m8-principles & practices of management.docx

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UNIT 1: INTRODUCTION TO MANAGEMENT

CONCEPT OF MANAGEMENT 73SIGNIFICANCE OF MANAGEMENT 73NATURE OF MANAGEMENT 74MANAGEMENT AS A SCIENCE AND AN ART 7414 PRINCIPLES OF MANAGEMENT 76FUNCTIONS OF MANAGEMENT 76MANAGEMENT CONTRIBUTIONS BY MANAGEMENT THINKERS 76SOCIAL RESPONSIBILITIES OF MANAGEMENT 82MANAGEMENT ETHICS 83

UNIT 2: PLANNING AND DECISION MAKINGPLANNING FUNCTION 84NATURE OF PLANNING 84IMPORTANCE OF PLANNING 85PLANNING PROCESS 86PRINCIPLES OF PLANNING 86LIMITATIONS OF PLANNING 87DECISION MAKING 88TYPES OF DECISIONS 88DECISION MAKING PROCESS 88

INDIVIDUAL AND GROUP DECISION MAKING 89MANAGEMENT BY OBJECTIVES (MBO) 91CHARACTERISTICS OF MBO 92LIMITATIONS OF MBO 92NEGOTIATION 92

UNIT 3: ORGANIZINGORGANIZING FUNCTION 95ORGANIZING PROCESS 95DEPARTMENTALIZATION 95SPAN OF MANAGEMENT 96DELEGATION OF AUTHORITY 97PROCESS OF DELEGATION OF AUTHORITY 97ADVANTAGES / IMPORTANCE OF DELEGATION OF AUTHORITY 98PRINCIPLES OF EFFECTIVE DELEGATION OF AUTHORITY 98

CENTRALIZATION AND DECENTRALIZATION 99

UNIT 4: DIRECTION AND CONTROLLING

DIRECTING FUNCTION 100IMPORTANCE OF DIRECTION 100PRINCIPLES OF DIRECTING 100MOTIVATION 101IMPORTANCE OF MOTIVATION 101THEORIES OF MOTIVATION 102LEADERSHIP 105IMPORTANCE OF LEADERSHIP 107CONTROLLING FUNCTION 107CHARACTERISTICS OF CONTROL 108PROCESS OF CONTROLLING 108CO-ORDINATION 109

SIGNIFICANCE OF CO-ORDINATION 109PRINCIPLES OF COORDINATION 109COORDINATION IS THE ESSENCE OF MANAGEMENT 110

UNIT 5: HUMAN RESOURCE MANAGEMENTCONCEPT OF HUMAN RESOURCE MANAGEMENT 111SCOPE OF HUMAN RESOURCE MANAGEMENT 111STRATEGIC HUMAN RESOURCE MANAGEMENT 111STAFFING FUNCTION 112NATURE OF STAFFING 112STAFFING PROCESS 112PERSONNEL MANAGEMENT 113NATURE OF PERSONNEL MANAGEMENT 113FUNCTIONS OF PERSONNEL MANAGEMENT 113EMPLOYEE RELATIONS 116

M8PRINCIPLES & PRACTICES OF MANAGEMENT


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M8-Principles & Practices of Management 7

CONCEPT OF MANAGEMENT

Management in all business and organizational activities is the act of getting people together to accomplish desired goalsand objectives using available resources efficiently and effectively. Management comprises planning, organizing, staffing,leading or directing, and controlling an organization (a group of one or more people or entities) or effort for the purpose ofaccomplishing a goal. Resourcing encompasses the deployment and manipulation of human resources, financial resources,technological resources, and natural resources.

Because organizations can be viewed as systems, management can also be defined as human action, including design, tofacilitate the production of useful outcomes from a system. This view opens the opportunity to 'manage' oneself, a pre-

requisite to attempting to manage others.Imagine an army with no general, a team with no coach, or a nation with no government. How could the army beat the

enemy? How could the team win games? How could the nation avoid complete anarchy? They couldnt. And an organizationcant succeed without a manager.

Managers make sure that an organization stays, well organized. Organizing and directing the work of others is thework of the manager. People need organization and direction if they are to work effectively, and managers provide that.

Management is generally defined as the art and science of getting things done through others. This definition emphasizesthat a manager plans and guides the work of other people. Some (cynical) individuals think that this means managers donthave any work to do themselves. As youll learn in this book (if you dont already know it), managers have an awful lot ofwork to do.

Organizing and directing the work of others is known as administration. In a business it is called business administration.(In a hospital, it is called health-care administration. In a government agency, it is called public administration.) Thus,

business administration means managing a business, and an MBAmaster of business administrationdegree prepares aperson to manage a business. In an MBA program, which is a graduate school program, you learn about the structure, parts,and purpose of a business, and about the tools you need in order to manage the business. These tools include budgets andfinancial statements as well as methods of analyzing business decisions.

Simply speaking, management is what managers do. However, this simple statement doesnt tell us much. We definemanagement as the process of coordinating and integrating work activities so that they are completed efficiently andeffectively with and through other people.

The process represents the ongoing functions of primary activities engaged in by managers. These functions are typicallylabeled planning, organizing, leading, and controlling.

Definition of Management

Management is the process of designing and maintaining an environment in which individuals, working together ingroups, efficiently accomplish selected aims. - Harold Koontz and Heinz Weihrich

Management is defined as t he process of planning, organising, actuating and controlling an organisations operations inorder to achieve coordination of the human and material resources essential in the effective and efficient attainment ofobjectives. -Robert L. Trewelly and M. Gene Newport

Management is the process of working with and through others to effectively achieve organisational objectives byefficiently using limited resources in the changing environment. - Kreitner

SIGNIFICANCE OF MANAGEMENT

Management is a function, a discipline, a task to be done, and managers practice this discipline, carry out the functionsand discharge these tasks - Peter F. Drucker

Analysis of business failures made over many years shows that a high percentage of these failures was due to unqualifiedor inexperienced management. The Bank of America has said, in its publication "Small Business Reporter".

"In the final analysis, more than 90% of business failures are due to managerial incompetence and inexperience."

The significance of management is much more in case of developing countries. In recent years development specialistshas shown in their research that availability of money or technology does not bring development. The limiting factor inalmost every case has been the lack of quality on the part of managers.

There are some people or groups who believe that there is no need of management. In fact, they feel that peoplewould work together better and with more personal satisfaction if there were no managers. They refer 'team effort' as theideal group operation. Perhaps they do not realise that whenever an individual plays a game, he has clear group goals as wellas some personal goals also. In fact, every group effort designed to attain goals with minimum cost of time, money andmaterials , adopts some basic principles and techniques of management.

Management is critical in the nation's economic and social development also. Efficient management helps adeveloping country to make better use of resources for the achievement of economic development.

UNIT 1: INTRODUCTION TO MANAGEMENT


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NATURE OF MANAGEMENT

1. Universality: Management is an universal phenomenon in the sense that it is common and essential element in allenterprises. Managers perform more or less the same functions irrespective of their position or nature of the organization. Thebasic principles of management can be applied in all managerial situations regardless of the size, nature and location of theorganization. Universality of managerial tasks and principles also implies that managerial skills are transferable andmanagers can be trained and developed.

2. Purposeful: Management is always aimed at achieving organizational goals and purposes. The success of management ismeasured by the extent to which the desired objectives are attained. In both economic and non-economic enterprises, thetasks of management are directed towards effectiveness (i.e., attainment of organizational goals) and efficiency (i.e., goal

attainment with economy of resource use).3. Social process: Management essentially involves managing people organized in work groups. It includes retaining,Developing and motivating people at work, as well as taking care of their satisfaction as social beings. All these interpersonalrelations and interactions makes the management as a social process.

4. Coordinating force: Management coordinates the efforts of organization members through orderly arrangement of inter-related activities so as to avoid duplication and overlapping. Management reconciles the individual goals with theorganizational goals and integrates human and physical resources.

5. Intangible: Management is intangible. It is an unseen force. Its presence can be felt everywhere by the results of its effortwhich comes in the form of orderliness, adequate work output, satisfactory working climate, employees satisfaction etc.

