A. Evolution of Scientific Management

Scientific Management by TaylorFredrick Winslow Taylor ( March 20, 1856 - March 21, 1915) commonly known as ’Father of Scientific Management’ started his career as an operator and rose to the position of chief engineer. He conducted various experiments during this process which forms the basis of scientific management. It implies application of scientific principles for studying & identifying management problems.According to Taylor, “Scientific Management is an art of knowing exactly what you want your men to do and seeing that they do it in the best and cheapest way”. In Taylors view, if a work is analyzed scientifically it will be possible to find one best way to do it.Hence scientific management is a thoughtful, organized, dual approach towards the job of management against hit or miss or Rule of Thumb.According to Drucker, “The cost of scientific management is the organized study of work, the analysis of work into simplest element & systematic management of worker’s performance of each element”.

Principles of Scientific Management1. Development of Science for each part of men’s job (replacement of

rule of thumb)a. This principle suggests that work assigned to any employee should be

observed, analyzed with respect to each and every element and part and time involved in it.

b. This means replacement of odd rule of thumb by the use of method of enquiry, investigation, data collection, analysis and framing of rules.

c. Under scientific management, decisions are made on the basis of facts and by the application of scientific decisions.

2. Scientific Selection, Training & Development of Workersa. There should be scientifically designed procedure for the selection of

workers. b. Physical, mental & other requirement should be specified for each and

every job. c. Workers should be selected & trained to make them fit for the job. d. The management has to provide opportunities for development of

workers having better capabilities. e. According to Taylor efforts should be made to develop each employee

to his greatest level and efficiency & prosperity.

3. Co-operation between Management & workers or Harmony not discord

a. Taylor believed in co-operation and not individualism. b. It is only through co-operation that the goals of the enterprise can be

achieved efficiently. c. There should be no conflict between managers & workers. d. Taylor believed that interest of employer & employees should be fully

harmonized so as to secure mutually understanding relations between them.

4. Division of Responsibilitya. This principle determines the concrete nature of roles to be played by

different level of managers & workers. b. The management should assume the responsibility of planning the

work whereas workers should be concerned with execution of task. c. Thus planning is to be separated from execution.

5. Mental Revolutiona. The workers and managers should have a complete change of outlook

towards their mutual relation and work effort. b. It requires that management should create suitable working condition

and solve all problems scientifically. c. Similarly workers should attend their jobs with utmost attention,

devotion and carefulness. They should not waste the resources of enterprise.

d. Handsome remuneration should be provided to workers to boost up their moral.

e. It will create a sense of belongingness among worker. f. They will be disciplined, loyal and sincere in fulfilling the task

assigned to them. g. There will be more production and economical growth at a faster rate.

6. Maximum Prosperity for Employer & Employeesa. The aim of scientific management is to see maximum prosperity for

employer and employees. b. It is important only when there is opportunity for each worker to

attain his highest efficiency. c. Maximum output & optimum utilization of resources will bring higher

profits for the employer & better wages for the workers. d. There should be maximum output in place of restricted output. e. Both managers & workers should be paid handsomely.

Functions of ManagementManagement has been described as a social process involving responsibility for

economical and effective planning & regulation of operation of an enterprise in the fulfillment of given purposes. It is a dynamic process consisting of various elements and activities. These activities are different from operative functions like marketing, finance, purchase etc. Rather these activities are common to each and every manger irrespective of his level or status.Different experts have classified functions of management. According to George & Jerry, “There are four fundamental functions of management i.e. planning, organizing, actuating and controlling”. According to Henry Fayol, “To manage is to forecast and plan, to organize, to command, & to control”. Whereas Luther Gullick has given a keyword ’POSDCORB’ where P stands for Planning, O for Organizing, S for Staffing, D for Directing, Co for Co-ordination, R for reporting & B for Budgeting. But the most widely accepted are functions of management given by KOONTZ and O’DONNEL i.e. Planning, Organizing, Staffing, Directing and Controlling.For theoretical purposes, it may be convenient to separate the function of management but practically these functions are overlapping in nature i.e. they are

highly inseparable. Each function blends into the other & each affects the performance of others.

1. Planning It is the basic function of management. It deals with chalking out a future course of action & deciding in advance the most appropriate course of actions for achievement of pre-determined goals. According to KOONTZ, “Planning is deciding in advance - what to do, when to do & how to do. It bridges the gap from where we are & where we want to be”. A plan is a future course of actions. It is an exercise in problem solving & decision making. Planning is determination of courses of action to achieve desired goals. Thus, planning is a systematic thinking about ways & means for accomplishment of pre-determined goals. Planning is necessary to ensure proper utilization of human & non-human resources. It is all pervasive, it is an intellectual activity and it also helps in avoiding confusion, uncertainties, risks, wastages etc.

2. Organizing It is the process of bringing together physical, financial and human resources and developing productive relationship amongst them for achievement of organizational goals. According to Henry Fayol, “To organize a business is to provide it with everything useful or its functioning i.e. raw material, tools, capital and personnel’s”. To organize a business involves determining & providing human and non-human resources to the organizational structure. Organizing as a process involves:

Identification of activities. Classification of grouping of activities. Assignment of duties. Delegation of authority and creation of responsibility. Coordinating authority and responsibility relationships.

3. Staffing It is the function of manning the organization structure and keeping it manned. Staffing has assumed greater importance in the recent years due to advancement of technology, increase in size of business, complexity of human behavior etc. The main purpose o staffing is to put right man on right job i.e. square pegs in square holes and round pegs in round holes. According to Kootz & O’Donell, “Managerial function of staffing involves manning the organization structure through proper and effective selection, appraisal & development of personnel to fill the roles designed un the structure”. Staffing involves:

Manpower Planning (estimating man power in terms of searching, choose the person and giving the right place).

Recruitment, Selection & Placement. Training & Development . Remuneration . Performance Appraisal . Promotions & Transfer.

4. Directing

It is that part of managerial function which actuates the organizational methods to work efficiently for achievement of organizational purposes. It is considered life-spark of the enterprise which sets it in motion the action of people because planning, organizing and staffing are the mere preparations for doing the work. Direction is that inert-personnel aspect of management which deals directly with influencing, guiding, supervising, motivating sub-ordinate for the achievement of organizational goals. Direction has following elements:

Supervision Motivation Leadership Communication

Supervision- implies overseeing the work of subordinates by their superiors. It is the act of watching & directing work & workers.Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive, negative, monetary, non-monetary incentives may be used for this purpose.Leadership- may be defined as a process by which manager guides and influences the work of subordinates in desired direction.Communications- is the process of passing information, experience, opinion etc from one person to another. It is a bridge of understanding.

5. Controlling It implies measurement of accomplishment against the standards and correction of deviation if any to ensure achievement of organizational goals. The purpose of controlling is to ensure that everything occurs in conformities with the standards. An efficient system of control helps to predict deviations before they actually occur. According to Theo Haimann, “Controlling is the process of checking whether or not proper progress is being made towards the objectives and goals and acting if necessary, to correct any deviation”. According to Koontz & O’Donell “Controlling is the measurement & correction of performance activities of subordinates in order to make sure that the enterprise objectives and plans desired to obtain them as being accomplished”. Therefore controlling has following steps:

a. Establishment of standard performance. b. Measurement of actual performance. c. Comparison of actual performance with the standards and finding out

deviation if any. d. Corrective action.

Definition of CoordinationCo-ordination is the unification, integration, synchronization of the efforts of

group members so as to provide unity of action in the pursuit of common goals. It is a hidden force which binds all the other functions of management. According to Mooney and Reelay, “Co-ordination is orderly arrangement of group efforts to provide unity of action in the pursuit of common goals”. According to Charles Worth, “Co-ordination is the integration of several parts into an orderly hole to achieve the purpose of understanding”.

Management seeks to achieve co-ordination through its basic functions of planning, organizing, staffing, directing and controlling. That is why, co-ordination is not a separate function of management because achieving of harmony between individuals efforts towards achievement of group goals is a key to success of management. Co-ordination is the essence of management and is implicit and inherent in all functions of management.

