered. For example, if the conveyer of the message is in a bad mood then the receiver might think that the information being delivered is not good.
Simple Organizational Structure: The organizational structure should not be complex. The number of hierarchical levels should be optimum. There should be a ideal span of control within the organization. Simpler the organizational structure, more effective will be the communication.
Avoid Information Overload: The managers should know how to prioritize their work. They should not overload themselves with the work. They should spend quality time with their subordinates and should listen to their problems and feedbacks actively.
Give Constructive Feedback: Avoid giving negative feedback. The contents of the feedback might be negative, but it should be delivered constructively. Constructive feedback will lead to effective communication between the superior and subordinate.
Proper Media Selection: The managers should properly select the medium of communication. Simple messages should be conveyed orally, like: face to face interaction or meetings. Use of written means of communication should be encouraged for delivering complex messages. For significant messages reminders can be given by using written means of communication such as : Memos, Notices etc.
Flexibility in meeting the targets: For effective communication in an organization the managers should ensure that the individuals are meeting their targets timely without skipping the formal channels of communication. There should not be much pressure on employees to meet their targets.

Q18. Write a note on Social Responsibility of Business?

Ans. Social Responsibility

Social responsibility is the obligation of businessmen towards the society. Businessmen must review the impact of their decisions and actions on the other sections of the society.

According to Peter F Druker, “Social responsibility requires managers to consider whether their action is likely to promote the public good, to advance the basic beliefs of our society, to contribute to its stability, strength and harmony.”

Need for Social Responsibilities

A businessman must perform social responsibilities because of the following reason

(i) Self interest
(ii) Better environment for business
(iii) Public image
(iv) Avoidance of government interference
(v) Social power
(vi) Resources used for moral justification
(vii) Contribution to social problems

The Case Against Social Responsibility

Some experts criticise the concept of social responsibility, some of the arguments given against social responsibilities are given below

(i) Motive of earning profit
(ii) Lack of social skill
(iii) Social responsibility involves cost
(iv) Dilution of basic goal of business
(v) Business are not moral agents
(vi) Reduction in competitiveness

Reality of Social Responsibility

After learning the case for and against social responsibilities, we can conclude that business is no longer a mere economic institution but it is also a social institution and businessmen are the trustees of different social groups.

The main reasons and factors which have forced businessmen to consider their responsibilities towards society

(i) Threat of public regulation
(ii) Pressure of labour movements
(iii) Impact of consumer consciousness
(iv) Development of social standard for business
(v) Relationship between social interest and business interest
(vi) Development of professional managerial Class

Kinds of Social Responsibilities

(i) Economic Responsibility

In an economic responsibility, business is expected to produce goods and services that are beneficial for society and society which wants and sell them at a profit.

(ii) Legal Responsibility

Every business enterprise is expected to operate within the legal frame work of our society. A law abiding enterprise gets no interference of government and is considered as a socially responsible enterprise.

(iii) Ethical Responsibilities

Ethics is much more than law, while behaving ethically businessmen should not be involved in adulteration, black marketing, etc.

(iv) Discretionary Responsibilities

This responsibility is purely voluntary. This includes contribution in charity. Participation in social service projects, setting up educational and training institutions etc helping people affected by flood, earthquake etc.

Social Responsibility towards Different Interest Groups

(i) Responsibilities towards Consumers

(a) Production of safe items by maintaining quality standards
(b) Being truthful in advertising
(c) To follow fair trade practices.

(ii) Responsibilities towards Employee

(a) Providing fair compensation and benefits
(b) Providing good and safe working conditions
(c) To give them opportunities to participate in decision making

(iii) Responsibilities towards the Owners / Shareholders / Investors

(a) To ensure safety of investment
(b) To ensure fair and regular return on investment
(c) To ensure appreciation of investment by proper utilisation of resources

(iv) Responsibilities towards the Government

(a) To abide by rules, regulations and laws
(b) To pay taxes and duties on time
(c) To help in solving social problem

(v) Responsibilities towards the Community

(a) To protect the environment from all types of pollution
(b) To provide more employment opportunities
(c) To help the weaker section of the society

(vi) Responsibilities towards Suppliers

(a) To ensure regular payment to the supplier
(b) To adopt fair dealing with the suppliers
(c) To protect and assist small scale suppliers by placing order with them

7. Business and Environment Protection

(i) Causes of Environmental Pollution

Environment pollution arises due to the following causes

(a) Air pollution
(b) Water pollution
(c) Land pollution

(ii) Need for Pollution Control

The main reasons to control the pollution are as follows

(a) To ensure safety
(b) Economic losses
(c) To maintain the natural beauty
(d) To ensure healthy life
(e) To lead a comfortable life

8. Role of Business in Environmental Protection

The businessmen should take following steps to control and check environmental pollution

(i) Making use of eco-friendly techniques of production
(ii) Recycling industrial waste
(iii) Treating the waste through technologies before discharging them into water or dumping in the land
(iv) Make use of eco-marks by producing eco-friendly products

9. Business Ethics It refers to the set of moral values or standards or norms which govern the activities of a businessman. Ethics defines what i, right and what IS wrong.

10. Elements of Business Ethics

Some of the basic elements of business ethics while running a business enterprises are

(i) Top management commitment
(ii) Publication of a ‘code’
(iii) Establishment of compliance mechanism
(iv) Involving employees at all levels
(v) Measuring result

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