NATURE & CHARACTERISTICS OF MANAGEMENT

33A. ANANDA KUMAR / INDUSTRIAL MANAGEMENT / UNIT-1

INDUSTRIAL MANAGEMENTUNIT 1

INTRODUCTIONManagement is as an art and science of getting work done through people. It is the process of giving directing and controlling the various activities of the people to achieve the objectives of an organization.

DEFINITIONManagement is the process of designing and maintaining of an environment in which individuals working together in groups efficiently accomplish selected aims.- Koontz & WeihrichManagement is the art of knowing what do you want to do and then seeing that it is done in the best and cheapest way.- F. W. TaylorManagement is the coordination of all resources through the process of planning, organizing, directing and controlling in order to attain stated goals.- Henry L. SiskMANAGERIAL SKILLSFor analysis, skills required of any manager are classified under three different heads technical, human and conceptual skill.Technical Skill:It refers to the ability to the tools, equipment, procedures and techniques.Effective supervision and coordinating of the work of the subordinates. Therefore depends on the technical possessed by the lower level market.

2. Human Skill:Human skill refers to the ability of the manager to work effectively as a group member and to build cooperative effort in the team he leads.Human skills are concerned with understanding of people.Managers skill in working with others is natural and conditions.

Conceptual Skills:This skill also called design and problem. Solving skill involves the ability.To see the organisation and the various components of it as a whole.To understand how its various parts and functions mesh together.To foresee how changes in any one of these may affect all the others.A higher degree of conceptual skill helps in analyzing the environment and in identifying the opportunities.

MANAGEMENT LEVELSThe three levels of management that are commonly found in any organisation are top, middle and lower management.

Top level Management

Middle level Management

Lower level Management

Top Level Management:The main functions of top management are To formulate goals and policies of the company.To formulate budgets.To appoint top executives.To provide overall direction and leadership of the company.To decide the distribution of profits etc.

Middle Level Management:The important functions of middle level management.To monitor and control the operating performance.To train, motivate and develop supervisory level.To co-ordinate among themselves so as to integrate the various activities of a department.

Lower Level or Supervisory Management:The main functions of lower level managementTo train and develop the efficiency of the workers.To assign jobs to workersTo give orders and instructions.To maintain discipline and good human relations among workers.To report feedback information about workers.

FUNCTIONS OF MANAGEMENTPlanning:Planning is simple is looking ahead. It is preparing for the future. Effective planning leads to efficient management. Effective planning provides answers to questions like what to do? When to do? How to do? Who is to do?

The planning process involves the following activities.Determination of the goal of the organization.Formulating policies, rules, procedures etc. for the organization.Forecasting the future based on past and present activities.

Organising:Organizing establishes harmonious relationship among all the workers of an organization by providing them with suitable authority and responsibility.

According to Louis A. Allen Organisation involves identification and grouping the activities to be performed and dividing them among the individuals and creating authority and responsibility relationships among them for the accomplishment of organizational objectives.

Organisation process involves the following activities:Identification and analysis of activities required. For the attainment organizational objectives.Assignment of duties to the individuals concerned.Follow-up the activities.

Staffing:Staffing process involves selecting candidates for positions, fixing salary, training and developing them for effective organizational functions. The manager performs the duties of job analysis, job description etc. which come under the staffing function.

Directing:One plans are made and the organisation is created next step is to achievement of objectives of the organisation.

Directing is involves activities like guiding, supervising and motivating the subordinates in their jobs. Motivation, leadership and communication are three important sub function of directing. Motivation helps to increase the performance of the workers. Communication provides with proper information to improve the effective management. Leadership the process by which a manager guide and influences the work of his subordinates.Controlling:Controlling as a function of management deals with checking and verifying the activities against the predetermined standards. The process of ensuring that actual activities conform to planned activities. Controlling process involves the following steps.

Establishing standardsMeasuring current performance.Comparing this performance to the established standards.Taking corrective actions of deviation are detected.

HENRY FAYOLS CONTRIBUTION (1841 - 1925)Fayol was a contemporary of Taylor. He started his career as a junior engineer in a coal mining company in France in 1860 and became its general manager in 1880. We published his famous book Administration Industrielle et Generale in 1916 which was published in English in 1949 under the title General and Industrial Management. This book is now considered to be one of the best classics in management. He concerned with the fourteen principles of management. They are