A manager can be compared to an orchestra conductor since both of them have to create rhythm and unity in the activities of group members. Co-ordination is an integral element or ingredient of all the managerial functions as discussed below: -

a. Co-ordination through Planning - Planning facilitates co-ordination by integrating the various plans through mutual discussion, exchange of ideas. e.g. - co-ordination between finance budget and purchases budget.

b. Co-ordination through Organizing - Mooney considers co-ordination as the very essence of organizing. In fact when a manager groups and assigns various activities to subordinates, and when he creates department’s co-ordination uppermost in his mind.

c. Co-ordination through Staffing - A manager should bear in mind that the right no. of personnel in various positions with right type of education and skills are taken which will ensure right men on the right job.

d. Co-ordination through Directing - The purpose of giving orders, instructions & guidance to the subordinates is served only when there is a harmony between superiors & subordinates.

e. Co-ordination through Controlling - Manager ensures that there should be co-ordination between actual performance & standard performance to achieve organizational goals.

From above discussion, we can very much affirm that co-ordination is the very much essence of management. It is required in each & every function and at each & every stage & therefore it cannot be separated.

Coordination and Cooperation

Co-ordination is an orderly arrangement of efforts to provide unity of action in the fulfillment of common objective whereas co-operation denotes collective efforts of persons working in an enterprise voluntarily for the achievement of a particular purpose. It is the willingness of individuals to help each other.

Co-ordination is an effort to integrate effectively energies of different groups whereas co-operation is sort to achieve general objectives of business.

Though these two are synonymous but they are different as below:

Differences between Co-ordination and Co-operation

Basis Co-ordination Co-operation

Meaning It is an orderly arrangement of group efforts in pursuit of common goals.

It means mutual help willingly.

Scope It is broader than co-operation which includes as well because it harmonizes the group efforts.

It is termed as a part of co-ordination.

Process The function of co-ordination is performed by top management.

The functions of co-operation are prepared by persons at any level.

Requirements

Co-ordination is required by employees and departments at work irrespective of their work.

Co-operation is emotional in nature because it depends on the willingness of people working together.

Relationship It establishes formal and informal relationships.

It establishes informal relationship.

Freedom It is planned and entrusted by the central authority & it is essential.

It depends upon the sweet will of the individuals and therefore it is not necessary.

Support It seeks wholehearted support from various people working at various levels.

Co-operation without co-ordination is fruitless & therefore it may lead to unbalanced developments.

Therefore, existence of co-operation may prove to be effective condition or requisite for co-ordination. But it does not mean that co-ordination originates automatically from the voluntary efforts of the group of members. It has to be achieved through conscious & deliberate efforts of managers, therefore to conclude we can say that co-operation without co-ordination has no fruit and co-ordination without co-operation has no root.

Management Levels

1.  Top level management:- It includes board of directors, chief executive or general managers , senior strategist, decision making, directors . Corporate level goals, missions and objectives are determined. The major functions of this level are:-

To formulate and determine the objectives and define the goals of the business

To establish policies and prepare plans to attain the goals To set up an organizational structure to conduct the operations as per the

plans To provide the overall direction in the organization To assemble the resources necessary for the attainment of the policy and

execution of the paln To control effectively the business operations To judge and evaluate the results

      2. Middle level management:- It includes departmental managers, divisional heads and section officers. It acts as a bridge between top level management and lower level management. the major functions of this level are:-

To implement the task set up by top management To implement the policies framed by the top management To run the organizations effectively and efficiently To cooperate for the smooth functioning of the organizations To coordinate between different departments To recruit , select and train the employees for the better functioning of the

departments To issue the instructions to the lower level management To motivate the workers and staffs for higher productivity and to reward

them. To lead the departments and build up an organizational spirit To report and make suitable recommendations to the top level management

for the better execution of the plans and policies

      3. Lower level management:- It includes supervisors, foremen and workers. it is also known as supervisory level of management in which the supervisors or foreman like sales officers , account officers etc. take responsibilities of the implementation and control of the operational plans developed by the middle level managers. The function of this level are: -

To issue the orders and instruction to the workers to supervise and control the performance

To plan the activities of the sections. To direct and guide the workers about the work procedures To provide job training to the workers To arrange the necessary tools, equipment , materials for the workers and

look after their proper maintenance To solve the problem of workers To develop sense of cooperation and high group spirit among the workers To advise the middle level about the work environment To inform the unsolved problems of the workers to the middle level

management 

Top-level Managers (Strategic Managers)

Senior executives are responsible for the overall management and effectiveness of the organization.

They also focus on long-term issues and emphasize the survival and growth of the organization.

They are concerned with the interaction between the organization and its external environment.

Top-level managers include Chief Executive Officer (CEO), Chief Operating Officer (COO); company President, Vice-President, and members of the top executive committee.

Middle-level managers (Tactical Managers)

Managers located in the middle of the organizational hierarchy, reporting to top-level managers.

They are the link between top-level managers and frontline managers.

They are responsible for translating the general goals and plans developed by strategic managers into more specific objectives and activities.

Frontline Managers (Operational Managers)

Lower level managers who supervise the operational activities of the organization.

They are the link between management and non-management personnel.

They implement the specific plans developed with middle managers and serve as the link between management and non-management personnel.

Management skills Technical skills Technical skill is the ability to perform a specialized task involving a particular method or process. The tasks can be in the areas of engineering, business, computer, etc.

Conceptual and decision skills Conceptual and decision skills are about a manager's ability, To recognize complex and dynamic issues;

To examine the numerous and conflicting factors that influence these issues and problems;

To resolve the problems for the benefit of the organization and its members. The overall objectives and strategy of the organization;

The interactions among different parts of the organization;

The role of the business in its external environment.

Interpersonal and communication skills

Interpersonal and communication skills are “people skills”. They are about the ability to lead, motivate and communicate effectively with others.

This skill is very important because managers spend most of their time interacting with people. The ability to get along with many diverse types of people is vital for a successful management career.

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B. Organizational Structure Structure

In an organisation, a number of activities are performed. These activities are required to be coordinated. Organisation structure is designed for division of tasks, grouping of activities and coordinating and controlling the tasks of the organisation. The detailed study of all components and dimensions of organisational structure is required for creation of efficient and stable structure. Well designed organization structure facilitates the smooth functioning of the organisation. In this unit, you will learn the concept, components and types of organisation structure. You will further learn the dimensions of structure and themodels of organisational designs. You will be familiarised with the determinants of the organizational effectiveness.

Significance of Organisation StructureThe organisation structure contributes to the efficient functioning of organisation in the following ways.

Clear-cut Authority Relationships : Organisation structure allocates authority and responsibility. It specifies who is to direct whom and who is accountable for what results. The structure helps an organization member to know what is his role and how does it relate to other roles.

Pattern of Communication : Organisation structure provides the patterns of communication and coordination. By grouping activities and people, structure facilitates communication between people centered on their job activities. People who have joint problems to solve often need to share information.

Location of Decision Centres : Organisation structure determines the location of centres of decision making in the organisation. A departmental store, for instance may follow a structure that leaves pricing, sales promotion and other matters largely up to individual departments to ensure that various departmental conditions are considered.

Proper Balancing : Organisation structure creates the proper balance and emphasizes on coordination of group activities. Those more critical aspect for the success of the enterprise may be given higher priority in the organisation. Research in a pharmaceutical company, for instance, might be singled out for reporting to the general manager or the managing director of the company. Activities of comparable importance might be given, roughly equal levels in the structure to give them equal emphasis.

Stimulating Creativity : Sound organization structure stimulates creative thinking and initiative among organisational members by providing well defined patterns of authority. Everybody knows the area where he specialises and where his efforts will be appreciated.

Encouraging Growth : An organisation structure provides the framework within which an enterprise functions. If it is flexible, it will help in meeting challenges and creating opportunities for growth. A sound organisation structure facilitates growth of the enterprise by increasing its capacity to handle increased level of activity.