6. Continuous process: Management is a dynamic and an on-going process. The cycle of management continues to operateso long as there is organised action for the achievement of group goals.

7. Composite process: Functions of management cannot be undertaken sequentially, independent of each other.

Management is a composite process made up of individual ingredients. All the functions are performed by involving severalingredients. Therefore, the whole process is integrative and performed in a network fashion.

8. Creative organ: Management creates energetic effect by producing results which are more than the sum of individualefforts of the group members. It provides sequence to operations, matches jobs to goals, connects work to physical andfinancial resources. It provides creative ideas, new imaginations and visions to group efforts. It is not a passive force adoptingto external environment but a dynamic life giving element in every organization.

MANAGEMENT AS A SCIENCE AND AN ART

Management as an Art

What is art? Art is the skillful and personal application of existing knowledge to achieve desired results. It can beacquired through study, observation and experience. Since art is concerned with personal application of knowledge somekind of ingenuity and creativity is required to practice the basic principles learnt.

The basic features of an art are as follows:(i) Existence of theoretical knowledge: Art presupposes the existence of certain theoretical knowledge. Experts in their

respective areas have derived certain basic principles which are applicable to a particular form of art. For example,literature on dancing, public speaking, acting or music is widely recognised.

(ii) Personalised application: The use of this basic knowledge varies from individual to individual. Art, therefore, is a verypersonalised concept. For example, two dancers, two speakers, two actors, or two writers will always differ indemonstrating their art.

(iii)Based on practice and creativity: All art is practical. Art involves the creative practice of existing theoreticalknowledge. We know that all music is based on seven basic notes. However, what makes the composition of amusician unique or different is his use of these notes in a creative manner that is entirely his own interpretation.

Management can be said to be an art since it satisfies the following criteria:

(i) A successful manager practices the art of management in the day-to-day job of managing an enterprise based on study,observation and experience. There is a lot of literature available in various areas of management like marketing,

finance and human resources which the manager has to specialise in. There is existence of theoretical knowledge.(ii) There are various theories of management, as propounded by many management thinkers, which prescribe certain

universal principles. A manager applies these scientific methods and body of knowledge to a given situation, an issueor a problem, in his own unique manner. A good manager works through a combination of practice, creativity,imagination, initiative and innovation. A manager achieves perfection after long practice. Students of managementalso apply these principles differently depending on how creative they are.

(iii)A manager applies this acquired knowledge in a personalised and skillful manner in the light of the realities of a givensituation. He is involved in the activities of the organisation, studies critical situations and formulates his own theoriesfor use in a given situation. This gives rise to different styles of management The best managers are committed anddedicated individuals; highly trained and educated, with personal qualities such as ambition, self- motivation,creativity and imagination, a desire for development of the self and the organisation they belong to.

All management practices are based on the same set of principles; what distinguishes a successful manager from a lesssuccessful one is the ability to put these principles into practice.


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Management as a Science

Science is a systematised body of knowledge that explains certain general truths or the operation of general laws. Thebasic features of science are as follows:

(i) Systematised body of knowledge: Science is a systematic body of knowledge. Its principles are based on a cause andeffect relationship. For example, the phenomenon of an apple falling from a tree towards the ground is explained bythe law of gravity.

(ii) Principles based on experimentation: Scientific principles are first developed through observation and then testedthrough repeated experimentation under controlled conditions.

(iii)Universal validity: Scientific principles have universal validity and application.Based on the above features, we can say that management has some characteristics of science.

(i) Management has a systematised body of knowledge. It has itsa) Anthropology Anthropology is the study of societies, which helps us learn about human beings and their

activities. Anthropologists work on cultures and environments, for instance, has helped managers to better

understand differences in fundamental values, attitudes, and behavior between people in different countries andwithin different organisations.

b) EconomicsEconomics is concerned with the allocation and distribution of scarce resources. It provides us withan understanding of the changing economy as well as the role of competition and free markets in a global context.An understanding of free trade and protectionist policies is absolutely essential to any manager operating in theglobal marketplace, and these topics are addressed by economists.

c) Philosophy Philosophy courses inquire into the nature of things, particularly values and ethics. Ethics arestandards that govern human conduct. These ethics have shaped todays organisations by providing a basis for

legitimate authority, linking rewards to performance, and justifying the existence of business and the corporate

form.d) Political Science Political science is the study of the behavior of individuals and groups within a political

environment. Management is affected by a nations form of governmentby whether it allows its citizens to holdproperty, by its citizens ability to engage in and enforce contracts, and by the appeal mechanisms available to

redress grievances. A nations stand on property, contracts, and justice, in turn, shapes the type, form, and policiesof its organisations.

e) Psychology Psychology is the science that seeks to measure, explain, and sometimes change the behaviour ofhumans and other animals. Todays managers confront both a diverse customer base and a diverse set ofemployees. Psychologists efforts to understand gender and cultural diversity provide managers with a better

perception of the needs of their changing customer and employee populations. Psychology courses are also relevantto managers in terms of gaining a better understanding of motivation, leadership, trust, employee selection,performance appraisals, and training techniques.

f) Sociology Sociology is the study of people in relation to their fellow human beings. What are some of thesociological issues that have relevance to managers? Here are a few. How are societal changes such asglobalisation, increasing cultural diversity, changing gender roles, and varying forms of family life affectingorganisational practices? What are the implications of schooling practices and education trends on futureemployees skills and abilities? Answers to questions such as these have a major effect on how managers operate

their businesses.

Management has its own theory and principles that have developed over a period of time, but it also draws onother disciplines such as Economics, Sociology, Psychology and Mathematics. Like all other organised activity,management has its own vocabulary of terms and concepts. For example, all of us discuss sports like cricket andsoccer using a common vocabulary. The players also use these terms to communicate with each other. Similarlymanagers need to communicate with one another with the help of a common vocabulary for a better understanding oftheir work situation.

(ii) The principles of management have evolved over a period of time based on repeated experimentation and observationin different types of organisations. However, since management deals with human beings and human behaviour, the

outcomes of these experiments are not capable of being accurately predicted or replicated. Therefore, management canbe called an inexact science. Despite these limitations, management scholars have been able to identify generalprinciples of management. For example, scientific management principles by F.W. Taylor and FunctionalManagement principles by Henri Fayol.

(iii)Since the principles of management are not as exact as the principles of science, their application and use is notuniversal. They have to be modified according to a given situation. However, they provide managers with certainstandardised techniques that can be used in different situations. These principles are also used for training anddevelopment of managers.

You must have understood from the foregoing discussion that management has features of both art and science. Thepractice of management is an art. However, managers can work better if their practice is based on the principles ofmanagement. These principles constitute the science of management. Management as an art and a science are therefore notmutually exclusive, but complement each other.


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14 PRINCIPLES OF MANAGEMENT

Management Principles developed by Henri Fayol:

1. Division of work: Work should be divided among individuals and groups to ensure that effort and attention are focusedon special portions of the task. Fayol presented work specialization as the best way to use the human resources of theorganization.

2. Authority: The concepts of Authority and responsibility are closely related. Authority was defined by Fayol as the rightto give orders and the power to exact obedience. Responsibility involves being accountable, and is therefore naturallyassociated with authority. Whoever assumes authority also assumes responsibility.

3. Discipline: A successful organization requires the common effort of workers. Penalties should be applied judiciously toencourage this common effort.4. Unity of command: Workers should receive orders from only one manager.

5. Unity of direction: The entire organization should be moving towards a common objective in a common direction.6. Subordination of individual interests to the general interests: The interests of one person should not take priority

over the interests of the organization as a whole.7. Remuneration: Many variables, such as cost of living, supply of qualified personnel, general business conditions, and

success of the business, should be considered in determining a workers rate of pay.

8. Centralization: Fayol defined centralization as lowering the importance of the subordinate role. Decentralization isincreasing the importance. The degree to which centralization or decentralization should be adopted depends on thespecific organization in which the manager is working.