Principles of Management: 1. Division of Work: Work should be divided in proper way with reference to the available time. In general worker on the same job and the managers on the same duty acquire ability sureness and accuracy which increase theory output. 2. Authority & Responsibility: Authority means power given to a person to get work from his subordinates. Responsibility means kind and amount of work expected of from a man by his superior. One of the essential elements of a good management delegation of authority to the lower levels of management and fixing responsibility on town. 3. Discipline: Discipline is very essential for the smooth running of organisation. To Fayol, discipline will result from good leadership at all levels of the organisation, fair agreements and judiciously enforced penalties for infractions. 4. Unity of Command: An employee must receive orders and instructions from one supervisor only. Multiple commands will cause conflicts and confusions. A sound management should avoid dual commands. 5. Unity of Direction: Unity of direction signifies each group of activities having the same objective must have one head and one plan. All the groups should coordinate and work together to achieve the common goal. 6. Subordination of Individual interest to General interest: Every employee is working in an organisation and his interest earn money to meet his personal needs. The general interest of organisation is development and the progress of the organisation. The employees should give importance first to the general interest than his individual interest. It will lead to effective management of organisation. 7. Remuneration of personnel: Remuneration should be fair for both the employees and employers. The wage payment systems should satisfy the employees. 8. Centralization: The Organisation is centralized when the power is concentrated with one person. If the power is fully distributes to the subordinates of the organisation is fully decentralized. For effective management of people decentralization is necessary. Decentralization helps to take a quick decision on all important problems. 9. Scalar Chain: Scalar chain principle states that instructions and orders should be sent from the top management to the lower management. 10. Order: Two types of order 1) Materials order 2) Social order. In any organisation materials and for men are correct places provided. So that materials can be easily taken out and men easily located and also save time.Material Order: A place for everything and everything in its place.Social Order: A place for everyone and everyone in place. 11. Equity: Equity refers to the treatment of employees equally. Equal treatment of the employees helps to achieve organizational goals. 12. Stability of Staff: A high employee turnover rate is not good for the efficient functioning of any organisation. 13. Initiative: It is concerned with thinking and execution of a plan. When employees come forward with new ideas, they must be encouraged by the superiors. It will create the morale of the employees. 14. Esprit-de-corps: This means union is strength. In organisation employees should be harmony and unity. It improves employee moral.

SCIENTIFIC MANAGEMENTF.W. Taylor was born in 1856. He started his career as an apprentice in Philadephia in 1875. In 1878, Taylor joined Midvale Steel Company in U.S.A., as a machine shop labourer and became a supervisor. Finally, he became the Chief engineering in 1884 after gaining experience as time clerk, lathe gang boss, assistant foreman, master mechanic and chief draftsman. He had got M.E. degree (Master of Engineering) through evening course in 1883.In the 18th century, the production was affected by industrial revolution, when the management people wanted to increase their production. Their ambitions were fulfilled by the invention of the concept of Scientific Management by F.W Taylor in the 19th century. Taylor is the first person to find the concept of Scientific Management and develop it so, he is called as the father of Scientific Management. According to F.W. Taylor, Scientific Management consists of a certain philosophy of scientific selection and training of right workers for the right job, providing adequate working conditions, providing a system of monetary incentives to efficient workers and assumption of responsibilities by managers and supervisors. The workers are selected scientifically and training is provided to both new and existing workers. The workers are selected scientifically and training is provided to both new and existing workers. The workers are placed according to their qualifications and experience. The effective doing of any work depends upon physical working conditions, lighting, ventilation, rest rooms, rest periods, drinking water, canteen, recreation, sanitation and the like are some of the physical working conditions. The system of monetary incentives should motivate the workers to work well. Managers and supervisors should accept responsibility for planning, scheduling, guiding and controlling. It means that planning and execution are different functions.Principles of Scientific ManagementF.W. Taylor has given the principles of Scientific Management. They are briefly explained below:1. Science not rule of thumb: It means the replacement of old method of doing work scientifically. The nature of work performed by each worker should be clearly determined. It includes the allotment of fair work to each worker, standardization in work, adoption of differential piece rate of payment system and the like.2. Harmony in group action: F.W. Taylor has emphasized peace and friendship in group action. In other words, dissatisfaction of any worker is to be avoided in the group action. The dissatisfaction is eliminated through scientific selection, training and strategic placing of workers.3. Co-operation: There should be a co-operation between management and workers and vice versa. Workers should help the management to get larger profits, better quality products and lower cost of production. Management should give fair wages to workers, recognize the performance of work and acknowledge the indispensability of workers in raising productivity. Then, better co-operation will be achieved. According to Taylor, substitution of war for peace, hearty and brotherly cooperation for discontentment and strife, replacement of suspicious watchfulness with mutual confidence of becoming friends instead of enemies result in co-operation.4. Maximum Output: Maximum output is achieved through division of work and assumption of responsibility by the management and workers jointly. Maximum output results in the increasing profit to the management and wages and bonus to the workers. Management should provide standard materials, tools and working conditions to perform the work economically and efficiently.5. Improvement of workers: Under Scientific Management, all the workers should be given opportunity to improve to the fullest extent possible. It is necessary for the development of the company. Workers are scientifically selected and provided with the job training, so, the management should find out the physical, educational and psychological requirements of each job and find suitable persons to each job. Systematic training can shape the workers in relations to the job assigned to them.Elements or Features of Scientific ManagementF.W. Taylor had conducted many experiments to find out how the workers could be made more efficient. These experiments help to improve the very essence of Scientific Management. Scientific Management has the following features:1. Separation of planning from executive function: F.W. Taylor separated the planning function from the executive function. Before Taylors period, both planning function and executive function were performed by one and the same worker. A worker himself plans the work and the instruments necessary to perform the work. The same workers do the job under the supervision of a supervisor. It results in disagreement on many issues between workers and supervisors. So, F.W. Taylor emphasized upon the separation of planning from execution. The planning function should be performed by the supervisors and executive function alone be assigned to the workers.2. Scientific task setting: It means allotment of work to each worker on the basis of the capacity of an average worker functioning in normal working conditions. He should be able to complete the work in a working day. If there is no scientific task setting, the workers will work below their capacity. Taylor called it as a fair days work.3. Functional foremanship: When there is a development of a supervision system, planning is separated from execution, as explained earlier. Taylor had found out the concept of functional foremanship. This is based on the specialisation of functions performed at supervision level. Under the functional foremanship system, there are eight persons. Out of eight persons, four persons are concerned with planning. They are Route clerk, Instruction card clerk, Time and cost clerk and Disciplinarian. The remaining four persons are concerned with the executive function. They are Speed boss, Inspector, Maintenance foreman and Gang boss.4. Work study: Work study refers to the systematic critical assessment of efficiency required to do the job. It varies from one job to another job.5. Methods study: The entire process of production is taken into account under this study. Efforts are made to reduce the distance passed by materials and improvement in handling transportation, inspection and storage of raw materials and finished goods. Best tools and machinery are provided to ensure best possible results.6. Motion duty: A study relating to the movement of a machine operator and his machine while performing the job is called motion study. The very purpose of conducting this study is elimination of unnecessary movements of machine operator and machine. If these movements are eliminated, time required to perform the job is reduced to the optimum extent and the job is performed more efficiently.7. Time study: Time study refers to the act of measuring the time required to perform a particular job. A standard time is fixed by conducting the time study. If the standard time is fixed, all the work is performed in the fixed time and control over it becomes easy.8. Fatigue study: A study relating to the fixing of the working hours with rest periods to enable the workers to recoup the energy lost while performing the job is called Fatigue study. The fatigue may be mental or physical. In certain cases, both sap the energy of a worker. Health and efficiency of workers are well preserved by providing adequate rest to them. According to Taylor, Methods of Study, Motion Study, Time Study and Fatigue Study are parts of Work Study.9. Rate setting: F.W. Taylor emphasized upon fair wages to workers, and had recommended differential piece rate age system. The reason is that differential piece rate wage system may act as an incentive to lazy and less efficient workers.10. Standardisation: Standardisation is made in respect of tools and instruments, working hours, volume of work, working conditions or atmosphere, cost of production etc. These are fixed on the basis of job analysis.11. Scientific selection and training: The workers should be selected scientifically. Next, the appointment should be given to each worker according to the nature of the job requirement and his qualifications. Adequate training should be given to new as well as existing workers in order to update their knowledge. A job is assigned to a worker to suit his capacity best.12. Financial incentives: Financial incentives can motivate the workers to show their efficiency. Provisions should be made in such a way that increase in efficiency should go with increase in wage structure. As per the differential piece rate wage system, the efficient workers get higher wages and vice versa. The differential piece rate wage system was charted out by F.W. Taylor.13. Mental revolution: Mental revolution refers to change in thinking both on the part of the management and workers. If not, all the measures suggested in Scientific Management System would be useless. The success of implementation of Scientific Management depends on the mental revolution of Management and workers. According to Taylor, The success of scientific management rests primarily on a fundamental change in the attitude of management and workers both as to their duty to co-operate in producing the largest possible surplus and to the necessity for substituting exact scientific knowledge for opinions or the old rule of thumb of individual knowledge.14. Economy: The techniques of cost estimates and control should be considered in order to obtain economy. The available resources are used to the fullest possible maximum extent to eliminate wastage. Maximum profit is earned through this process. Various ways are given in Scientific Management to get economy in production and for maximizing profits.