Making use of Technological Improvements : A sound organisation structure which is adaptable to change can make the best possible use of latest technology. It will modify the existing pattern of authority - responsibility relationships in the wake of technological improvements. In short, existence of good organisation structure is essential for better management. Properly designed organisation can help in improving team work and productivity by providing a framework within which the people can work together most effectively. Therefore, an organisation structure should be developed according to the needs of the people in the organisation.

These organisational structures are briefly described in the following paragraphs:

1. Line Organisational Structure: A line organisation has only direct, vertical relationships between different

levels in the firm. There are only line departments-departments directly involved in accomplishing the primary goal of the organisation. For example, in a typical firm, line departments include production and marketing. In a line organisation authority follows the chain of command.

Features: Has only direct vertical relationships between different levels in the firm.

Advantages: A line structure tends to simplify and clarify responsibility, authority and

accountability relationships. The levels of responsibility and authority are likely to be precise and understandable.

A line structure promotes fast decision making and flexibility. Because line organizations are usually small, managements and employees

have greater closeness.

Disadvantages: As the firm grows larger, line organisation becomes more ineffective. Improved speed and flexibility may not offset the lack of specialized

knowledge. Managers may have to become experts in too many fields. There is a tendency to become overly dependent on the few key people who

perform numerous jobs.

2. Staff or Functional Authority Organizational Structure : Functional structures typically work well for smaller and less complex organizations dealing with only one or a few products or services. Also work best in relatively stable environments that allow organizations to pursue consistent strategies.

Advantages: Economies of scale with efficient use of resources, Task assignments consistent with technical training, High quality technical problem solving In-depth training and skill development within functions Clear cut career paths within functions

Disadvantages: Poor communication and coordination across functions, Having too many decisions referred upward in the hierarchy, Loss of clear responsibility for product or service delivery, and slow

innovation in response to environmental changes. One of the most serious disadvantages occurs when members of functional

departments become overspecialized, develop self-centered, narrow viewpoints, and lose the total system perspective.

Failure to communicate and extend support across department lines is common in such situations. This often slows decision making because problems must be referred up the hierarchy for resolution

3. Project Organisational Structure: The line, line and staff and functional authority organisational structures

facilitate establishment and distribution of authority for vertical coordination and control rather than horizontal relationships. In some projects (complex activity consisting of a number of interdependent and independent activities) work process may flow horizontally, diagonally, upwards and downwards. The direction of work flow depends on the distribution of talents and abilities in the organisation and the need to apply them to the problem that exists. The cope up with such situations, project organisations and matrix organisations have emerged.

Feature:

Temporary organisation designed to achieve specific results by using teams of specialists from different functional areas in the organisation.

Importance of Project Organisational Structure: Work is defined by a specific goal and target date for completion. Work is unique and unfamiliar to the organisation. Work is complex having independent activities and specialized skills are

necessary for accomplishment. Work is critical in terms of possible gains or losses. Work is not repetitive in nature.

Characteristics of project organisation: Personnel are assigned to a project from the existing permanent organisation

and are under the direction and control of the project manager. The project manager specifies what effort is needed and when work will be

performed whereas the concerned department manager executes the work using his resources.

The project manager gets the needed support from production, quality control, engineering etc. for completion of the project.

The authority over the project team members is shared by project manager and the respective functional managers in the permanent organisation.

The services of the specialists (project team members) are temporarily loaned to the project manager till the completion of the project.

There may be conflict between the project manager and the departmental manager on the issue of exercising authority over team members.

Since authority relationships are overlapping with possibilities of conflicts, informal relationships between project manager and departmental managers (functional managers) become more important than formal prescription of authority.

Full and free communication is essential among those working on the project.

4. Matrix Organisational Structure: It is a permanent organisation designed to achieve specific results by using

teams of specialists from different functional areas in the organisation.

Feature: Superimposes a horizontal set of divisions and reporting relationships onto a hierarchical functional structure

Advantages: Decentralized decision making. Strong product/project co-ordination. Improved environmental monitoring. Fast response to change. Flexible use of resources. Efficient use of support systems.

Disadvantages: High administration cost. Potential confusion over authority and responsibility. High prospects of conflict. Overemphasis on group decision making. Excessive focus on internal relations.

This type of organisation is often used when the firm has to be highly responsive to a rapidly changing external environment. In matrix structures, there are

functional managers and product (or project or business group) managers. Functional manager are in charge of specialized resources such as production, quality control, inventories, scheduling and marketing. Product or business group managers are incharge of one or more products and are authorized to prepare product strategies or business group strategies and call on the various functional managers for the necessary resources.

The problem with this structure is the negative effects of dual authority similar to that of project organisation. The functional managers may lose some of their authority because product managers are given the budgets to purchase internal resources. In a matrix organisation, the product or business group managers and functional managers have somewhat equal power. There is possibility of conflict and frustration but the opportunity for prompt and efficient accomplishment is quite high.

Span of ControlThe departmentation reflects the types of jobs which are grouped together. Different persons are involved in performing these jobs. They are required to be supervised closely.

Span of control refers to the number of individuals a manager can effectively supervise. Thus, it is expected that the span of control, that is, the number of subordinates directly reporting to a superior should be limited so as to make supervision and control effective. This is because executives have limited time and ability. It is sometimes suggested that the span of control should neither be too wide nor too narrow. In other words, the number of subordinates should not be too large or too small. The number of subordinates cannot be easily determined because the nature of jobs and capacity of individuals vary from one organisation to another. Moreover, the actual span of supervision affects the organisation in different ways. A wide span results in fewer levels of supervision and facilitates communication. It permits only general supervision dueto the limited availability of time. Narrow span, on the other hand, requires multiple levels of supervisionand hence longer time for communication. It is more expensive and complicates the process of communication. A narrow span, however enables managers to exercise close supervision and control. Although there are certain limits to the span of control, the tendency in recent years has been to avoid specifying absolute number because it has been recognised that the ideal span depends on a number of factors. Some of the important factors are discussed below :

Nature of the Work : If the work is simple and repetitive, the span of control can be wider. However, if the work requires close supervision the span of control must be narrow.

Ability of the Manager : Some managers are more capable of supervising large number of people than others. Thus for a manager who possesses qualities of leadership, decision-making ability and communication skill in greater degree the span of control may be wider.

Efficiency of the Organisation : Organisations with efficient working systems and competent personnel can have larger span of control.

Staff Assistants : When staff assistants are employed, contact between supervisors and subordinates can be reduced and the span broadened.

Time Available for Supervision : The span of control should be narrowed at the higher levels because top managers have less time available for supervision. They have to devote the major part of their work time in planning, organising, directing and controlling.

Ability of the Subordinates : Fresh entrants to jobs take more of a supervisor’s time than trained persons who have acquired experience in the job. Subordinates who have good judgement, initiative, and a sense of obligation seek less guidance form the supervisor.

Degree of Decentralisation : An executive who personally takes many decisions is able to supervise fewer people than an executive who merely provides encouragement and occasional direction. It should be clear that the size of the span of control is related to numerous variables, and no single limit is likely to apply in all cases. A variety of factors can influence the resulting number of employees comprising the optimum span of control in any particular organisation. The span of control also influence the creation of tall and flat structure. Let us learn the concept of tall and flat structure

Authority, Responsibility & Delegation

A manager alone cannot perform all the tasks assigned to him. In order to meet the targets, the manager should delegate authority. Delegation of Authority means division of authority and powers downwards to the subordinate. Delegation is about entrusting someone else to do parts of your job. Delegation of authority can be defined as subdivision and sub-allocation of powers to the subordinates in order to achieve effective results.

Elements of DelegationAuthority - in context of a business organization, authority can be defined as the power and right of a person to use and allocate the resources efficiently, to take decisions and to give orders so as to achieve the organizational objectives. Authority must be well- defined. All people who have the authority should know what is the scope of their authority is and they shouldn’t misutilize it. Authority is the right to give commands, orders and get the things done. The top level management has greatest authority.