9. Scalar chain: Managers in hierarchies are part of a chain like authority scale. Each manager, from the first linesupervisor to the president, possess certain amounts of authority. The President possesses the most authority; the firstline supervisor the least. Lower level managers should always keep upper level managers informed of their workactivities. The existence of a scalar chain and adherence to it are necessary if the organization is to be successful.

10. Order: For the sake of efficiency and coordination, all materials and people related to a specific kind of work should betreated as equally as possible.

11. Equity: All employees should be treated as equally as possible.12. Stability of tenure of personnel: Retaining productive employees should always be a high priority of management.

Recruitment and Selection Costs, as well as increased product-reject rates are usually associated with hiring newworkers.

13. Initiative: Management should take steps to encourage worker initiative, which is defined as new or additional workactivity undertaken through self direction.

14. Espirit de corps: Management should encourage harmony and general good feelings among employees.FUNCTIONS OF MANAGEMENT

Planning is the ongoing process of developing the business' mission and objectives and determining how they will be

accomplished. Planning includes both the broadest view of the organization, e.g., its mission, and the narrowest, e.g., a tacticfor accomplishing a specific goal.

Organizing is establishing the internal organizational structure of the organization. The focus is on division, coordination,and control of tasks and the flow of information within the organization. It is in this function that managers distributeauthority to job holders.

Staffing is filling and keeping filled with qualified people all positions in the business. Recruiting, hiring, training, evaluatingand compensating are the specific activities included in the function. In the family business, staffing includes all paid andunpaid positions held by family members including the owner/operators.

Directing is influencing people's behavior through motivation, communication, group dynamics, leadership and discipline.The purpose of directing is to channel the behavior of all personnel to accomplish the organization's mission and objectiveswhile simultaneously helping them accomplish their own career objectives.

Controlling is a four-step process of establishing performance standards based on the firm's objectives, measuring andreporting actual performance, comparing the two, and taking corrective or preventive action as necessary.

MANAGEMENT CONTRIBUTIONS BY MANAGEMENT THINKERS

Part 1: Machiavelli, Fayol and Taylor

The 20th century was remarkable for the rise of the professional manager often basing his or her approach tomanagement on a particular theory or favoured guru. MBA students all over the world have investigated these theories andwritten countless assignments discussing their value. As we progress through the 21st century, are these theories still relevantor have they had their day? This article is the first in a three-part series that looks at ten influential theorists and the influencethey still have. The series does not attempt to create a top ten or rank contributions in any way (they are presented inchronological order), but aims to provide food for thought and debate. Part 1 looks at Machiavelli, Fayol and Taylor threefamous theorists who have all passed into management mythology, but whose views are sometimes misunderstood.


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Niccolo Machiavelli, 14691527

Machiavelli lived in Florence, where he worked for the Florentine state as a secretary, then adiplomat. His best known work, The Prince, is based on his observation of Cesare Borgia a cunning,cruel and self-seeking man. Machiavelli did not regard Cesare Borgia as an ideal person, but thought that,under him, the Florentines could unite Italy and this was his long-term goal. In fact, Machiavellis tacticdid not work, as the Medici (the ruling family of Florence) took exception to what he said, and CesareBorgia himself also found the work insulting.

Machiavelli was essentially a republican, preferring a state controlled by citizens (in his day, citizensmade up only a small part of the population). However, the adjective Machiavellian has become synonymous with corrupt,

devious government and with the ethos that the end justifies the means. Machiavellis Prince uses devious, immoralpolitical behaviour to achieve his ends.

Therefore a prince, so long as he keeps his subjects united and loyal, ought not to mind the reproach of cruelty Upon

this a question arises: whether it is better to be loved than feared or feared than loved? It may be answered that one should

wish to be both, but, because it is difficult to unite them in one person, it is much safer to be feared than loved.

[I]t is necessary for a prince wishing to hold his own to know how to do wrong, and to make use of it or not according

to necessity.

Today, Machiavellian behaviour is denounced as self-seeking and immoral, and the end justifying the means ethos isconsidered morally wrong. However, the fact is that people do behave like this, and a lot of successful managers employthese methodssome more consciously than others.

Take Harold Geneen (1910 to 1997), CEO of ITT (International Telephone and Telegraph) from 1959 to 1977. He hadan autocratic management style, was a relentless workaholic with no interest in personal life (and expected the same from hisemployees), and subjected his executives to harsh and bullying behaviours such as humiliation and cross-examination. Yet hewas highly successful and created a huge conglomerate; he masterminded 250 acquisitions at ITT, some hostile. He wasobsessed with profits and took ITTs profits from US$29 million to US$550 million. Some of his sayings resonate closelywith Machiavellis description of how a leader should behave to achieve his ends.

The soul of a business is a curious alchemy of needs, desires, greed and gratifications mixed with selflessness, sacrifices

and personal contributions far beyond material rewards.

You read a book from beginning to end. You run a business the opposite way. You start with the end, and then you do

everything you must to reach it.

The best way to inspire people to superior performance is to convince them by everything you do and by your everyday

attitude that you are wholeheartedly supporting them.

Geneen took the Prince analogy even further by embroiling ITT in political scandals such as subsidising the 1972Republican convention in San Diego and the companys influence in elections in Chile, during which ITT was accused offunding CIA subversion. There were also allegations of tax evasion.

It appears that the reality of many organisations is that management is a political activity, and most managers have to usesituations to advance their own or their functions interests. Most are uncomfortable about admitting this and would prefer tothink of themselves as ethical. Chris Argyris picked up on this dilemma when he described the espoused theory and thetheory-in-use. The former is what managers say they believe, but the latter is what actually guides their behaviour.

As we headed towards the 21st century, the rewards of Machiavellian behaviour could be seen in the research carried outby Fred Luthans. He found that successful managers (those who get promoted) spend a lot of time engaged in the political actof networkingusing their contacts and influences. By contrast, effective managers (those who are perceived as being goodat their jobs) spend relatively little time networking. Instead, they put their efforts into communicating and people managing.Sadly, for the ethicists among us, effective managers do not get rewarded by career advancement or at least not to the sameextent as successful managers. And as we progress into the new century, a recent article in the Harvard Business Reviewpoints out that leadership is not a moral concept and that leaders are not necessarily good people; they are like everyone else,trustworthy and deceitful, cowardly andbrave, greedy and generous.

Henri Fayol, 18411925

Command and control

Fayol is famous for the classical school of management, which emphasises commandand control. AFrenchman, he wrote General and Industrial Management in 1916, but it was not translated into Englishuntil 1949. Fayol taught that the functions of management are five-fold: planning, organising,commanding, coordinating and controlling. He also defined 14 principles of management.

1. Division of workspecialisation and repetition, leading to speed and accuracy.2. Authority and responsibilitytogether, these require increasing judgement and morality at senior levels: Responsibility

is feared as much as authority is sought for.3. Disciplineobedience, application and respect.


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4. Unity of commandworkers receiving orders from one superior only.5. Unity of directionone plan, one leader.6. Subordination of individual interests to the general good.7. Fair but not excessive remuneration, which rewards effort.8. Centralisation.9. The scalar chain a line or hierarchy of authority, although it was permitted to cut out the hierarchy to improve

communication (juniors can interact with each other in the interests of efficiency).10. Order: a place for everyone and everyone in their place.11. Equityequal and fair treatment of employees.12. Stabilitypeople need to stay in their jobs long enough to deliver, so should not be moved around too much.13. Initiativeallowing employees to think through a problem and implement a solution (which, Fayol believed, increases

motivation).14. Esprit de corps keeping the team together, using harmony as a basis of strength: Dividing enemy forces to weaken

them is clever, but dividing ones own team is a grave sin against the business.

Although command and control appears at odds with todays emphasis on employee participation, it is undoubtedlytrue that many organisations require a degree of hierarchy, and clear lines of command and accountability, in order tofunction effectively. Any organisation that has to respond quickly to a crisis the armed forces, for example, or theemergency services needs to know exactly who is in charge and who does what. Fayol has his supporters today amongmanagement theorists. Elliott Jaques, for example, points out that management hierarchies are still needed because managersare accountable, so must have authority too. In practice, hierarchy is not necessarily autocratic; it is important to work out thedesirable layers of management, and the authority associated with each, so that employees know where they stand and cantherefore fulfil their potential. Jaques believes that concepts such as de-layering, group objectives and empowerment can leadto confusion and problems due to an incomplete understanding of where accountability lies.