IMPORTANCE OF MANAGEMENTManagement is must for every organisation. Management can plan the activities to attain the objectives. 1. Attainment of group goals: The achievement of objectives of business depends upon various factors. The management theory gives direction of achievement of goals. 2. Effective functioning of business: Ability, understanding, communication, motivation, coordination and supervision are some of the factors responsible for the effective functioning of business. Management is vital tool to help for effective functioning of business. 3. Resource development: The resources of any enterprise may be identified and developed by the management. Generally the term resources are men, money, material and machines. 4. Management control the organisation: The management controls the activities of an enterprise. Control process is used to eliminate the unnecessary activities. 5. Integrates individual efforts: Management takes necessary steps to integrate various efforts to attain the objectives of an organisation. 6. Motivation: Motivation is vital tool to achieve organisation goal. Properly motivate the workers increasing the speed of performance of a work. Motivation is in the form of monetary or non-monetary incentive. 7. Communication: Communication is important role for effective management. Effective communication leads to efficient management. 8. Coordination: All the activities of enterprises are department-wise. Management coordinates the activities of different departments to attain the objectives of the organisation. 9. Decision-making: There are a number of decisions taken by the management every day. The management gives guides the managers to take correct decisions. 10. Leadership quality: Leadership quality is developed in the persons who are working in the top level management.TYPES OF MANAGEMENT1. Development Management: It includes research into materials, machines, processes, etc.2. Distribution Management: It includes marketing, merchandising advertising, sales, etc.3. Financial Management: It includes economic forecasting, costing, accounting, budgetary control, insurance and actuarial work, etc.4. Maintenance Management: It includes upkeep of buildings, equipment, estate work, etc.5. Purchase Management: It includes tendering, buying, contract work, store keeping, store and stock control.6. Production Management: In includes work analysis, planning, scheduling, routing, quality control and work study.7. Transport Management: In includes transportation by rail, road, air and water, packing, warehousing, etc.8. Personnel Management: It includes employee selection, placement, training, transfer, promotion, discharge, industrial relations, safety, health and welfare services, etc.9. Office Management: It includes planning and control of offices, keeping records, etc.