Authority always flows from top to bottom. It explains how a superior gets work done from his subordinate by clearly explaining what is expected of him and how he should go about it. Authority should be accompanied with an equal amount of responsibility. Delegating the authority to someone else doesn’t imply escaping from accountability. Accountability still rest with the person having the utmost authority.

Responsibility - is the duty of the person to complete the task assigned to him. A person who is given the responsibility should ensure that he accomplishes the tasks assigned to him. If the tasks for which he was held responsible are not completed,

then he should not give explanations or excuses. Responsibility without adequate authority leads to discontent and dissatisfaction among the person. Responsibility flows from bottom to top. The middle level and lower level management holds more responsibility. The person held responsible for a job is answerable for it. If he performs the tasks assigned as expected, he is bound for praises. While if he doesn’t accomplish tasks assigned as expected, then also he is answerable for that.

Accountability - means giving explanations for any variance in the actual performance from the expectations set. Accountability can not be delegated. For example, if ’A’ is given a task with sufficient authority, and ’A’ delegates this task to B and asks him to ensure that task is done well, responsibility rest with ’B’, but accountability still rest with ’A’. The top level management is most accountable. Being accountable means being innovative as the person will think beyond his scope of job. Accountability, in short, means being answerable for the end result. Accountability can’t be escaped. It arises from responsibility.For achieving delegation, a manager has to work in a system and has to perform following steps

1. Assignment of tasks and duties 2. Granting of authority 3. Creating responsibility and accountability 4.

Delegation of authority is the base of superior-subordinate relationship, it involves following steps:-

1. Assignment of Duties - The delegator first tries to define the task and duties to the subordinate. He also has to define the result expected from the subordinates. Clarity of duty as well as result expected has to be the first step in delegation.

2. Granting of authority - Subdivision of authority takes place when a superior divides and shares his authority with the subordinate. It is for this reason, every subordinate should be given enough independence to carry the task given to him by his superiors. The managers at all levels delegate authority and power which is attached to their job positions. The subdivision of powers is very important to get effective results.

3. Creating Responsibility and Accountability - The delegation process does not end once powers are granted to the subordinates. They at the same time have to be obligatory towards the duties assigned to them. Responsibility is said to be the factor or obligation of an individual to carry out his duties in best of his ability as per the directions of superior. Responsibility is very important. Therefore, it is that which gives effectiveness to authority. At the same time, responsibility is absolute and cannot be shifted. Accountability, on the others hand, is the obligation of the individual to carry out his duties as per the standards of performance. Therefore, it is said that authority is delegated, responsibility is created and accountability is imposed. Accountability arises out of responsibility and responsibility arises out of authority. Therefore, it becomes important that with every authority position an equal and opposite responsibility should be attached.

Therefore every manager,i.e.,the delegator has to follow a system to finish up the delegation process. Equally important is the delegatee’s role which means his responsibility and accountability is attached with the authority over to here.

Relationship between Authority and Responsibility :Authority is the legal right of person or superior to command his subordinates while accountability is the obligation of individual to carry out his duties as per standards of performance Authority flows from the superiors to subordinates,in which orders and instructions are given to subordinates to complete the task. It is only through authority, a manager exercises control. In a way through exercising the control the superior is demanding accountability from subordinates. If the marketing manager directs the sales supervisor for 50 units of sale to be undertaken in a month. If the above standards are not accomplished, it is the marketing manager who will be accountable to the chief executive officer. Therefore, we can say that authority flows from top to bottom and responsibility flows from bottom to top. Accountability is a result of responsibility and responsibility is result of authority. Therefore, for every authority an equal accountability is attached.

Differences between Authority and Responsibility

Authority Responsibility

It is the legal right of a person or a superior to command his subordinates.

It is the obligation of subordinate to perform the work assigned to him.

Authority is attached to the position of a superior in concern.

Responsibility arises out of superior-subordinate relationship in which subordinate agrees to carry out duty given to him.

Authority can be delegated by a superior to a subordinate

Responsibility cannot be shifted and is absolute

It flows from top to bottom.

It flows from bottom to top.

Principles of ManagementA principle refers to a fundamental truth. It establishes cause and effect

relationship between two or more variables under given situation. They serve as a guide to thought & actions. Therefore, management principles are the statements of fundamental truth based on logic which provides guidelines for managerial decision making and actions. These principles are derived: -

a. On the basis of observation and analysis i.e. practical experience of managers.

b. By conducting experimental studies.There are 14 Principles of Management described by Henri Fayol.

1. Division of Labora. Henri Fayol has stressed on the specialization of jobs.

b. He recommended that work of all kinds must be divided & subdivided and allotted to various persons according to their expertise in a particular area.

c. Subdivision of work makes it simpler and results in efficiency. d. It also helps the individual in acquiring speed, accuracy in his

performance. e. Specialization leads to efficiency & economy in spheres of business.

2. Party of Authority & Responsibilitya. Authority & responsibility are co-existing. b. If authority is given to a person, he should also be made responsible. c. In a same way, if anyone is made responsible for any job, he should

also have concerned authority. d. Authority refers to the right of superiors to get exactness from their

sub-ordinates whereas responsibility means obligation for the performance of the job assigned.

e. There should be a balance between the two i.e. they must go hand in hand.

f. Authority without responsibility leads to irresponsible behavior whereas responsibility without authority makes the person ineffective.

3. Principle of One Bossa. A sub-ordinate should receive orders and be accountable to one and

only one boss at a time. b. In other words, a sub-ordinate should not receive instructions from

more than one person because - -  It undermines authority-  Weakens discipline-  Divides loyalty-  Creates confusion-  Delays and chaos-  Escaping responsibilities-  Duplication of work-  Overlapping of efforts

c. Therefore, dual sub-ordination should be avoided unless and until it is absolutely essential.

d. Unity of command provides the enterprise a disciplined, stable & orderly existence.

e. It creates harmonious relationship between superiors and sub-ordinates.

4. Unity of Directiona. Fayol advocates one head one plan which means that there should be

one plan for a group of activities having similar objectives. b. Related activities should be grouped together. There should be one

plan of action for them and they should be under the charge of a particular manager.

c. According to this principle, efforts of all the members of the organization should be directed towards common goal.

d. Without unity of direction, unity of action cannot be achieved. e. In fact, unity of command is not possible without unity of direction.

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C. Organizational Ethics

1. Managerial Ethics : The term ethics refers to principles, values, and beliefs that define what is right andwrong behavior.

Factors That Affect Employee EthicsStages of Moral Development - Research confirms three levels of moral development. Each level has two stages.

The first level is called preconventional. At this level, the individual’s choicebetween right or wrong is based on personal consequences involved.

At the second stage, which is labeled conventional, moral values reside inmaintaining expected standards and living up to the expectations of others.

The third level—the principled level—the individual makes a clear effort todefine moral principles apart from the authority of the groups to which theperson belongs.

Research on the stages of moral development indicates that people proceedsequentially through the six stages of these three levels, with no guarantee

ofcontinued development at any stage. The majority of adults are at Stage 4.

Thehigher the stage an employee reaches, the more likelihood that he or she willbehave ethically.

Individual Characteristics - A person joins an organization with a relatively entrenched set of values.

Values are basic convictions about what is right and wrong. Values are broadand cover a wide variety of issues.

Ego strength is a personality measure of the strength of a person’s convictions.Individuals who score high on ego strength are likely to resist impulses to actunethically and are likely do what they think is right.

Locus of control is a personality attribute that measures the degree to whichpeople believe they control their own fate. Individuals with an internal locus

ofcontrol think that they control their destiny, while persons with an external

locusof control are less likely to take personal responsibility for the consequences

oftheir behavior and are more likely to rely on external forces. Externals

believethat what happens to them is due to luck or chance.

structural variables - A third factor influencing managerial ethics is structural variables. The existence of structural variables such as formal rules and regulations, job descriptions, writtencodes of ethics, performance appraisal systems, and reward systems can strongly

influence ethical behavior.