F W Taylor, 18561915

Scientific management

Sigmund Freud would have had a field day with Frederick Winslow Taylor. From an early age, hewas obsessed with control, and with planning, scheduling and self-regimenting. Childhood games lost allspontaneity and fun as Fred insisted on precise rules and measurements. Today he might be dismissed as acrank, but at the time his principles of scientific management yielded results and hit a chord.

In 1878, Taylor began working at the Midvale Steel Company, where he rose to be foreman and testedout his ideas, later published as The Principles of Scientific Management. Taylor believed that responsibility for theorganisation of work belonged with the manager; workers merely implemented what they were told to do. He taught that themost efficient way of doing the job should be specified precisely, then followed. Workers should be carefully selected,trained and monitored via tools such as the time and motion study. Some of Taylors sayings make bleak reading today.

You are not supposed to think. There are other people paid for thinking around here.

In the past man has been first; in the future the system must be first.

Taylors view of the separation of hand and brain, and belief that workerscould be motivated by payment by resultsincentives alone, make us feel uncomfortable and, interestingly, were by no means universally popular in his own day. Hewas, for example, termed the enemy of theworking man and was summoned in 1911 to defend his system of managementbefore a committee of the US House of Representatives.

However, before we adopt a condemnatory stance we should remember that Taylorism is still flourishing today.McDonalds employees are taught to follow tick lists that break down their activities into small component parts; productionlines are closely controlled and monitored by computers; and call centre operatives follow scripts that have been written forthem.

Taylors ideas were developed by others. Frank and Lillian Gilbreth, for example, founded a highly successful businessin the 1890s to 1910s based on time and motion studies, the elimination of waste and the reduction of time spent on work

activities. However, their analysis of work at a micro level began to develop a movement away from an obsession withcontrol and tasks towards an interest in, and understanding of, the importance of the individual. Lillian Gilbreth herselfreturned to university to study psychology in more detail, and wrote The Psychology of Management the first detailedapplication of psychological concepts to management.

[T]he emphasis in successful management lies on the man, not on the work; that efficiency is best secured by placing the

emphasis on the man, and modifying the equipment, materials and methods to make the most of the man.

Taylor would not have approved of this focus on the individual later developed by Elton Mayo, whose wellknownHawthorne experiments highlighted the importance of social interaction. Given Taylors obsession with control and self-discipline, it is unlikely that he would have even understood such theories.


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Part 2: Weber, Follett and Maslow

In Part 1 of this series, which appeared in the January 2005 issue of Training Journal, we looked at the influence ofMachiavelli, Fayol and Taylor. Part 2 moves on chronologically to examine the work of three more theoristsWeber, Follett(a female theorist whose views are not widely known, but who is highly favoured by some of todays influential gurus) andMaslow.

Max Weber, 18641920

Bureaucratic organisation

AGerman sociologist, Weber has been somewhat misunderstood. He is often portrayed as anadvocate of bureaucracy, but he was in fact skeptical about its merits and saw clearly how the organisation

could become an instrument of domination. He observed, however, that bureaucracy was the mostfrequently found type of rational legal authority (that is, authority based on a set of rules and procedures).He also saw that bureaucracy had replaced other forms of authority for example, charismatic (based onpersonal qualities) and traditional (based on respect for tradition and the past). Weber believed the

bureaucratic form is a manifestation of the process of rationalisation of society. Unlike

Fayol, he did not see bureaucracy as the best form of organisation; his main interest was in explaining how rulerslegitimately exercised authority. Weber was concerned about the trend towards increasing bureaucratisation andrationalisation, which he likened to an iron cage that threatened the human spirit.

Despite his concerns, Weber is inextricably linked with bureaucracyan organisational form that endures today and islikely to continue to do so. In its purest form (in practice not likely to be found), Weber characterised the bureaucraticorganisation as giving the following features.

Official functions bounded by rules. Specialisation a clear division of labour and an understanding of what is expected, with job holders having thenecessary authority. A clearly defined hierarchy. Stable and comprehensive rules. Impersonalityequality of treatment. Selection on the basis of qualification, not favouritism. Full-time paid officials. A career structure. Officials detached from ownership of organisationlessening the possibility of bribery or corruption. Systematic discipline and control of work.

Bureaucracy clearly led to some benefits that Weber approved of. In particular these were a levelling of social classes(because technical competence was the main criterion for advancement), a greater degree of social equality, and plutocracy(because the many different offices required specialist qualifications).

Mary Parker Follett, 18681933

A prophet before her time?

Follett was an American political scientist and management thinker who experienced a late andsomewhat unexpected career as a management guru. In the 1920s she was well known on both sides ofAtlantic, but her star was later eclipsed by the more masculine approaches that seemed to be better attunedwith the Second World War era. The principles of democracy and cooperation permeate all Follettswritings, be they about politics, business or education. (Indeed, she thought that democratic principlesshould be taught from an early age.)

Follett theorised about community, experience and the group, and how these related to the individual and theorganisation. A business, she reasoned, is a microcosm of human society. An organisation is one in which people at all levelsshould be motivated to work and participate. They should gather their own information, define their own roles and shape

their own lives. Organisations are based fundamentally on cooperation and coordination; this is the single unifying principleholding them together. She advocated power with (a jointly developed power) rather than power over as the key to socialprogress and business successwhich did not suit the prevailing mood before, during and after the Second World War, but ismuch more in tune with recent management thinkers. Henry Mintzberg and Rosabeth Moss Kanter, for example, are fans ofFolletts approach.

The following quotations serve as examples of Folletts ethos of management and resonate with todays ideas aboutorganizational citizenship and the importance of employee involvement.

The ramifications of modern industry are too widespread, its organization too complex, its problems too intricate for

industry to be managed by commands from the top alone.

You must have an organisation which will permit interweaving all along the line

[I]t is my plea above everything else that we learn how to cooperate


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The leader knows that any lasting agreement among members of the group can come only by their sharing each others

experience.

The difference between competition and joint effort is the difference between a short and a long view.

Folletts theoretical emphasis on integration, synthesis and unifying differences and her work on group processes, crowdpsychology, neighbourhood and work, governance and the self in relation to the whole now appear way ahead of their time.We should remember, however, that in the 1920s before the spectre of war reared its headshe was received with empathyand understanding. Her current resurrection is an indication of the relevance of such theories to many working environmentstoday.

Abraham Maslow, 19081970

Motivational theory

Maslow is famous for encapsulating a theory of human needs which is fundamental to theunderstanding of motivation. His hierarchy of needs, derived from research into human behaviorbetween 1939 and 1943, describes five sets of goals, each of which cannot be attended to until theprevious goal has been satisfied.

1. Physiologicalsuch as hunger, thirst, shelter and sleep.2. Safetysecurity, stability and freedom from attack.3. Love and belongingfriends, family, partners, identification.4. Esteemsuccess, self-respect, mastery, achievement.5. Self-actualisationself-fulfilment, realisation of potential, creativity, the desire to become more and more what one is, to

become everything that one is capable of becoming.

The motivational theorists that followed Maslow built on his work and have produced well-known and much-quotedtheories, two of which are briefly outlined below.

Herzbergs two-factor hygiene and motivation theory Frederick Herzberg overturns previously held received wisdom aboutpay being the ultimate employee motivator. He describes pay and other organisational factors such as working environmentas hygiene factors they can cause dissatisfaction, but do not motivate. Intrinsic factors like achievement, recognition,advancement and job interest are the true motivators.

Vrooms expectancy theory Victor Vroom states that individuals have different needs and will be motivated if they believethat there is a positive correlation between effort and performance; that favourable performance will result in a desirablereward; that the reward will satisfy an important need; and that the desire to satisfy the need is strong enough to make theeffort worthwhile.