PLANNINGPlanning is the most basic of all management functions. There is no choice between planning and no planning. The choice is only with regard to the method and techniques used to plan. Most of us are planning many things in our day-to-day lives. Frequently, we plan to do official work, improve our careers, plan our investment, built own houses, do business and so on. Organizations are no exception and lots of planning activities are done by the management people at all levels. Planning is the process of selecting objectives and determining the course of action required to achieve these objectives. Lot of information has to be gathered and processed before planning is formulated.Planning bridges the gap from where we are and where we want to go. It makes the things possible to occur which would not otherwise happen. Let us look at what the following observations suggest about planning.Planning is outlining a future course of action in order to achieve on objective.Planning is looking ahead.Planning is getting ready to do something tomorrow.Plan is a trap laid down to capture the future.

STEPS IN PLANNING PROCESSPlanning is a process; therefore, it contains number of steps within it. It is not necessary that a particular planning process or steps are valid for all organizations and for all types of plans. A planning process is suitable for large scale organization which may not be suitable for small organizations. Since, various factor that go into planning process may differ from plan to plan or from organization to organization. The planning process or steps given here is mostly applicable for major programmes. But with minor modifications, the process is applicable for all types of plans.

Identification of opportunities

Establishment of objectivesIdentification of alternativesSelecting an alternativeThe general planning steps is given below

Evaluation of alternativesFormulating derivative plansEstablishing sequence of activitiesDeveloping planning premises

1. Identification of opportunities: Identification of awareness of the opportunity is the starting point of planning. First of all, we should identify the possible future opportunities and analyze them clearly and completely. From that, we should know:Where we stand,What is our strength and weakness,What problem we wish to solve and why, andWhat we expect to gain.

Once, the opportunities are perceived from availability, the other steps of planning are undertaken.

2. Establishment of objectives or goals: The next step in planning is to establish objectives for the entire organization and then for each subordinate units. Objectives specify and indicate the results expected.What is to be done?Where is the primary emphasis to be placed?What is to be accomplished by the various types of plans?

Organisational objectives should be specified in all key result areas. Key result areas are those which are important for organization in achieving its objective. The key result areas may be profitability, sales, research and development, manufacturing and so on.3. Developing planning premises: Planning premises are the assumptions that should be made about the various elements of the environment. It provides the basic framework in which plans operate. These premises may be internal or external.Internal premises include organizational, policies, resources of various types, sales forecasts and the ability of the organisation to withstand the environmental pressure. External premises include the total factors in task environment like political, social, technological, competitors, plans and actions, and government policies etc.The plans are formulated on the basis of both internal and external premises. The nature of planning premises differs at different levels of planning. At the top level, it is mostly externally focused where as the bottom level is internally focused.4. Identification of alternatives: The next step in planning is to search for and designs the alternative courses of action. Based on organizational objectives and planning premises, various alternatives of plans can be identified. A particular objective can be achieved through a number of ways. The entire alternative cannot be analysed. Some alternative can be rejected at its preliminary stage itself by considering preliminary criteria such as minimum investment required, matching with the present business, market conditions government control, skilled workers, technique available etc. Only the alternatives which meet the preliminary criteria may be chosen for further detailed analysis. 5. Evaluation of alternatives: The alternatives considered for the analysis according to preliminary criteria may be taken for further evaluation. Each alternative course of action is evaluated on the basis of profitability, capital investment, rish involved, gestation period etc. It presents a problem because each of these alternatives may have certain advantages and disadvantages. For instance, an alternative may appear to be must profitable. But, it requires a large cash outlet with slow payback; another may be less profitable but involves less risk factors.6. Selecting alternatives: After the evaluation of various alternatives, the most appropriate course of action is selected. If more than one alternative is suitable, then any are alternative may be chosen for execution. When the situation changes and the selected plan do not provide to be the best, the other alternative may be tried.7. Formulation of derivative plans: The derivative plans are formulated on the basis of the major plans. There are several minor plans required to support and execute the major plans. These plans are known as derivative plans. The various derivative plans are planning for buying equipment, buying raw materials, recruiting and training personal, developing new product etc.8. Establishing sequence of activities: After formulating basic and derivative plans, the sequence of activities is determined so that plans are put into action while formulating derivative plans, a built in mechanism should be created for periodic review and updating of various plans whenever necessary. The starting and finishing times are fixed for each piece of work so as to indicate when and within what time that work is to be commenced and completed.PURPOSE or OBJECTIVES OF PLANNINGPlanning has great importance in all type of organization. Organisation often fails not because of lack of resources, but because of poor planning. Planning has become a requisite for the survival and growth of business organization. It is necessary to plan due to the following reasons.1. Primary of Planning: Planning is a primary function of an organization which proceeds all other functions. All other functions such as organizing, staffing, directing and controlling are performed to achieve the objectives already set by the planning process.2. To achieve objectives: Planning is directed towards the attainment of organization objectives. While planning, we should be clear about few questions.Why am I making this plan?What am I trying to accomplish?What resources do I need to execute the plan?