Organization’s culture - The content and strength of an organization’s culture influences ethical behavior.

An organizational culture most likely to encourage high ethical standards is onethat is high in risk tolerance, control, and conflict tolerance.

A strong culture exerts more influence on managers than does a weak one. However, in organizations with weak cultures, work groups and

departmentalstandards strongly influence ethical behavior.

Intensity of an issue - Finally, the intensity of an issue can affect ethical decisions. Six characteristic determine issue intensity

Greatness of harm Consensus of wrong Probability of harm Immediacy of consequences Proximity to victim Concentration of effect

2. Social Responsibilities of Managers

Social responsibility is defined as the obligation and commitment of managers to take steps for protecting and improving society’s welfare along with protecting their own interest. The managers must have social responsibility because of the following reasons:

1. Organizational Resources - An organization has a diverse pool of resources in form of men, money, competencies and functional expertise. When an organization has these resources in hand, it is in better position to work for societal goals.

2. Precautionary measure - if an organization lingers on dealing with the social issues now, it would land up putting out social fires so that no time is left for realizing its goal of producing goods and services. Practically, it is more cost-efficient to deal with the social issues before they turn into disaster consuming a large part if managements time.

3. Moral Obligation - The acceptance of managers’ social responsibility has been identified as a morally appropriate position. It is the moral responsibility of the organization to assist solving or removing the social problems

4. Efficient and Effective Employees - Recruiting employees becomes easier for socially responsible organization. Employees are attracted to contribute for more socially responsible organizations. For instance - Tobacco companies have difficulty recruiting employees with best skills and competencies.

5. Better Organizational Environment - The organization that is most responsive to the betterment of social quality of life will consequently have a better society in which it can perform its business operations. Employee hiring would be easier and employee would of a superior quality. There would be low rate of employee

turnover and absenteeism. Because of all the social improvements, there will be low crime rate consequently less money would be spent in form of taxes and for protection of land. Thus, an improved society will create a better business environment.

But, manager’s social responsibility is not free from some criticisms, such as -1. High Social Overhead Cost - The cost on social responsibility is a social cost

which will not instantly benefit the organization. The cost of social responsibility can lower the organizational efficiency and effect to compete in the corporate world.

2. Cost to Society - The costs of social responsibility are transferred on to the society and the society must bear with them.

3. Lack of Social Skills and Competencies - The managers are best at managing business matters but they may not have required skills for solving social issues.

4. Profit Maximization - The main objective of many organizations is profit maximization. In such a scenario the managers decisions are controlled by their desire to maximize profits for the organizations shareholders while reasonably following the law and social custom.

Social responsibility can promote the development of groups and expand supporting industries.

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D. Formation of Companies

1. SOLE PROPRIETORSHIPThe sole proprietorship is a form of business that is owned, managed and controlled by an individual. He has to arrange capital for the business and he alone is responsible for its management. He is therefore, entitled to the profits and has to bear the loss of business, however, he can take the help of his family members and also make use of the services of others such as a manager and other employees. This type of business organisation is also called single ownership or single proprietorship. If the business primarily consists of trade, the organization is a sole trading organization. Small factories and shops are often found to be sole proprietorship organisations. It is the simplest and most easily formed business organization.

This is because not much legal formality is required to establish it. For instance to start a factory the permission of the local authorities is sufficient. Similarly to start a restaurant, it is only necessary to get the permission of local health authorities. Or again, to run a grocery store, the proprietor has only to follow the rules laid down by local administration.

Features of Sole Proprietorship:Individual Initiative: One person is the owner in a sole-proprietary form of organisation.

Risk Bearing: The proprietor is the sole beneficiary of profits in this form organisation. If there is a loss he alone has to bear it. Thus the risks of business are borne by the proprietor himself.

Management and control: Management and control of this type of organisation is the responsibility of the sole proprietor. He may, however, employ a manager or other people for the purpose.

Minimum government regulations: The government does not interfere with the working of the sole proprietorship organisation. However, they have to comply with the general laws and rules laid down By government.

Unlimited liability: The sole proprietor has to bear the losses and is responsible for the liabilities of the business. If the business assets are not sufficient to meet the liabilities, he may also have to sell his personal property for that purpose.

Secrecy: All important decision taken by the owner himself. He keeps all the business secrets only to himself.

Merits Of Sole Proprietorship:A sole proprietary organisation has the following advantages:Easy formation: A sole proprietorship business is easy to form where no legal formality involved in setting up this type of organization. It is not governed by any specific law. It is simply required that the business activity shouldbe lawful and should comply with the rules and regulations laid down by local authorities.

Better Control: In sole proprietary organisation, all the decisions relating to business operations are taken by one person, which makes functioning of business simple and easy. The sole proprietor can also bring about changesin the size and nature of activity. This gives better control to business.

Sole beneficiary of profits: The sole proprietor is the only person to whom the profits belong. There is a direct relation between effort and reward. This motivates him to work hard and bear the risks of business.

Benefits of small-scale operations: The sole proprietorship is generally organized for small-scale business. This helps the proprietor’s family members to be employed in business. At the same time such a business is also entitled to certain concessions from the government. For example, small industrial organisations can get electricity and water supply at concessional rates on a priority basis.

Inexpensive Management: The sole proprietor does not appoint any specialists for various functions. He personally supervises various activities and can avoid wastage in the business.Limitations Of Sole Proprietorship:Limitation of management skills: A sole proprietor may not be able to manage the business efficiently as he is not likely to have necessary kills regarding all aspects of the business. This poses difficulties in the growth of business also.

Limitation of Resources : The sole proprietor of a business is generally at a disadvantage in raising sufficient capital. His own capital may be limited and his personal assets may also be insufficient for raising loans against their security. This reduces the scope of business growth.

Unlimited liability: The sole proprietor is personally liable for all business obligations. For payment of business debts, his personal property can also be used if the business assets are insufficient.

Lack of continuity: A sole proprietary organisation suffers from lack of continuity. If the proprietor is ill this may cause temporary closure of business. And if he dies the business may be permanently closed. From the above account of the merits and limitations it becomes clear that it is only personal services like repair work, tailoring etc. small factories, retail shops and professional activities which can be set up as sole proprietary organisations. In India, this form of organisation is quite popular and accounts for the largest number of business units.

2. PARTNERSHIPPartnership is an association of persons who agree to combine their financial resources and managerial abilities to run a business and share profits in an agreed ratio. Since the resources of a sole proprietor to finance, and his capacity to manage a growing business is limited, he feels the need for a partnership firm. Partnership business, therefore, usually grows out of the need for expansion of business with more capital, better supervision and control, division of work and spreading of risks. The Indian Partnership Act defines partnership as “Partnership” is the relation between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all. The persons who have agreed to join in partnership are individually called “Partners” and collectively a ‘firm’. A partnership firm can be formed with a minimum of two partners and it can have a maximum of twenty partners.

Features of Partnership : Existence of an agreement: Partnership is formed on the basis of an agreement between two or more persons to carry on business. It does not arise out of the operation of law as in the case of joint Hindu family business. The terms and conditions of partnership are laid down in a document known as Partnership Deed.

Engagement in business : A partnership can be formed only on the basis of a business activity. Its business may include any trade, industry or profession. Thus, a partnership can engage in any occupation production and/or distribution of goods and services with a view to earning profits.Sharing of profits and losses: In a partnership firm, partners are entitled to share in the profits and are also to bear the losses, if any.Agency relationship : The partnership business may be carried on by all or any of the partners acting for all. Thus, each partner is a principal and so can act in his own right. At the same time he can act on behalf of other partners as their agent. Thus, every partner can bind the firm by his acts.

Unlimited Liability : The liability of partners is unlimited as in the case of sole proprietorship. In case some obligation arises then not only the partnership assets but also the private property of the partners can be taken for the payment of liabilities of the firm.

