fundamentals of management - management principles
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Fundamentals of ManagementFundamentals of Management
Management Principles
Prof. Rushen Chahal
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What is Organizing?What is Organizing?
Can be defined as process of determiningCan be defined as process of determiningthe activities to be performed, arrangingthe activities to be performed, arranging
these activities to administrative units, asthese activities to administrative units, aswell as assigning managerial authority andwell as assigning managerial authority andresponsibilities to people employed in theresponsibilities to people employed in theorganizationorganization
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Importance of organizingImportance of organizing
Focus on and facilitate theFocus on and facilitate the attaining ofattaining ofobjectivesobjectives
Arrangement ofArrangement ofpositions and jobspositions and jobswithin thewithin the hierarchyhierarchy
DefineDefine responsibilities and line ofresponsibilities and line ofauthority ofauthority of all levelsall levels
CreatingCreating relationships that willrelationships that willminimizeminimize friction..friction..
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Basic Elements of OrganizationBasic Elements of Organization
Centralization and decentralizationCentralization and decentralization
Delegation of AuthorityDelegation of Authority
Span of ControlSpan of ControlDivision of ServiceDivision of Service
DepartmentalizationDepartmentalization
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Elements of Formal organizationElements of Formal organization
1.1. CentralizationCentralization: Concentration of decision: Concentration of decisionmaking and actions at high levelmaking and actions at high level
managementmanagement
2.2. DecentralizationDecentralization: Consistent delegation of: Consistent delegation ofauthority to the lower levels where theauthority to the lower levels where thework is performedwork is performed
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Advantages of CentralizationAdvantages of Centralization
Provide Power and prestige for managerProvide Power and prestige for manager
Promote uniformity of policies, practicesPromote uniformity of policies, practices
and decisionsand decisionsMinimal extensive controlling proceduresMinimal extensive controlling procedures
and practicesand practices
Minimize duplication of functionMinimize duplication of function
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Disadvantages of CentralizationDisadvantages of Centralization
Neglected functions for mid. Level, andNeglected functions for mid. Level, and
less motivated beside personnel.less motivated beside personnel.
Nursing supervisor functions as a linkNursing supervisor functions as a link
officer between nursing director and firstofficer between nursing director and first--line management.line management.
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Advantages ofDecentralizationAdvantages ofDecentralization
Raise morale and promote interpersonalRaise morale and promote interpersonalrelationshipsrelationships
Relieve from the daily administrationRelieve from the daily administrationBring decisionBring decision--making close to actionmaking close to action
Develop SecondDevelop Second--line managersline managers
Promote employees enthusiasm andPromote employees enthusiasm andcoordinationcoordination
Facilitate actions by lowerFacilitate actions by lower--level managerslevel managers
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Disadvantages ofDisadvantages of
DecentralizationDecentralization
TopTop--level administration may feel it wouldlevel administration may feel it woulddecrease their statusdecrease their status
Managers may not permit full andManagers may not permit full andmaximum utilization of highly qualifiedmaximum utilization of highly qualifiedpersonnelpersonnel
Increased costs. It requires moreIncreased costs. It requires moremanagers and large staffmanagers and large staff
It may lead to overlapping and duplicationIt may lead to overlapping and duplicationof effortof effort
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Delegation ofAuthorityDelegation ofAuthority
Process off assigning work from a topProcess off assigning work from a toporganizational level to a lower one or fromorganizational level to a lower one or from
superior to subordinate and giving thatsuperior to subordinate and giving thatperson the authority to accomplish themperson the authority to accomplish them
Adownward flow of authority fromAdownward flow of authority fromHIGHER level in the organization toHIGHER level in the organization toLOWER levelLOWER level
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The Delegation ProcessThe Delegation Process
1.1. Allocation of dutiesAllocation of duties
2.2. Delegation of authorityDelegation of authority
3.3. Assignment of responsibilityAssignment of responsibility4.4. Creation of accountabilityCreation of accountability
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The Delegation ProcessThe Delegation Process ContdContd::
AuthorityAuthority: It is a right to take a final: It is a right to take a finaldecision and command others. It moves indecision and command others. It moves ina downward directiona downward direction
ResponsibilityResponsibility: It is an obligation to: It is an obligation toperform a duty. It cannot be delegated.perform a duty. It cannot be delegated.