If we prepare answers for the above questions, it provides lot of clarity to the objectives. Planning serves as a bridge between present and future.3. To cope with uncertainty and change: There is a continuous change in the environment. A good organisation has to work in accelerating change. This change is reflected in both tangible and intangible forms. Tangible changes are in the form of changes in technology, market forces, government regulations etc. Intangible changes are in the form of changes in attitudes, values, cultures etc. Planning enables the identification of future problems and meeting such contingencies. Planning helps to minimize risk while taking advantages of opportunities.4. To facilitate control: Control involves the measurement of accomplishment of events against plans and correction of deviations to assure the achievement of objectives as set by plans. Planning provides the standards with which actual performance can be measured and corrective actions taken wherever necessary. Without planning, we do not know what to control.5. To help in coordination: All the managerial functions lead to coordination in the organization. But real coordination begins with the planning stage. Since, all the departments work in accordance with the overall plan, the harmony and coordination is achieved. Coordination is the essence of management and planning is the base for it.6. To increase organizational effectiveness: The term effectives mean that the organization is able to achieve its objectives within the given resources. A better planning ensures organizational effectiveness in many ways. In better planning, all the resources are put in a way that ensures their maximum efficiency and contribution to organizational objectives. Planning states the objectives of the organization in the context of given resources. Therefore, each resources of the organization has a specific use at a particular time. Thus, planning ensures that resources are put in action in a way in which these have been specified.7. To guide decision making: Planning provides a basis for future oriented decisions. Without planning, business decisions may become random. Planning creates better relation among various decisions. It serves as a framework for making rational decision.

ADVANTAGES OF PLANNINGThe following are the advantages of planning:1. Helps in achieving objectives: Planning concentrates attention on setting goals or objectives of an organization. It gives effective direction to the control of employees of the organization towards achieving organizational goals.2. Better utilization of resources: Planning gives clear cut direction on what to produce and how to produce. Therefore, there is a possibility of utilizing the resources effectively.3. Economy in operation: Better utilization of resources leads to economy in operation.4. Reduces uncertainty and risk: Uncertain and changes are inevitable and planning cannot eliminate them. Planning enables the enterprise to make adequate adjustment to adopt to future changes.5. Improves competitive strength: Planning enables a firm to remain in competition. Planning helps management to adopt modern methods of operation and to improve the quality of the product to attract the customer. Competitive strength is improved by adding these changes.6. Effective control: Planning serves as a base for control. Planning determines the time for starting and completing the projects, set standards of performance. It enables the managers to control the activities.7. Coordination: Planning enables effective coordination of all managerial function. By providing well-defined objectives, unity of direction, well established policies, procedures and programmes, planning facilitates to get effective coordination.8. Encourages Motivation: A well-prepared plan encourages the employees moral and confidence of the managers and gives them a sense of effective participation.

LIMITATIONS OF PLANNINGInspite of various advantages of planning, it suffers from the following limitations:1. Lack of accurate information: Planning is done for future. The accuracy and reliability of forecasts is doubtful if the forecasting period increases, because future is quite uncertain. Planning cannot insure against future perfectly.2. Time and Cost: Planning is a time consuming process. The various steps in planning may consume a lot of time because there is no limit of precision in planning tools.Since, the planning is proceeded with many course of action such as collection of necessary information, careful analysis and interpretation etc., it is a costly affair.3. Inflexibility: Planning may result in integral rigidity in managerial work. Such rigidity leads to delay in work performance. Many times, changes are not accepted even though they are unavoidable.4. Delay during emergency period: During emergencies, immediate and on the spot actions are necessary which are not possible under planning. So, planning leads to delay in action.5. False sense of security: The management people may think that once the plans are formulated, action will automatically be efficient forever. It makes the management having a false sense of security unless the plans are reviewed and revised periodically.

ORGANISINGOrganising is the process of identifying and grouping of activities required to attain the objectives, delegating authority, creating responsibility and establishing relationships for the people to work effectively. As a process, organisation refers to the process of determining, arranging, grouping and assigning the activities to be performed for the attainment of objectives. Thus, the organisation is a mechanism or structure which helps the activities to be performed effectively. The organisation is established for the purpose of achieving the business objectives.An organisation structure should be designed to clarify who is to do what task and who is responsible for what results. The organisation structure is designed both from mechanistic and humanistic point of view. It is not only a mechanical structure of duties, activities and relationships, but also web of human interactions within social group with attitudes and aspirations.

Definition:According to Haimann, Organising is the process of defining and grouping the activities of the enterprise and establishing the authority relationships among them.Koontz and ODonnel define organizing as the grouping of activities necessary to attain objectives, the assignment of each grouping to a manager with authority necessary to supervise it, and the provision for co-ordination horizontally and vertically in the enterprise structure.According to Terry, Organising is the establishment of effective behavioural relationships among