Common Management : Every partner has a right to take part in the running of the business. It is not necessary for all partners to participate in the day-to-day activities of the business but they are entitled to participate. Even if partnership business is run by some partners, the consent of all other partners is necessary for taking important decisions.Restriction on transferability of share: No partner can transfer his share in partnership to any other person. He may, however, do so with the consent of all other partners.

Registration : To form a partnership firm, it is not compulsory to register it. However, if the partners so decide, it may be registered with the Registrar of Firms.There are advantages of registration, which are discussed later.

Duration : The partnership firm continues at the pleasure of the partners. Legally a partnership comes to an end if any partner dies, retires or becomes insolvent. However, if the remaining partners agree to work together under the original firm’s name, the firm will not be dissolved and will continue its business after settling the claim of the outgoing partner.

3. CO-OPERATIVE ORGANISATIONA co-operative form of business organization is different from other forms of organization. It is a voluntary association of persons for mutual benefit and its aims are accomplished through self-help and collective effort. The main principle underlying a cooperative organization is mutual help, i.e., each for one and all for each. A minimum of 10 persons are required to form a co-operative society. To be called a co-operative society it must be registered with the Registrar of Co-operative Societies under the Co-operative Societies Act. The capital of a cooperative Society is raised from its members by way of share capital. It can also obtain additional resources by way of loans from the State and Central Co-operative Banks. A Co-operative society has much in common with partnership, yet there are differences between the two types of organisation.In partnership, mutual benefit is restricted to partners only, but in a co-operative society it extends to its members as also the public. For example in a consumer co-operative store or aco-operative credit society, the benefits are available to the members as well as the general public. Besides, partnership requires the existence of some business activity whereas a cooperative may be formed whenever individuals have common needs, which are difficult to fulfill single-handed. Also, registration is optional in the case of partnership but it iscompulsory for a co-operative society.

Type of Co-operative SocietiesConsumers’ co-operative societies : Consumer’ cooperatives are organised by consumers to eliminate middlemen and to establish direct relations with the manufacturers or wholesalers. These societies are formed by consumers to ensure a steady supply of goods and services of high quality at reasonable prices. It purchases goods either from the manufacturers or wholesalers for sale at reasonable prices. The profit if any , is distributed among members as dividend in

the ratio of capital contributed and also bonus in proportion to the purchases made by them.

Producers’ co-operative societies : Producers’ cooperative are formed to help the members in procuring inputs for production of goods or services. These societies generally provide raw material, tools and equipment and other common facilities to its members. This helps themto concentrate their attention on production of goods. The society provides inputs to the members and takes over their output for sale to outsiders. The basis for distribution of bonus is the goods delivered for sale by each member.

Co-operative marketing societies : Co-operative marketing societies are voluntary associations of small producers, who find it difficult to individually sell their products at a profit. The main purpose of such a society is to ensure a steady and favourable market for the outputof its members. The output is pooled together and sold at the best price. The sale proceeds are distributed in proportion to the contribution of the members to the pool. Marketing co-operatives eliminate middlemen and ensure honest trading practices in weighing, measuring and accounting.

Co-operative credit societies : Such societies are formed to provide financial help in the form of loans to members. The funds of these societies consist of share capital contributed by the members and the deposits made by them and outsiders. The funds are used in giving loansto needy members on easy terms. Thus, the members are protected from the exploitation of moneylenders, who charge very high rates of interest. Another important purpose of credit co-operatives is to encourage the habit of thrift among their members.

Co-operative farming societies : In co-operative farming societies, small farmers join together and pool their resources for cultivating their land collectively. Their objective is to achieve economies of large scale farming and maximising agricultural output. Such societies areparticularly important in the case of countries like India, where agriculture suffers from excessive sub-division and fragmentation of land. Co-operative farming makes it possible for members to use modem tools and equipments, good seeds, fertilizer and irrigation facilities in order toachieve higher production.

Co-operative housing societies: They are formed to provide residential accommodation to the members. They undertake the purchase and development of land and/or construction of houses/flats on the land. Some housing co-operatives provide their members with necessary loansat low rates of interest to build houses. These societies are gaining popularity in big cities.

Merits of Co-operative OrganisationsThe co-operative form of organisation offers the following advantages:Easy to form : A co-operative society is voluntary association and may be formed with a minimum of ten adult members. Its registration is very simple and can be done without much legal formalities.

Open membership: Membership in a Co-operative organisation is open to all having a common interest . A person can become a member at any time he likes and can leave the society by returning his shares without affecting its continuity.

Democratic management : A co-operative society is managed in a democratic manner. It is based on principle of one man one vote. All members have equal rights and can have a voice in its management.

Limited liability: The liability of the members of a cooperative society is limted to the extent of capital contributed by them. They don’t have to bear personal liability for the debts of the society.

Stability: A co-operative society has a separate legal existence. It is not affected by the death, insolvency, lunacy or permanent incapacity of any of its members. It has a fairly stable life and continues to exist for a long period.

Economical operations : The operation of co-operative society is quite economical due to elimination of middlemen and the voluntarily services provided by its members.

Government patronage : Government gives all kind of help to co-operatives, such as loans at lower rates of interest and relief in taxation.

Other benefits : Certain non-economic benefits are also derived by members through cooperatives. Credit cooperatives, for instance, promote habits of thrift and producers’ co-operative encourage joint activity among members.

Limitations of Co-operative Organisations As against the above-mentioned advantages of cooperatives the following limitations and drawbacks of this form of organisation must also be noted:

Limited capital: Co-operatives are usually at a disadvantage in raising capital because of the low rate of return on capital invested by members.

Inefficient management: The management of a cooperative society is generally inefficient because the managing committee consists of part-time and inexperienced people. Qualified managers are not attracted towards a co-operative on account of its limited capacity to pay adequate remuneration. Absence of motivation: A co-operative society is formed for mutual benefit and the interest of individual members are not fully satisfied. There is no direct link between effort and reward. Hence members are not inclined to put in their best efforts in a co-operative society.

Differences and factionalism among members: Once the initial enthusiasm about the co-operative ideal is exhausted, differences and group conflicts arise among members. Then it becomes very difficult to get full cooperation of the members. The selfish motives of membersbegin to dominate and service motive is sometimes forgotten. But the society continues because it functions in the interest of members.

Rigid rules and regulations: Excessive government regulation and control over Co-operatives affect their functioning. For example, a Co-operative society is required to get its accounts audited by the auditors of the co-operative department and submit its accountsregularly to the Registrar. These regulations and control may adversely affect the flexibility of operations and the efficiency of management in a co-operative society.

4. LIMITED LIABILITY PARTNERSHIP (LLP)LLP, a legal form available world-wide is now introduced in India and is governed by the Limited Liability Partnership Act 2008, with effect from April 1, 2009.. LLP combines the advantages of ease of running a Partnership and separate legal entity status and limited liability aspect of a Company.

Main features of a LLP LLP is a separate legal entity separate from its partners, can own assets in

its name, sue and be sued. Unlike corporate shareholders, the partners have the right to manage the

business directly One partner is not responsible or liable for another partner’s misconduct or

negligence. Minimum of 2 partners and no maximum. Should be ‘for profit’ business. Perpetual succession. The rights and duties of partners in LLP, will be governed by the agreement

between partners and the partners have the flexibility to devise the agreement as per their choice. The duties and obligations of Designated Partners shall be as provided in the law.

Liability of the partners is limited to the extent of his contribution in the LLP. No exposure of personal assets of the partner, except in cases of fraud.

LLP shall maintain annual accounts. However, audit of the accounts is required only if the contribution exceeds Rs. 25 lakhs or annual turnover exceeds Rs.40 lakhs.

Merits Lower cost of formation. Lesser compliance requirements. Easy to manage and run. Easy to wind-up and dissolve. No requirement of minimum capital contributions. Partners are not liable for the acts of the other partners. No minimum alternate tax (as of date).

Demerits LLP cannot raise money from the public. Financial Institution may not lend the large amount the LLP.