Maslows hierarchy of needs is now so well known that it is hard to imagine managerial life without it. Maslow started adebate about motivation that will continue into the 21st century and probably beyond. As evidence increasingly mounts thathighly motivated individuals perform better, every CEO and HR professional would like to be able to possess the magic key

to motivating their workforce.

Part 3: Drucker, Hofstede, Mintzberg and Senge

This is the third and final part of a short series describing ten influential theorists and the influence they still have today.Part 1 looked at Machiavelli, Fayol and Taylor, while Part 2 examined Weber, Follett and Maslow. Part 3 offers four morerecent (and still living) theorists whose views continue to have a major impact.

Peter Drucker, b.1909

Management as a Discipline

Peter Drucker is renowned as the creator of management as a discipline in its own right. He was bornin 1909 in Vienna, and was educated both there and in England before emigrating to the USA in 1937.When he became Professor of Management at New York University in 1950, he was, in his own words,

the first person anywhere in the world to have such a title and to teach such a subject. Druckers ground-breaking management book about General Motors, Concept of the Corporation,

was published in 1946. In it, he asserted that management was not a rank or a title, but a responsibility and a practice adiscipline that can be taught and must be studied, just like other disciplines. Drucker is a prolific writer who has coined newphrases and introduced new concepts that have become firmly established as facts of management life. His two famousbooks, The Practice of Management (1954) and Management Tasks, Responsibilities, Practices (1973), describe hisphilosophy and approach to management and are also textbooks that teach the reader how to manage. His five basicprinciples of management are:

1.setting objectives2.organising3.motivating and communicating4.establishing measurements of performance, and5.developing people.


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Despite advancing years Drucker has continued to contribute fresh ideas, publishing Management Challenges for the21st Century in 1999. He has the gurus knack of presenting concepts and ideas clearly and persuasively to his audience, andis eminently quotable.

The best way to predict the future is to create it.

A manager is responsible for the application and performance of knowledge.

The most important contribution management needs to make in the 21st century is to increase the productivity of

knowledge work and the knowledge worker.

Geert Hofstede, b.1928

Cultural differences

Born in 1928, Geert Hofstede is renowned for his work on cross-cultural management based on aworldwide survey of IBM employeespeople who had much in common (such as educational attainment,nature of work and company) but who belonged to different nationalities. He derived four dimensions(later, he added a fifth) that distinguish cultures at a national level.

1.Power distanceperceptions of the degree of inequality in society. Those with a large power distance put greater stresson hierarchies and often have extreme politics, while those with low power distance stress equal rights.

2.Collectivism versus individualismthe former base their societies on social groups, while the latter stress the identity ofthe individual.

3.Masculinity versus femininity masculine societies are assertive and competitive, and feminine societies prefercooperative relationships.

4.Uncertainty avoidance the avoidance of risks and the creation of rules (countries with low uncertainty avoidance aretolerant of ambiguity and are uncomfortable with regulations).

5.Long-term versus short-term orientationAnglo-Saxon Western countries are decidedly short-term in their focus, unlikeChina and Far Eastern countries.

Hofstede observed that management is seen very differently in different countries. In the US, for example, the manageris a cultural hero, whereas in Germany, where technical qualifications are prized and held by many workers, the engineer ismore likely to fulfil this role. The core of Japanese enterprise is the permanent worker group those who are tenured andaspire to life-long employment. Control is via the peer group rather than the professional manager. In France, a hierarchical,stratified society, where management cadres are responsible for running organisations, matrix management is frowned upon;the principle of unity of command dominates. Dutch management operates by consensus and open-ended exchanges ofviews. Dutch workers value being given freedom to adopt their own approach to the job, being consulted, being giventraining opportunities, contributing to the success of the organisation and helping others; this consensual employmentrelationship contrasts with the contractual relationship prevalent in the USA. The overseas Chinese, another cultural group

studied by Hofstede, favour small, family owned businesses, with no separation between ownership and management; theyare flexible and opportunistic, with few professional managers.

Hofstedes observations about management will be relevant in the 21 st century and beyond for as long as we havedifferent cultures in the world. His observation that management cannot be isolated from other processes in society is avaluable one for managers educated on a diet of predominantly US thinkers. He finds it particularly amusing that US writersof management texts often misrepresent his research, stating that he surveyed IBM managers rather than employees thusunconsciously reinforcing their prejudice in favour of the managerial role.

Henry Mintzberg, b.1939

The Reality of Management

Henry Mintzbergs The Nature of Managerial Work was published in 1973 (based on his PhDresearch). It created waves by describing what managers actually do rather than the theory of what they do,

what they say they do or what they should be doing.

[T]here are really no tangible mileposts where he can stop and say, now my job is finished the

manager is a person with a perpetual preoccupation.

In practice, Mintzberg found that managers work occurs in very short episodes, is highly fragmented, frequentlyinterrupted and brief in duration. Managers are not systematic, reflective planners, but prefer (and gravitate towards)activities that are current, specific, well-defined and non-routine. The complexity of organisations means that managers aredriven to brevity, fragmentation and superficiality.

[They] focus on that which is current and tangible in [their] work even though the complex problems facing many

organisations call for reflection and a far-sighted perspective.

The reality of managerial behaviour is untidy and not at all in line with the rational model. In practice, managers use abounded rationality model of decision making.


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Since 1973, Mintzberg, a professor at McGill University in Montreal, has continued to be iconoclastic and provocative,and has applied his attentions to a variety of subjects. In his own field, strategy, he has remained at the forefront of thedebate. A champion of strategy as a creative and emergent process, he has consistently defended it against those who seek toreduce it to prescriptive analysis. His value to 21st-century managers lies in his constant questioning and challenging ofreceived wisdom, and his emphasis on people and relationships within organisations.

The MBA is really about business, which would be fine except that people leave these programs thinking theyve been

trained to do management. I think every MBA should have a skull and crossbones stamped on their forehead and underneath

should be written: Warning: not prepared to manage.

And the issue is not just that they are not trained to manage, but that they are given a totally wrong impression of what

managing is; namely decision making by analysis. The impression they get from what theyve studied is that people skillsdont really matter.

The global style is not global, it is American. The trouble is everywhere else people think that the universal way of

managing is what happens in the United States. But each place has its own different style.

Peter Senge, b.1947

The learning organization

The youngest thinker in this article, Peter Senge was born in 1947. His 1990 book The FifthDiscipline popularised the concept of the learning organisation and brought it to the forefront ofmanagement thinking. Senge describes the learning organisation as a place where:

people continually expand their capacity to create the results they truly desire, where new and

expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are

continually learning to see the whole together.In an environment of rapid change, Senge argues, only those organisations that have the flexibility and skills to adapt

will surviveand to outperform the competition, organisations must gain the commitment of all employees, no matter whattheir level, and nurture their capacity to learn.

Being a true learning organisation requires a mind shift to enable the organisation not just to survive but to acquire thecontinuing capacity to create. Learning organisations must master five basic disciplines.

1.Systems thinking fundamental to the learning organization philosophy is the ability to see the whole, rather thanfocusing on the parts.

2.Personal masterythe proficiency to live in a continual learning mode, which brings selfconfidence to the individual,who is not afraid to admit ignorance and the need to grow.

3.Mental models deeplyingrained assumptions, generalisations or even pictures and images that influence how weunderstand the world and how we take action.

4.Building shared visiona genuine vision that encourages people to excel and learn because they want to.5.Team learningbecause people need to be able to act together and learn from each other in order to achieve maximum

creativity and innovation.

Within the learning organisation, the leader is not so much a decision maker and motivator as a designer, steward andteacher.

Senges learning organisation is hard to find in practice, and appears at odds with the need to deliver short-term profits toshareholders. However, the late 20th and early 21st centuries are fast-moving times, when knowledge and the ability tomuster it to create and innovate are at a premium. If not yet a reality, the aspiration of the learning organisation has helpedmany individuals and organisations to focus on learning as a benefit, rather than a cost and it will be fascinating to seewhether true learning organisations develop during our lifetimes.

SOCIAL RESPONSIBILITIES OF MANAGEMENT

The term social responsibilities can be defined as the obligation of management towards the society and othersconcerned.