NATURE OF ORGANIZATIONThe main characteristics of an organization are as follows:1. Common Objectives: Every organization exists to achieve some common objectives. All efforts of the organisation are directed towards this goal.2. Specialization or Division of Labour: The total work of an organization is divided into functions and sub-functions to get the benefits of specialization.3. Authority of structure: There is an arrangement of positions into a graded series. The authority and responsibility of each position is defined in the structure. The chain of superior and subordinate relationships is known as chain of command.4. Group of persons: An organization is basically a group of persons. Therefore, activity groupings and authority provisions must take into account the limitations and customs of people. People constitute the dynamic human element of an organization.5. Co-ordination: There is a mechanism for coordinating different activities and parts of an organizations so that it functions as an integrated whole.6. Communication: Every organization has its own channels of communication. These channels are necessary for mutual understanding and cooperation among members of an organization.7. Environment: An organization functions in an environment comprising economic, social, political and legal factors. Therefore, it must be desired to work efficiently in a changing environment.8. Rule and Regulations: For effective functioning of an organization, it should have some rules and regulations. Such rules and regulations may be in writing or implied form customary behaviour.FORMAL ORGANISATIONA formal organisation typically consists of a classical hierarchical structure in which positions, responsibility, authority, accountability and the line of command are clearly defined and established. It is a system of well defined jobs with a prescribed pattern of communication, coordination and delegation of authority.According to Allen, The formal organisation is a system of well-defined jobs, each bearing a definite measure of authority, responsibility and accountability.Formal organisation must be flexible. Each and every person is assigned the duties and given the required amount of authority and responsibility to carryout the job. It creates co-ordination between workers to achieve common goal. The inter relationship of staff members can be shown in the organisation chart and manuals Advantages of formal organisationSince the definite boundary of each worker is clearly defined, the conflict among the workers is automatically reduced.Overlapping of responsibility is easily avoided.More stable organization can be ensured. It makes the organization less dependent on one man.A sense of security arises from classification of the task.It motivates the employees.

INFORMAL ORANISATIONInformal organisation is an organisation which establishes the relationship on the basis of members interaction, communication, personal likings and disliking, and social contacts within as well as outside the organisation. It arises naturally on the basis of friendship or some common interest which may or may not be related with work. For example, the typists working in different departments may form informal group due to similarity of work. Common language, common hobby, common habits may also lead to informal organisation.The informal organisation relationship exists under the formal organisation also. The informal organisation gives a greater job satisfaction to the individuals and result in maximum production.

Advantages of informal organisationSince informal organisation gives satisfaction to the workers, it motivates workers and also maintains the stability of the work.It fills up the gaps and deficiency of the formal organisation.It fills up the gaps among the abilities of the managers.The presence of informal organisation encourages the executives to plan the work correctly and act accordingly.It is one of the useful channel of communication.

Disadvantages of informal organisationInformal organisation may function in ways that are counter productive. They may stand in the way of organisation achieving the objectives.It indirectly reduces the effort of management to promote greater productivity.It spreads rumor among the workers regarding the functioning of the organistion unnecessarily.

ORGANISATIONAL CHARTSOrganisational charts are prepared for the purpose of describing the organisational structure clearly. An organisation chart is a graphical portrayal of the various positions in the enterprise and the formal relationships among them. It shows the organisational relationships and activities within an organisation.George R. Terry defines, An organisation chart is a diagrammatical form which shows the important aspects of an organisation including the major functions and their respective relationships, the channels of supervision and the relative authority of each employee who is incharge of each respective function.J. Batty has defined, An organisation chart is diagrammatic representation of the framework or structure of an organisation.

KINDS OF ORGANISATION CHARTSThere are several kinds of organisation charts. Some of them are described below:1. Vertical ChartManaging DirectorPersonnel ManagerMarketing ManagerProduction ManagerSupervisor for operation AWorkman ISupervisor for operation CSupervisor for operation BWorkman IIIWorkman IIChairmen

It shows the organisation structure in the form of a pyramid, the lines of communication flow from top level to the bottom in vertical lines. This vertical chart is in the form of a graph. In this chart, the highest position is placed at the top after that the next highest is shown in the table. It is also known as Top-Down chart.

Horizontal chart or Left to right chartPresident

Managing DirectorManaging DirectorManaging DirectorManaging DirectorBranch Manager IBranch Manager IIBranch ManagerIIISalesman ISalesman IIISalesman II

The chart in which the line of command is flowing horizontally instead of vertical is known as horizontal chart. There is no much difference between vertical and horizontal chart. In this chart, highest position is shown at the extreme left and the lowest position at the extreme right.Circular chart or concentric chart Supervisor III

Production Marketing Manager manager

Personnel Finance Manager manager Supervisor II

Supervisor I Peochairman

In this chart, the position of the top executive is shown in the centre of the chart. The subordinates of these top executives are shown in all directions outward from the centre. Such a chart is a better representation of the personnel relationships as it eliminates the status implications.

STAFFINGStaffing is defined as filling and keeping filled, positions in the organization structure. It includes identifying work force requirements, inventorying the people available and recruiting, selecting, placing promoting, appraising and training developing both candidates and current jobholders to accomplish their tasks effectively and efficiently. Staffing is the part of the management process which is concerned with the procurement, utilization, maintenance and development of a large satisfied work force in the organization.Nature of StaffingStaffing is an important managerial function- Staffing function is the most important mangerial act along with planning, organizing, directing and controlling. The operations of these four functions depend upon the manpower which is available through staffing function.

Staffing is a pervasive activity- As staffing function is carried out by all mangers and in all types of concerns where business activities are carried out.

Staffing is a continuous activity- This is because staffing function continues throughout the life of an organization due to the transfers and promotions that take place.

The basis of staffing function is efficient management of personnels- Human resources can be efficiently managed by a system or proper procedure, that is, recruitment, selection, placement, training and development, providing remuneration, etc.