Understanding joint stock companies (Private & Public Limited)

In a partnership, there can be a maximum of 20 people. Because of this limit, the amount of capital that can be generated is limited. Also, because of the unlimited

liability of partnerships, the partners may be discouraged from taking huge risks and further expanding their business. To overcome these problems a public or a private company may be formed.

Private and public companies are much better investments because of “Limited liability”. This means that if an investor has invested Rs.1000/- in a particular company, and the company goes bankrupt, the investor only loses the money he has invested. To pay off the debt, the investors property, bank accounts etc. are "not" used.

Because of this limited liability, many investors are interested in investing in these private or public companies. Hence, a large capital can be generated and a huge business can be run.

The major disadvantage of Private and Public companies, is that they have a costly and elaborate process of setting up. They are also closely regulated by the government.

So what are Public or Private companies?These companies are also known as “joint stock companies”. The companies in India are governed by the Indian Companies Act, 1956. The Act defines a company as an artificial person created by law, having a separate legal entity, with perpetual succession and a common seal.What this means is that, the company “is different” from the investors. The investors put in money and capital is raised. But the company is treated as a virtual person. The company is treated as a person who is different from its investors. The company has an identity of its own. If someone sues the company, he does not sue the investors, he sues the virtual person that is the company.

To understand the concept of joint stock (private and public limited) companies, consider the following characteristics :Legal formation : No single individual or a group of individuals can start a business and call it a joint stock company. A joint stock company can come into existence only when it has been registered after completion of all the legal formalities required by the Indian Companies Act, 1956.

Artificial person : Just like an individual takes birth, grows, enters into relationships and dies, a joint stock company takes birth, grows, enters into relationships and dies. However, it is called an artificial person as its birth, existence and death are regulated by law.

Separate legal entity : Being an artificial person, a joint stock company has its own separate existence independent of its investors. This means that a joint stock company can own property, enter into contracts and conduct any lawful business in its “own” name. It can sue and can be sued by others in the court of law. The shareholders are “not” the owners of the property owned by the company. Also, the shareholders cannot be held responsible for any of the acts of the company.

Common seal : A joint stock company has a “seal”, which is used while dealing with others or entering into contracts with outsiders. It is called a common seal as it can be used by any officer at any level of the organization working on behalf of the

company. Any document, on which the company's seal is put and is duly signed by any official of the company, becomes binding on the company.For example, a purchase manager may enter into a contract for buying raw materials from a supplier. Once the contract paper is sealed and signed by the purchase manager, it becomes valid. The purchase manager may leave the company or may be removed from his job or may have taken a wrong decision, yet, the contract is valid till a new contract is made or the existing contract expires.

Perpetual existence : A joint stock company continues to exist as long as it fulfills the requirements of law. It is not affected by the death, lunacy, insolvency or retirement of any of it’s investors. For example, in case of a private limited company having four members, if all of them die in an accident, the company will “not” be closed. It will continue to exist. The shares of the company will be transferred to the legal heirs of the members.

Limited liability : In a joint stock company, the liability of a member is limited to the amount he has invested. While repaying debts, for example, if a person has invested only Rs.10,000 then only this amount that he has invested can be used for the payment of debts. That is, even if there is liquidation of the company, the personal property of the investor cannot be used to pay the debts and he will lose his investment worth Rs.10,000.

Democratic management : Joint stock companies have democratic management and control. Since in joint stock companies there are thousands and thousands of investors, all of them cannot participate in the affairs of management of the company. Normally, the investors elect representatives from among themselves known as ‘Directors’ to manage the affairs of the company.

Special characteristics of Private Limited Companies These companies can be formed by at least two individuals having minimum

paid-up capital of not less than Rupees 1 lakh. As per the Companies Act, 1956 the total membership of these companies

cannot exceed 50. The shares allotted to its members are also not freely transferable between

them. These companies are not allowed to raise money from the pub-lic through

open invitation. They are required to use “Private Limited” after their names.

The examples of such companies are Combined Marketing Services Private Limited, Indian Publishers and Distributors Private Limited etc.

Special characteristics of Public Limited Companies A minimum of seven members are required to form a public limited

company. It must have minimum paid-up capital of Rs 5 lakhs. There is no restriction on maximum number of members. The shares allotted to the members are freely transferable. These companies can raise funds from general public through open

invitations by selling its shares or accepting fixed deposits. These companies are required to write either ‘public limited’ or ‘limited’

after their names.

Examples of such companies are Hyundai Motors India Limited, Jhandu Pharmaceuticals Limited etc.

5. PUBLIC SECTOR ENTERPRISESYou have learnt about various forms of business organisations, which primarily relate to private enterprises. Traditionally, business activities were left mainly to individual and private organisations, and the government was taking care of only the essential services such as railways, electricity supply, postal services etc. But, it was observed that private sector did not take interest in areas where the gestation period was long, investment was heavy and the profit margin was low; such as machine building, infrastructure, oil exploration, etc. Not only that, industries were also concentrated in some regions that had certain natural advantages like availability of raw materials, skilled labour , nearness to market. This led to regional imbalances. Hence, the government while regulating the business activities of private enterprises went in for direct participation in business and set up public enterprises in areas like coal industry, oil industry, machine building, steel manufacturing, finance and banking, insurance etc. These units are not only owned by central, state or local government but also managed and controlled by them and are termed as Public Sector Enterprises.

As state earlier, the business units owned, managed and controlled by the central, state orlocal government are termed as public sector enterprises or public enterprises. These arealso known as public sector undertakings. A public sector enterprise may be defined as any commercial or industrial undertaking owned and managed by the government with a view to maximize social welfare and uphold the public interest. Public enterprises consist of nationalized private sector enterprises, such as, banks, Life Insurance Corporation of India and the new enterprises set up by the government such as Hindustan Machine Tools (HMT), Gas Authority of India (GAIL), State Trading Corporation (STC) etc.

Characteristics of Public SectorLooking at the nature of the public enterprises their basic characteristics can be summarisedas follows:Government Ownership and Management: The public enterprises are owned and managed by the central or state government, or by the local authority. The government may either wholly own the public enterprises or the ownership may partly be with the government and partly with the private industrialists and the public. In any case the control, management and ownership remains primarily with the government. For example, National Thermal Power Corporation (NTPC) is an industrial organisation established by the Central Government and part of its share capital is provided by the public. So is the case with Oil and Natural Gas Corporation Ltd.(ONGC).

Financed from Government Funds: The public enterprises get their capital from Government Funds and the government has to make provision for their capital in its budget.

Public Welfare: Public enterprises are not guided by profit motive. Their major focus is on providing the service or commodity at reasonable prices. Take the case of Indian Oil Corporation or Gas Authority of India Limited (GAIL). They provide petroleum and gas at subsidized prices to the public.

Public Utility Services: Public sector enterprises concentrate on providing publicutility services like transport, electricity, telecommunication etc.

Public Accountability: Public enterprises are governed by public policies formulated by the government and are accountable to the legislature.

Excessive Formalities: The government rules and regulations force the public enterprises to observe excessive formalities in their operations. This makes the task of management very sensitive and cumbersome

Basis of difference

Private sector enterprises

Public sector enterprises

Objective Maximization of profit.Maximize social welfare and ensure balanced economic development.

Ownership Owned by individuals. Owned by Government.

ManagementManaged by owner and professional managers.

Managed by Government.

CapitalRaised by owners through loans, private sources and public issues.

Raised from Government funds and sometimes through public issues.

Area of operationOperates in all areas with adequate return on investment

Operates in basic and public utility sectors.