AccountabilityAccountability: subordinates must be held: subordinates must be heldanswerable to their carried out dutiesanswerable to their carried out duties
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Types ofAuthorityTypes ofAuthority
FormalFormal: Delegated within an organization: Delegated within an organizationfor e.g. superiorfor e.g. superior--subordinate authoritysubordinate authority
FunctionalFunctional: Authority based on specialized: Authority based on specializedknowledge like staff authority or theknowledge like staff authority or theauthority delegated to assist lineauthority delegated to assist linemanagersmanagers
PersonalPersonal: Authority based on seniority and: Authority based on seniority andrelationshirelationshi
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Factors determining degree ofFactors determining degree of
authority delegationauthority delegation
Organizations size...Organizations size...
Importance of duty or decision...Importance of duty or decision...
Task complexity...Task complexity...Organizational culture...Organizational culture...
Qualities of subordinatesQualities of subordinates
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Main principles ofDelegationMain principles ofDelegation
Responsibility cannot be delegatedResponsibility cannot be delegated
Authority and responsibility should beAuthority and responsibility should be
equal in proportionequal in proportion
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Barriers to successfulBarriers to successful
delegationdelegation
Lack of superiors ability to direct theLack of superiors ability to direct the
subordinatessubordinates
Lack of confidence in subordinateLack of confidence in subordinate
Absence of controlAbsence of control
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Major Causes of managersMajor Causes of managers
refusal to delegaterefusal to delegate
Tendency to do things personallyTendency to do things personally
Desire to dominate the knowledge,Desire to dominate the knowledge,information, and/or skillsinformation, and/or skills
Unwillingness to accept risks of wrongsUnwillingness to accept risks of wrongs
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Reasons for why subordinatesReasons for why subordinates
avoiding delegationavoiding delegation
DecisionDecision--making is a hard mental work,making is a hard mental work,and people seek ways of avoiding itand people seek ways of avoiding it
Fear of criticism for mistakesFear of criticism for mistakes
Lack off necessary information andLack off necessary information andresources to do a good jobresources to do a good job
Overload of workOverload of work
Positive incentives may be inadequatePositive incentives may be inadequate
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Types of organizationalTypes of organizational
relationshipsrelationships
The Line relationThe Line relation: presents levels of: presents levels ofhierarchy, Superiorhierarchy, Superior--subordinatesubordinaterelationships, and provides the frameworkrelationships, and provides the frameworkfor the organizationfor the organization
The Staff relationThe Staff relation: has no command,: has no command,personnel have only the right to advise,personnel have only the right to advise,assist, support those in the line authorityassist, support those in the line authorityin the performance of their dutiesin the performance of their duties
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Span of ControlSpan of Control
Number of subordinates that can beNumber of subordinates that can be
adequately supervised by one supervisoradequately supervised by one supervisor
Span of control consists of twoSpan of control consists of two
dimensionsdimensionsNarrow Span of controlNarrow Span of control
Wide span of controlWide span of control
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Narrow span of controlNarrow span of control
The Manager supervises a small numberThe Manager supervises a small numberof people or subordinatesof people or subordinates
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Advantages ofNarrow Span ofAdvantages ofNarrow Span of
controlcontrol
Close supervisionClose supervision
Close controlClose control
Fast communication betweenFast communication betweensubordinates and superiors.subordinates and superiors.
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Disadvantages ofNarrow spanDisadvantages ofNarrow span
of controlof control
Superiors tend to get too involved inSuperiors tend to get too involved in
subordinates worksubordinates work
Many levels of managementMany levels of management
High costs due to many levelsHigh costs due to many levels
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Wide span of controlWide span of control
The Manager supervises a large number ofThe Manager supervises a large number ofpeoplepeople
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Advantages ofWide span ofAdvantages ofWide span of
controlcontrol
Superiors are forced to delegateSuperiors are forced to delegate
Clear policies must be madeClear policies must be made
Subordinates must be carefully selectedSubordinates must be carefully selected
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Disadvantages of wide span ofDisadvantages of wide span of
controlcontrol
Tendency of overload superiors to takeTendency of overload superiors to take
most or all decisionsmost or all decisions
Danger of superiors loss of controlDanger of superiors loss of control
Requires exceptional quality of managersRequires exceptional quality of managers
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Factors determining span ofFactors determining span of
controlcontrol
The competence of both the supervisorThe competence of both the supervisorand the subordinateand the subordinate
The degree of interaction between the
The degree of interaction between theunits or personnel being supervisedunits or personnel being supervised
Other duties of the top managerOther duties of the top manager
LowerLower--level managers have a wider rangelevel managers have a wider rangeof span than topof span than top--level managerlevel manager
The similarity or dissimilarity of activitiesThe similarity or dissimilarity of activitiesbeing supervisedbeing supervised
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Factors determining span ofFactors determining span of
controlcontrol contdcontd::
The similarity or dissimilarity of activitiesThe similarity or dissimilarity of activitiesbeing supervisedbeing supervised
The incidence of new problems in the Unit
The incidence of new problems in the Unit
Availability of plans of work, policies andAvailability of plans of work, policies andstandardized proceduresstandardized procedures
The degree of physical distribution
The degree of physical distribution
The nature of work (stability, complexity,The nature of work (stability, complexity,etc)etc)
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Division ofServiceDivision ofService
Dividing large activities to be distributedDividing large activities to be distributedamong several people.among several people.