Reason for Social Responsibilities: Business enterprises are creatures of society and should respond to the demands ofsociety. If the management does not react to changes in social demands, the society will either force them to do so throughlaws or will not permit the enterprise to survive. Therefore the long term interests of business are best served whenmanagement assume social responsibilities. The image of business organization liked with the quality of its products andcustomer service and the extent to which it fulfills the expectations of owners, employees, consumers, government and thecommunity at large. For long term success it matters a great deal if the firm has a favorable image in the public mind. Everybusiness enterprise is a organ of society and its activities have impact on the social scene. Therefore, it is important formanagement to consider whether their policies and actions are likely to promote the public good, advances the basic values ofsociety, and constitute to its stability, strength and harmony.

Increasing concern for the social responsibility of management, it is now recognized that besides taking care of thefinancial interest of owners, managers of business firms must also take into account the interest of various other groups such


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as employees, consumers, the government and the community as a whole. These interested groups are directly or indirectlyaffected by the pursuit of business activities and they are the stake-holders of the business enterprise.

Responsibility towards owners: The primary responsibilities of management is to assure a fair and reasonable rate of returnon capital and fair return on investment can be determined on the basis of difference in the risks of business in different fieldsof activity. With the growth of business the shareholders can also expect appreciation in the value of their capital.

Responsibility towards employees: Management responsibility towards employees relate to the fair wages and salaries,satisfactory work environment, labour management relations and employee welfare. Fair wages should be fixed in the light oflabor productivity, the prevailing wage rates in the same or neighboring areas and relative importance of jobs. Managerssalaries and allowances are expected to be linked with their responsibility, initiative and skill. But the spread between

minimum wages and highest salaries should be reasonable. Employees are expected to build up and maintain harmoniousrelationships between superior and subordinates. Another aspect of responsibility towards employees is the provision ofwelfare amenities like safety and security of working conditions, medical facilities, housing, canteen, leave and retirementbenefits.

Responsibility towards consumers: In a competitive market, serving consumers is supposed to be a prime concern ofmanagement. But in reality perfect competition does not prevail in all product markets. In the event of shortage of supplythere is no automatic correction. Besides consumers are often victims of unfair trade practices and unethical conduct ofbusiness. Consumer interests are thus protected to some extent with laws and pressure of organized consumer groups.Management should anticipate these developments, satisfy consumer needs and protect consumer interests. Goods must be ofappropriate standard and quality and be available in adequate quantities at reasonable prices. Management should avoidresorting to hoarding or creating artificial scarcity as well as false and misleading advertisements.

Responsibility towards the Governments: As a part of their social responsibility, management must conduct business affairin lawful manner, honestly pay all the taxes and dues, and should not corrupt public officials for selfish ends. Business

activities must also confirm to the economic and social policies of the government.Responsibility towards the community and society: The socially responsible role of management in relation to thecommunity are expected to be revealed by its policies with respect to the employment of handicapped persons, and weakersections of the community, environmental protection, pollution control, setting up industries in backward areas, andproviding relief to the victims of natural calamities etc.

MANAGEMENT ETHICS

Morality as it pertains to the business management world is commonly known as management ethics. While eachcompany has a different ethical standard, management ethics are largely the same in every industry. In many ways, this typeof ethical understanding exists as an unwritten code, though literal ethical documents also exist.

The main goal of management ethics is to treat all employees and customers justly and fairly. It is believed that byfollowing a moral and ethical code, business will improve. When a management team adheres to management ethics,

employees become motivated and a workplace environment becomes motivational.When applied to everyday business, acting ethically means adhering to law, competing with others in an honest manner,

and performing daily tasks without any element of deceit. Many companies around the globe update written codes of conductas a result of past corporate scandals. It is not uncommon for a company to update this document on a yearly basis. After acode of conduct document has been updated, each staff member must read and understand the document. Further, allemployees must adhere to the updated codes of conduct, and those that do not follow these regulations are often dismissed.Although managers must follow the same codes of conduct as employees, these individuals have additional obligations.

Almost every decision that is made on a daily basis involves an ethical decision. Managers must keep this in mind at alltimes. By setting a good ethical example for other employees, managers can easily encourage all employees to follow thesame ethics. Some companies offer managers specialized management ethics courses that must be completed prior to jobacceptance.

Frequently, managers who switch companies are asked to follow a different code of conduct. This does not mean that allother management ethics should be forgotten, but it does mean that additional ethics should be learned. Ethics are not

necessarily interchangeable from country to country. Sometimes, different cultures respect different ethical rules. Thus, anyperson who decides to move to another country may have to adapt to cultural, and workplace, ethical differences.


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PLANNING FUNCTION

Planning is concerned with the future impact of today's decisions. It is the fundamental function of management fromwhich the other four stem. The need for planning is often apparent after the fact. However, planning is easy to postpone in t heshort-run. Postponement of planning especially plagues labor oriented, hands on managers.

The organizing, staffing, leading and controlling functions stem from the planning function. The manager is ready toorganize and staff, only after goals and plans to reach the goals are in place. Likewise, the leading function, influencing thebehavior of people in the organization, depends on the goals to be achieved. Finally, in the controlling function, thedetermination of whether or not goals are being accomplished and standards met is based on the planning function. The

planning function provides the goals and standards that drive the controlling function.Planning is important at all levels of management. However, its characteristics vary by level of management. The

characteristics of the world being simple, certain, structured and short-term often become rationalizations for top managersnot to plan. Top managers acting as if they are lower level managers plagues.

Planning Terminology

The order from general to specific is: vision-mission-objectives-goals. In Management Excel practice established beforethe use of Higgins as the basic reference, we adopted the order: vision-mission-objectives-goals. The Higgins text switchesthe order of objectives and goals. In reading the Higgins text, simply substitute the term objective for goal and the term goalfor objective. The key terms are defined as follows:

Vision: Nonspecific directional and motivational guidance for the entire organization. Top managers normally provide avision for the business. It is the most emotional of the four levels in the hierarchy of purposes.

Mission: An organization's reason for being. It is concerned with scope of the business and what distinguishes this business

from similar businesses. Mission reflects the culture and values of top management.Objectives: Objectives refine the mission and address key issues within the organization such as market standing, innovation,productivity, physical and financial resources, profitability, management and worker performance and efficiency. They areexpected to be general, observable, challenging, and untimed.

Goals: Goals are specific statements of anticipated results that further define the organization's objectives. They are expectedto be SMART: Specific, Measurable, Attainable, Rewarding, and Timed.

Development of tactics is a fifth level of planning. Tactics, the most specific and narrow plans, describe who, what,when, where and how activities will take place to accomplish a goal.

Strategic Planning

Strategic planning is one specific type of planning. Strategies are the outcome of strategic planning. An organization'sstrategies define the business the firm is in, the criteria for entering the business, and the basic actions the organization willfollow in conducting its business. Strategies are major plans that commit large amounts of the organization's resources to

proposed actions, designed to achieve its major objectives and goals. Strategic planning is the process by which theorganization's strategies are determined. In the process, three basic questions are answered:

1.Where are we now?2.Where do we want to be?3.How do we get there?

The "where are we now?" question is answered through the first three steps of the strategy formulation process: (1)perform internal and external environmental analyses, (2) review vision, mission and objectives, and (3) determine SWOT:Strengths, Weaknesses, Opportunities and Threats. SWOT analysis requires managers to be honest, self-disciplined andthorough. Going on to strategy choices without a comprehensive SWOT analysis is risky.

Strengths and weaknesses come from the internal environment of the firm. Strengths can be exploited, built upon andmade key to accomplishment of mission and objectives. Strengths reflect past accomplishments in production, financial,marketing and human resource management. Weaknesses are internal characteristics that have the potential to limit

accomplishment of mission and objectives. Weaknesses may be so important that they need to be addressed before anyfurther strategic planning steps are taken.

Opportunities and threats are uncontrollable by management because they are external to the firm. Opportunities providethe firm the possibility of a major improvement. Threats may stand in the way of a firm reaching its mission and objectives.