Staffing helps in placing right men at the right job. It can be done effectively through proper recruitment procedures and then finally selecting the most suitable candidate as per the job requirements.

Staffing is performed by all managers depending upon the nature of business, size of the company, qualifications and skills of managers,etc. In small companies, the top management generally performs this function. In medium and small scale enterprise, it is performed especially by the personnel department of that concern.

Staffing Process - Steps involved in StaffingManpower requirements- The very first step in staffing is to plan the manpower inventory required by a concern in order to match them with the job requirements and demands. Therefore, it involves forecasting and determining the future manpower needs of the concern.

Recruitment- Once the requirements are notified, the concern invites and solicits applications according to the invitations made to the desirable candidates.

Selection- This is the screening step of staffing in which the solicited applications are screened out and suitable candidates are appointed as per the requirements.

Orientation and Placement- Once screening takes place, the appointed candidates are made familiar to the work units and work environment through the orientation programmes. placement takes place by putting right man on the right job.

Training and Development- Training is a part of incentives given to the workers in order to develop and grow them within the concern. Training is generally given according to the nature of activities and scope of expansion in it. Along with it, the workers are developed by providing them extra benefits of indepth knowledge of their functional areas. Development also includes giving them key and important jobsas a test or examination in order to analyse their performances.

Remuneration- It is a kind of compensation provided monetarily to the employees for their work performances. This is given according to the nature of job- skilled or unskilled, physical or mental, etc. Remuneration forms an important monetary incentive for the employees.

Performance Evaluation- In order to keep a track or record of the behaviour, attitudes as well as opinions of the workers towards their jobs. For this regular assessment is done to evaluate and supervise different work units in a concern. It is basically concerning to know the development cycle and growth patterns of the employees in a concern.

Promotion and transfer- Promotion is said to be a non- monetary incentive in which the worker is shifted from a higher job demanding bigger responsibilities as well as shifting the workers and transferring them to different work units and branches of the same organization.

CONTROLLINGControlling consists of verifying whether everything occurs in confirmities with the plans adopted, instructions issued and principles established. Controlling ensures that there is effective and efficient utilization of organizational resources so as to achieve the planned goals. Controlling measures the deviation of actual performance from the standard performance, discovers the causes of such deviations and helps in taking corrective actionsAccording to Brech, Controlling is a systematic exercise which is called as a process of checking actual performance against the standards or plans with a view to ensure adequate progress and also recording such experience as is gained as a contribution to possible future needs.According to Donnell, Just as a navigator continually takes reading to ensure whether he is relative to a planned action, so should a business manager continually take reading to assure himself that his enterprise is on right course.Controlling has got two basic purposesIt facilitates co-ordination It helps in planning

Features of Controlling FunctionFollowing are the characteristics of controlling function of management-Controlling is an end function- A function which comes once the performances are made in confirmities with plans.

Controlling is a pervasive function- which means it is performed by managers at all levels and in all type of concerns.

Controlling is forward looking- because effective control is not possible without past being controlled. Controlling always look to future so that follow-up can be made whenever required.

Controlling is a dynamic process- since controlling requires taking reviewal methods, changes have to be made wherever possible.

Controlling is related with planning- Planning and Controlling are two inseperable functions of management. Without planning, controlling is a meaningless exercise and without controlling, planning is useless. Planning presupposes controlling and controlling succeeds planning.

Process of ControllingControlling as a management function involves following steps:Establishment of standards- Standards are the plans or the targets which have to be achieved in the course of business function. They can also be called as the criterions for judging the performance. Standards generally are classified into two- Measurable or tangible - Those standards which can be measured and expressed are called as measurable standards. They can be in form of cost, output, expenditure, time, profit, etc. Non-measurable or intangible- There are standards which cannot be measured monetarily. For example- performance of a manager, deviation of workers, their attitudes towards a concern. These are called as intangible standards.

Controlling becomes easy through establishment of these standards because controlling is exercised on the basis of these standards.

Measurement of performance- The second major step in controlling is to measure the performance. Finding out deviations becomes easy through measuring the actual performance. Performance levels are sometimes easy to measure and sometimes difficult. Measurement of tangible standards is easy as it can be expressed in units, cost, money terms, etc. Quantitative measurement becomes difficult when performance of manager has to be measured. Performance of a manager cannot be measured in quantities. It can be measured only by- Attitude of the workers, Their morale to work, The development in the attitudes regarding the physical environment, and Their communication with the superiors.

It is also sometimes done through various reports like weekly, monthly, quarterly, yearly reports.Comparison of actual and standard performance- Comparison of actual performance with the planned targets is very important. Deviation can be defined as the gap between actual performance and the planned targets. The manager has to find out two things here- extent of deviation and cause of deviation. Extent of deviation means that the manager has to find out whether the deviation is positive or negative or whether the actual performance is in conformity with the planned performance. The managers have to exercise control by exception. He has to find out those deviations which are critical and important for business. Minor deviations have to be ignored. Major deviations like replacement of machinery, appointment of workers, quality of raw material, rate of profits, etc. should be looked upon consciously. Therefore it is said, If a manager controls everything, he ends up controlling nothing. For example, if stationery charges increase by a minor 5 to 10%, it can be called as a minor deviation. On the other hand, if monthly production decreases continuously, it is called as major deviation.