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Advantages ofDivision ofAdvantages ofDivision of
serviceservice
Allow an employee to master a task with aAllow an employee to master a task with amaximum skillmaximum skill
Dividing work among individuals accordingDividing work among individuals accordingto their specialization leads to accuracyto their specialization leads to accuracy
Accomplishment of tasks within assignedAccomplishment of tasks within assignedperiod or deadlineperiod or deadline
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Disadvantages ofDivision ofDisadvantages ofDivision of
serviceservice
Creates many different, narrow jobs,Creates many different, narrow jobs,which need effective managerialwhich need effective managerialcoordinationcoordination
Human problems have been created fromHuman problems have been created fromdivision of service, fatigue and stress, anddivision of service, fatigue and stress, andwhich lead to less quantity and quality ofwhich lead to less quantity and quality ofwork, increased absenteeism and higherwork, increased absenteeism and higherturnoverturnover
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DepartmentationDepartmentation
Departmentation can be described asDepartmentation can be described asgrouping of functions and tasksgrouping of functions and tasks
Consisted of main methods such as:Consisted of main methods such as:
FunctionalFunctional
GeographicalGeographical
Product or ServiceProduct or Service
CustomerCustomer
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Functional DepartmentationFunctional Departmentation
Based on the functions or the operationsBased on the functions or the operationscarried within the organizationcarried within the organization
For e.g. production, selling, marketing,For e.g. production, selling, marketing,distributing and financingdistributing and financing
Type of organization or an enterpriseType of organization or an enterpriseaffects the formation of differentaffects the formation of differentdepartmentsdepartments
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Geographical DepartmentationGeographical Departmentation
Division of activities among branches orDivision of activities among branches orsubsidiaries that are away from the mainsubsidiaries that are away from the mainoffice or the headquartersoffice or the headquarters
Amanager is put inAmanager is put in--charge of the areacharge of the areaand made responsible for all the divisionsand made responsible for all the divisions
Results in lower cost of operating, butResults in lower cost of operating, butharder to control by the parent companyharder to control by the parent companyor the head officeor the head office 34Prof. Rushen Chahal
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Product or service departmentationProduct or service departmentation
Departmentation by product or serviceDepartmentation by product or servicee.g. Production unite.g. Production unit
Awide delegation of authority takes placeAwide delegation of authority takes placefrom top management to a division or afrom top management to a division or aplantplant
May have coMay have co--ordination problem andordination problem andduplication of serviceduplication of service
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CustomerDepartmentationCustomerDepartmentation
Usually found in sales or marketingUsually found in sales or marketingdepartmentsdepartments
Involves division of customer base inInvolves division of customer base interms of types of customers like individualterms of types of customers like individualbuyers, industrial buyers or wholesalersbuyers, industrial buyers or wholesalers
For e.g. banking services, credit cardFor e.g. banking services, credit cardservices, auto companiesservices, auto companies
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Process or equipmentProcess or equipment
departmentationdepartmentation
Aims at achieving economies or effectiveAims at achieving economies or effectiveutilization of the companys resources byutilization of the companys resources bygrouping activities around a processgrouping activities around a process
Similar types of labor and equipments areSimilar types of labor and equipments arebrought togetherbrought together
For e.g. Jewellery makers, shoe makersFor e.g. Jewellery makers, shoe makersand oil companiesand oil companies
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