NATURE OF PLANNING

The planning has the following inherent characteristics:

1. Planning is an intellectual process: - Planning as an intellectual process, the conscious determination of course of action.Thus, it is an intellectual stimulation. It possesses an element of day-dreaming. In the initial stage it may involve whatmight be called vision. It involves foreseeing future development, making forecasts or predictions and then takingdecisions. Thus, it becomes an important mental exercise.

UNIT 2: PLANNING AND DECISION MAKING


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2. Planning contributes to the objective: - A plan starts with the setting of objectives and in order to realize it developspolicies, procedures, and strategies, etc. Obviously, without setting the goals to be reached and lines of action to befollowed, there is a continuous and never-ending activity of a manager to keep the enterprise going.

3. Planning is a selecting process: - Planning is a selective process. It involves the study and a careful analysis of variousalternatives and then selecting the best one. It not only pertains to defining a problem which immediately confronts themanager, but often it mentally searches the possibilities for problems that might appear in the future.

4. Planning forms the premises for the decision of the future: - Plans become premises, for the decisions of the future.Detailed planning may include several plans, which are mutually exclusive. It provides series or sets of decision that canbe made under various possible circumstances. Thus, planning aids in making specific decisions, since it includes all ofthe important alternatives, which

5. Planning pervades all managerial activities: - Planning is a pervasive activity convering the entire enterprise with all itssegments and its every level of management. It is not the exclusive responsibility of top management but it extends tomiddle and lower management as well. It is a primary function of the management and its level and extent, etc. Willdepend upon the level of management.

6. Planning is directed towards efficiency: - The main purpose of planning is to increase the efficiency of the enterprise. Itis an attempt on the part of a manager to anticipate the future in order to achieve better performance. It has become animportant function due to uncertain and ever changing environmental of business.

7. Planning is a continuous and flexible process: - Because of uncertainties of the future the planner must be ever alert andshould form his plans in such a way as to adopt them to changing circumstances without inconvenience and undue costs.

IMPORTANCE OF PLANNING

Accounting to Koontz, ODonnell 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 isone of the most important functions of management because of the following factors:

1. Makes the objectives clear and specific: planning clearly specifies the objectives and the policies or activities to beperformed to achieve these objective in other words what is to be done and how it is to be done are clarified in planning.

2. Offsetting the uncertainty and change: planning is necessary to look ahead towards future and to take decisions regardfacing the expected changes/requirement of the future. E.g. before coming of summer session producers startedproduction for the products to be used in summer.

3. Plans facilitate decision-making: to achieve the objective predetermined under planning, business has to take variousdecisions by considering the available resources. If job may be completed by using various alternatives (e.g. manually orby machines) and the best alternative is decided by the management, which is more helpful in achieving the objective.

4. Provides basis of control: under controlling actual performance is compared with the planed performance(target/objective). So planning is the base of controlling process.

5. Leads to economy and efficiency: planning clarifies the work and its method of doing. Resultantly it reduces confusionand wastage of resources in the form of thinking at the time of doing. So efficiency of the worker will risen which willfurther result economy in production.

6. Facilitates integration: under planning proper directions as per plane are provided to the subordinates. Resultantly theyall make effort towards the achievement of preplanned objective. Such co-ordination of sub-ordinates and theirdepartments will certainly help the organisation in achieving its objective.

7. Encourages innovation and creativity: planning is the process of thinking in advance and so plans are made to achieve atarget at future date by using latest methods and technology to perform the industrial/business activities and so plans leadto innovation.

8. Facilitates control: planning facilitates the managers in performing their function of control. Planning and control areinseparable in the sense that unplanned action cannot be controlled because control involves keeping activities on thepredetermined course by rectifying deviations from plans. Planning facilitates control by furnishing standards of control.It lays down objectives and standards of performance, which are essential for the performance of control function.

9. Improves motivation: the effective planning system ensures participation of all managers, which improves theirmotivation. It improves the motivation of workers also because they know clearly what is expected of them. Moreover,

planning also serves as a good training device for future managers.10.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, changesin work methods, changes in quality, anticipation of tastes and fashion of people and technological changes, etc.

11.Encourages innovation and creativity: planning helps innovative and creative thinking among the managers becausemany new ideas come to the mind of a manager when he is planning. It creates a forward-looking attitude among themanagers.

12.Achieves better coordination: planning secures unity of direction towards the organisational objectives. All the activitiesare directed towards the common goals. There is an integrated effort throughout the enterprise. It will also help inavoiding duplication of efforts. Thus, there will be better coordination in the organisation.


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PLANNING PROCESS

As planning is one of great importance to an organization the entire process of planning should be carried out in asystematic manner. Planning is an intellectual process which an executive carries out before he does any job with the help ofother people. It involves the following steps :

1. Determination of the objectives: The first step in planning is to identify certain objectives. The objectives set mustclearly indicate what is to be achieved, where action should take place, who should perform it and when it is to beaccomplished. The objectives should be established for the entire organisation and for each and every department.Planning has no utility if it is not related to certain objectives.

2. Collection and forecasting of Information: Sufficient information must be collected in order to make plans and subplans. necessary information includes the critical assessment of current status of the organisation together with a forwardlook at the environment that is anticipated. The collection and forecasting of the information must be done in terms ofexternal and internal environment. The considerations of the external environments must the competitions now and in thefuture. The assessment of internal environment may consist of the strong and weak point of the organisation. This is animportant step of planning process.

3. Development of planning premises: The next step is the establishment of planning premises. Planning premises are theassumptions and predictions about the future. The assumptions are the basis of planning. Forecasting is important inpremising. It helps in making realistic assumptions about sales, costs, prices, products etc in future. This requires acollection of data on present trends and future possibilities.

4. Discovering alternative courses of action: Usually, there are several alternatives for any plan. The manager should try tofind out all the possible alternatives.At the time of developing alternatives he should screen out most viable alternatives.So he has to analyse in detail a limited number of alternatives.

5. Selection of best alternative: The various alternatives identified are evaluated and compared in terms of their expectedcosts and benefits. Many quantitative techniques are available to evaluate alternatives. after evaluating the various

alternatives the best alternative should be selected for implementation.6. Formulation of derivative plans: The next step is to develop detailed sub plans for its implementation. Derivative plans

are required to support the overall plans. The derivative plans are developed in the frame work of overall plans.These aredrawn up with respect to different areas of activity.

7. Communicating the plan: It is very important to get the co operation of the subordinates at every stage of itsimplementation. For this purpose the plans should be communicated and explained to them so that they can get the clearpicture of what to be done. An organisation is not benefited from planning process until they are put into action.

8. Follow up measures: To ensure the plans are proceeding along the right lines, the actual performance is compared withthe planned performance. In this way, any short coming can be noted and suitable remedial action can be taken.

PRINCIPLES OF PLANNING

Planning is a dynamic process, it is very essential for every organisation to achieve their ultimate goals, but, there are certain

principles which are essential to be followed so as to formulate a sound plan. They are only guidelines in the formulation andimplementation of plans. These principles are as follows:

1. Principle of Contribution: The purpose of planning is to ensure the effective and efficient achievement of corporateobjectives, in-fact, the basic criteria for the formulation of plans are to achieve the ultimate Objectives of the company.The accomplishment of the objectives always depends on the soundness of plans and the adequate amount ofcontribution of company towards the same.

2. Principle of Sound and Consistent Premising: Premises are the assumptions regarding the environmental forces likeeconomic and market conditions, social, political, legal and cultural aspects, competitors actions, etc. These areprevalent during the period of the implementation of plans. Hence, Plans are made on the basis of premises accordingly,and the future of the company depends on the soundness of plans they make so as to face the state of premises.

3. Principle of Limiting factors: The limiting factors are the lack of motivated employees, shortage of trained personnel,shortage of capital funds, government policy of price regulation, etc. The company requires to monitor all these factorsand need to tackle the same in an efficient way so as to make a smooth way for the achievement of its ultimate

objectives.

4. Principle of Commitment: A commitment is required to carry-on the business that is established. The planning shallhas to be in such a way that the product diversification should encompass the particular period during which entireinvestment on that product is recovered.