Once the deviation is identified, a manager has to think about various cause which has led to deviation. The causes can be-Erroneous planning, Co-ordination loosens, Implementation of plans is defective, and Supervision and communication is ineffective, etc.

Taking remedial actions- Once the causes and extent of deviations are known, the manager has to detect those errors and take remedial measures for it. There are two alternatives here- Taking corrective measures for deviations which have occurred; and After taking the corrective measures, if the actual performance is not in conformity with plans, the manager can revise the targets. It is here the controlling process comes to an end. Follow up is an important step because it is only through taking corrective measures, a manager can exercise controlling.

TYPES OF OWNERSHIPSole proprietorship / Single ownershipPartnershipJoint Stock CompaniesCooperative organisationState and central Government owned

SINGLE OWNERSHIPA Sole Proprietorship is a business with one owner who operates the business on his or her own or employ employees. It is the simplest and the most numerous form of business organization in the United States, however it is dangerous as the sole proprietor has total and unlimited liability. Self-contractor is one example of a sole proprietorship.In this type, the single ownership where an individual exercises and enjoys these rights in his own interest. It does well for those enterprises which require little capital and lend themselves readily to control by one person.Advantages of a sole proprietorshipSimplest and least expensive form of business to establish and to dissolve.The owner is making all the decisions and controlling the whole operations.All profit flows directly to the owner.It is subject to fewer regulations.It has tax advantage: any income is declared as the owners personal income tax return, therefore there are no corporate income taxes.

Disadvantages of a sole proprietorshipThe owner is responsible for all the obligations of the business.It is difficult to raise capital: it can only use the owners personal saving and consumer loans.

PARTNERSHIPA single owner becomes inadequate as the size of the business enterprise grows. He may not be in a position to do away with all the duties and responsibilities of the grown business. At this stage, the individual owner may wish to associate with him more persons who have either capital to invest, or possess special skill and knowledge to make the existing business still more profitable. Such a combination of individual traders is called Partnership.Partnership may be defined as the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Individuals with common purposes join as partners and they put together their property ability, skill, knowledge, etc., for the purpose of making profitsAdvantages of a partnershipIt is relatively easy to form but considerable amount of time should be invested in developing the partnership agreement.It is easier to raise capital compared to a sole proprietorship as there are more than one investor.Any income is declared as the partners personal income tax returns, therefore there are no corporate income taxes.Employees may be motivated and attracted to the business by the inventive to become a partner

Disadvantages of a partnershipPartners are jointly responsible for all the obligations of the business.Partners must make decision together therefore disputes or conflicts may occur. It may eventually lead to dissolving the partnership.

CORPORATIONIt is a form of private ownership which contains features of large partnership as well as some features of the corporation. A corporation is a limited liability entity doing business owned by multiple shareholders and is overseen by a board of directors elected by the shareholders. It is distinct from its owners and can borrow money, enter into contracts, pay taxes and be sued. The shareholders gain from the profit through dividend or appreciation of the stocks but are not responsible for the companys debts.Advantages of a corporationIt can raise additional funds through the sale of stock.Shareholders can easily transfer the ownership by selling their stock.Individual owner liability is limited to the value of stock they are holding in the corporation.

Disadvantages of a corporationIt is restricted by more regulations, more closely monitored by governmental agencies and are more costly to incorporate than other forms of the organizations.Profit of the business is taxed by the corporate tax rate. Dividends paid to shareholders are not deductible from corporate income, so this part of income is taxed twice as the shareholders must declare dividends as their personal income and pay personal income taxes too.

PUBLIC LIMITED COMPANYA public enterprise is one that is (1) Owned by the state, (2) Managed by the state or (3) Owned and managed by the state. Public enterprises are controlled and operated by the Government either solely or in association with private enterprises. It is controlled and operated by the Government to produce and supply goods and services required by the society. Limited companies which can sell share on the stock exchange are Public Limited companies. These companies usually write PLC after their names. AdvantagesThere is limited liability for the shareholders.The business has separate legal entity. There is continuity even if any of the shareholders die.These businesses can raise large capital sum as there is no limit to the number of shareholders.The shares of the business are freely transferable providing more liquidity to its shareholders .

DisadvantagesThere are lot of legal formalities required for forming a public limited company. It is costly and time consuming.In order to protect the interest of the ordinary investor there are strict controls and regulations to comply. These companies have to publish their accounts.The original owners may lose control. Public Limited companies are huge in size and may face management problems such as slow decision making and industrial relations problems.

PRIVATE LIMITED COMPANIESThese are closely held businesses usually by family, friends and relatives.Private companies may issue stock and have shareholders. However, their shares do not trade on public exchanges and are not issued through an initial public offering. Shareholders may not be able to sell their shares without the agreement of the other shareholders.AdvantagesLimited Liability: It means that if the company experience financial distress because of normal business activity, the personal assets of shareholders will not be at risk of being seized by creditors.Continuity of existence: business not affected by the status of the owner.Minimum number of shareholders need to start the business are only2.More capital can be raised as the maximum number of shareholders allowed is 50.Scope of expansion is higher because easy to raise capital from financial institutions and the advantage of limited liability.

DisadvantagesGrowth may be limited because maximum shareholders allowed are only 50.The shares in a private limited company cannot be sold or transferred to anyone else without the agreement of other shareholders.