5. Principle of Coordinated Planning: Long and short-range plans should be coordinated with one another to form anintegrated plan, this is possible only when latter are derived from the former. Implementation of the long-range plan isregarded as contributing to the implementation of the short-range plan. functional plans of the company too shouldcontribute to all others plans i.e. implementation of one plan should contribute to all the other plans, this is possibleonly when all plans are consistent with one another and are viewed as parts of an integrated corporate plan.

6. Principle of Timing: Number of major and minor plans of the organisation should be arranged in a systematic manner.The plans should be arranged in a time hierarchy, initiation and completion of those plans should be clearly determined.


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7. Principle of Efficiency: Cost of planning constitute human, physical and financial resources for their formulation andimplementation as well. Minimizing the cost and achieving the efficient utilization of resources shall has to be the aimof the plans. Cost of plan formulation and implementation, in any case, should not exceed the organisations output'smonetary value. Employee satisfaction and development, and social standing of the organisation are supposed to beconsidered while calculating the cost and benefits of plan.

8. Principle of Flexibility: Plans are supposed to be flexible to favour the organisation to cope-up with the unexpectedenvironments. It is always required to keep in mind that future will be different in actuality. Hence companies,therefore, require to prepare contingency plans which may be put into operation in response to the situations.

9. Principle of Navigational Change: Since the environment is always not the same as predicted, plans should bereviewed periodically. This may require changes in strategies, objectives, policies and programmes of the organisation.The management should take all the necessary steps while reviewing the plans so that they efficiently achieve theultimate goals of the organisation.

10.Principle of Acceptance: Plans should be understood and accepted by the employees, since the successfulimplementation of plans requires the willingness and cooperative efforts from them. Communication also plays acrucial role in gaining the employee understanding and acceptance of the plans by removing their doubts andmisunderstanding about the plans also their apprehensions and anxieties about consequences of plans for achievementof their personal goal

LIMITATIONS OF PLANNING

Planning is an important function of management. However, the planning may fail if the following limitations.

Lack of accuracy: planning relates to future and future is always uncertain and so prediction about future is so muchdifficult. Moreover planning are based on data/information relating to past and as such planning based on any wronginformation may not be useful to the organisation.

Costs: formulation of plans involves too much cost which are in the form of time spend, money spent etc. but some timesthere is little benefit from in plan and than it becomes a burden for the institution. If the plan is not useful than the amountor time spent on its formulation is a waste.

Advance effect on decisions: some plans are rigid and a manager faces difficulty while making any changes where asthere may be continuous change in environment where as the quick decision is required as per the changed environment.

Delay in actions: planning requires some time for thinking, analyzing the situation and designing the final plan and so incase emergency decision is required it will take time and business will lose its opportunity. Moreover delay in decision willfurther delay the action.

Psychological barrier: people in organisationhave to work strictly according to plan where as they may be able to givebetter performance in a way decided by themselves. Secondly they do not think beside the plan and performs their

activities like a machine without using their psychology. Limited flexibility: there may be some changes in planning only up to some extent because measure changes in plan will

further attract the changes in supporting plans also and as such the whole system is disturbed moreover changes in planstime and again will prove a wastage of time and money spent on previous plan (pre-changed plan).

Human elements: planning are the results of thinking of human being. Information on the basis of which plan isformulated may not be free form bias or there may be some other errors which will further Reebok (problem) the betterplan.

Limited practical value: planning is too much theoretical and have a less practical use planning is more suitable whenenvironment is suitable but due to unsuitability of environment business has to take various quick steps/decision time andagain and as such the importance of other resources which are used according to changing environment, is more than thatof planning.

Improper plan: planning/target set at the lower side than the capability of or resources and target on over side than thecapacity of the resources both are termed as improper planning because lower target will be easily achieved and we willfeel false sense of security. On the other hand over planned target beyond resources cannot be achieved even all effort bothare the situation of improper plan.

Planning is a time-consuming and costly process: this may delay action if certain cases. But it is also true that, ifsufficient time is not given to the planning process, the plans so produced may prove to be unrealistic. Similarly, planninginvolves costs of gathering and analyzing information and evaluation of various alternatives. If the management is notwilling to spend on planning, the result may not be good.

Planning is a forward-looking process: the planner must possess the required initiative. He should be an active plannerand should take adequate follow up measures to see that plans are understood and implemented properly.

Resistance to change is another important factor, which puts limits on planning: It is commonly experiencedphenomenon in many organisations. Sometimes, planners themselves do like change and on other occasion, they do notthink it desirable to bring change, as it will create resistance on the part of the workers. This attitude makes the planningprocess ineffective.


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Internal inflexibility in the organisation may compel the planners to make rigid plans: this may deter the managersfrom taking initiative and doing innovative thinking. So, the planners must have sufficient discretion and flexibility in theenterprise. They should not always be required to follow the procedures rigidly.

Psychological factors also limit the scope of planning: some people consider present as more important than futurebecause present is less uncertain. Such persons are psychologically opposed to planning. But it should not be forgotten thatdynamic managers always look ahead. Long-term well being of the enterprise cannot be achieved unless proper planning isdone for future.

The effectiveness of planning is sometimes limited: because of external factors, which are beyond the control of theplanners. External stringencies are very difficult to predict. Sudden breakout of war, government controls, natural havocs

and may other factors are beyond the control of management. They make the execution of plans very difficult.

DECISION MAKING

Decision-making is a process of selection from a set of alternative courses of action, which is thought to fulfill theobjectives of the decision problem more satisfactorily than others. It is a course of action, which is consciously chosen forachieving a desired result. A decision is a process that takes place prior to the actual performance of a course of action thathas been chosen. In terms of managerial decision-making, it is an act of choice, wherein a manager selects a particular courseof action from the available alternatives in a given situation. Managerial decision making process involves establishing ofgoals, defining tasks, searching for alternatives and developing plans in order to find the best answer fo the decision problem.The essential elements in a decision making process includes the following:

1.The decision maker,2.The decision problem,3.The environment in which the decision is to be made,4.The objectives of the decision maker,5.The alternative courses of action,6.The outcomes expected from various alternatives, and7.The final choice of the alternative.

Characteristics of decision-making

1.It is a process of choosing a course of action from among the alternative courses of action.2.It is a human process involving to a great extent the application of intellectual abilities.3.It is the end process preceded by deliberation and reasoning.4.It is always related to the environment. A manager may take one decision in a particular set of circumstances and another

in a different set of circumstances.5.It involves a time dimension and a time lag.6.It always has a purpose. Keeping this in view, there may just be a decision not to decide.7.It involves all actions like defining the problem and probing and analyzing the various alternatives, which take placebefore a final choice is made.

TYPES OF DECISIONS

There are two types of decisions depending upon the frequency at which decisions have to be made. They can beclassified into programmed and non-programmed decisions.

Programmed Decisions: A decision is said to be programmed when adequate information about the decision situation isavailable with the decision maker. In certain situations, due to the frequent occurrence of the situation, making a decision ruleis easy. The presence of such decision rules guides the decision maker as to which is the most appropriate alternative that canbe chosen under the prevailing conditions. This enables him in making programmed decisions. The same rule is used to makea decision whenever such a situation arises in the future. If the situation is the same, the rule applied has to be the same.

Non-Programmed Decisions: A new problem or decision making situation which involves the development and evaluation of

alternatives without the aid of a decision rule is generally called a non-programmed decision. Non-programmed decisions arecharacterized by a poorly defined structure and lack of goal clarity. They are made in the absence of reliable and well definedsources of information and lack an explicit procedure for decision making which, thus, is responsible for the poorly definedstructure of non-programmed decisions.

DECISION MAKING PROCESS

Quite literally, organizations operate by people making decisions. A manager plans, organizes, staffs, leads, and controlsher team by executing decisions. The effectiveness and quality of those decisions determine how successful a manager willbe.

Managers are constantly called upon to make decisions in order to solve problems. Decision making and problemsolving are ongoing processes of evaluating situations or problems, cons

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