E. Operations Management

3. Flexible Manufacturing System

Advantages and disadvantages of FMSs implementation Advantages

Faster, lower- cost changes from one part to another which will improve capital utilization

Lower direct labor cost, due to the reduction in number of workers Reduced inventory, due to the planning and programming precision Consistent and better quality, due to the automated control Lower cost/unit of output, due to the greater productivity using the same

number of workers Savings from the indirect labor, from reduced errors, rework, repairs and

rejects  Disadvantages

Limited ability to adapt to changes in product or product mix (ex. machines are of limited capacity and the tooling necessary for products, even of the same family, is not always feasible in a given FMS)

Substantial pre-planning activity Expensive, costing millions of dollars Technological problems of exact component positioning and precise timing

necessary to process a component Sophisticated manufacturing systems

F. Human Resource Management

Introduction Human Resource Management (HRM) is a relatively new approach to managing people in any organisation. People are considered the key resource in this approach. it is concerned with the people dimension in management of an organisation. Since an organisation is a body of people, their acquisition, development of skills, motivation for higher levels of attainments, as well as ensuring maintenance of their level of commitment are all significant activities. These activities fall in the domain of HRM. Human Resource Management is a process, which consists of four main activities, namely, acquisition, development, motivation, as well as maintenance of human resources.

Nature of Human Resource Management : Inherent Part of Management Pervasive Function Basic to all Functional Areas People Centered Personnel Activities or Functions Continuous Process Based on Human Relations

The basic objective of human resource management is to contribute to the realisation of the organisational goals. However, the specific objectives of human resource management are as follows.

To ensure effective utilisation of human resources, all other organisational resources will be efficiently utilised by the human resources.

To establish and maintain an adequate organisational structure of relationship among all the members of an organisation by dividing of organisation tasks into functions, positions and jobs, and by defining clearly the responsibility, accountability, authority for each job and its relation with other jobs in the organisation.

To generate maximum development of human resources within the organisation by offering opportunities for advancement to employees through training and education.

To ensure respect for human beings by providing various services and welfare facilities to the personnel.

To ensure reconciliation of individual/group goals with those of the organisation in such a manner that the personnel feel a sense of commitment and loyalty towards it.

To identify and satisfy the needs of individuals by offering various monetary and non-monetary rewards.

In order to achieve the above objectives, human resource management undertakes the following activities :

Human Resource Planning, i.e., determining the number and kinds of personnel required to fill various positions in the organisation.

Recruitment, selection and placement of personnel, i.e., employment function.

Training and development of employees for their efficient performance and growth.

Appraisal of performance of employees and taking corrective steps such as transfer from one job to another.

Motivation of workforce by providing financial incentives and avenues of promotion.

Remuneration of employees. The employees must be given sufficient wages and fringe benefits to achieve higher standard of living and to motivate them to show higher productivity.

Social security and welfare of employees

The main functions of human resource management are classified into two categories:Managerial Functions Planning : The planning function of human resource department pertains to the steps taken in determining in advance personnel requirements, personnel programmes, policies etc. After determining how many and what type of people are required, a personnel manager has to devise ways and means to motivate them.

Organisation : Under organisation, the human resource manager has to organise the operative functions by designing structure of relationship among jobs, personnel and physical factors in such a way so as to have maximum contribution towards organisational objectives. In this way a personnel manager performs following functions :

preparation of task force; allocation of work to individuals; integration of the efforts of the task force; coordination of work of individual with that of the department.

Directing : Directing is concerned with initiation of organised action and stimulating the people to work. The personnel manager directs the activities of people of the organisation to get its function performed properly. A personnel

manager guides and motivates the staff of the organisation to follow the path laid down in advance.

Controlling : It provides basic data for establishing standards, makes job analysis and performance appraisal, etc. All these techniques assist in effective control of the qualities, time and efforts of workers.

Operative Functions : The following are the Operative Functions of Human Resource Management Procurement of Personnel : It is concerned with the obtaining of the proper kind and number of personnel necessary to accomplish organisation goals. It deals specifically with such subjects as the determination of manpower requirements, their recruitment, selecting, placement and orientation, etc.

Development of Personnel : Development has to do with the increase through training, skill that is necessary for proper job performance. In this process various techniques of training are used to develop the employees. Framing a sound promotion policy, determination of the basis of promotion and making performance appraisal are the elements of personnel development function.

Compensation to Personnel : Compensation means determination of adequate and equitable remuneration of personnel for their contribution to organisation objectives. To determine the monetary compensation for various jobs is one of the most difficult and important function of the personnel management. A number of decisions are taken into the function, viz., job-evaluation, remuneration, policy, inventive and premium plans, bonus policy and co-partnership, etc. It also assists the organisation for adopting the suitable wages and salaries, policy and payment of wages and salaries in right time.

Maintaining Good Industrial Relation : Human Resource Management covers a wide field. It is intended to reduce strifies, promote industrial peace, provide fair deal to workers and establish industrial democracy. It the personnel manager is unable to make harmonious relations between management and labour industrial unrest will take place and millions of man-days will be lost. If labour management relations are not good the moral and physical condition of the employee will suffer, and it will be a loss to an organisation vis-a-visa nation. Hence, the personnel anager must create harmonious relations with the help of sufficient communication system and co-partnership.

Record Keeping : In record-keeping the personnel manager collects and maintains information concerned with the staff of the organisation. It is essential for every organisation because it assists the management in decision making such as in promotions.

Personnel Planning and Evaluation : Under this system different type of activities are evaluated such as evaluation of performance, personnel policy of an organisation and its practices, personnel audit, morale, survey and performance appraisal, etc

Organization Culture

How often have you been asked “What is your organisation culture like?” Maybe in an interview or during any informal discussion with one of your friends. 

What are the answers that we generally come up with when encountered with such questions?

“The culture is good, people are friendly, a very open culture in fact.” This comes out when positive and when it has to be negative, it’s like “It’s the worst culture that I have ever seen in my professional career. Incompetent people are sitting at the top. Nobody is aware of his or her work properly. HR and Finance never listen to you and above all my manager doesn’t know anything and he is sitting at that position. Only I know how am I surviving out there?” As if this question has triggered your emotional trauma and you have found a place to throw out all that is lying within.

This is a general reaction that I have quoted when we are encountered with this question. But have we actually given a thought or has somebody taken out time to explain the culture of our organization that we may have been working for quite a long time when it is quite evident from the above statements what impact it makes on the people. 

How many of us actually understand the real meaning of Organisation Culture and further its implications? May be out of curiosity, some of us will google out for the meanings or definitions of the Organisation Culture after blurting out one of the above stated reaction on this question. 

What is organization Culture?There has been no single definition of Organization Culture and it is difficult to get a consensus on the same but more or less they have settled to similar kinds of definitions as stated below:-

Organizational culture is an idea in the field of organizational studies and management which describes the psychology, attitudes, experiences, beliefs and values (personal and cultural values) of an organization. It has been defined as "the specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with

stakeholders outside the organization. Ravasi and Schultz (2006) stated that organizational culture is a set of shared mental assumptions that guide interpretation and action in organizations by defining appropriate behaviour for various situations. 

Now what do we understand from the above statements? How can we describe our organisation culture on the basis of the above statements/ definitions?

Let’s elaborate on it a bit more than perhaps we will be able to answer these questions. There are commonly two types of cultures stated and understood to exist. They are:-

Strong and Weak Organisation CultureStrong Cultured organisations are like well-greased machines which work very smoothly without any major hitch. They carry a strong belief and employees well align with the organizational values and everybody is well aware of his/ her responsibilities duties and they almost respond to the stimuli of the Cultural values. The employees of Strong Organisation Culture possess a strong belief that the processes they follow or the way they execute their duties is right.  

Whereas in case of Organizations of Weak Culture have employees who don’t find much alignment with the organizational values and generally they are controlled by some strong measures and bureaucracy. 

There are more classifications of the Organization Culture like Soft & Hard Culture, Formal & Informal Culture but more or less they describe the same contradicting aspects of an Organization Culture. I think when there are so many different aspects of looking at Organization Culture that it is very difficult to assimilate all here. So we will not get into definitions and classifications etc. but really would like to understand the difference between a Good Culture and a Bad Culture and the factors that actually influence these.

First we will start with the ingredients that make up the Culture of an Organization.

1. I would like to start with this statement that the “Culture percolates from above and does not move up from below.” So the blame can always be put on the higher management for a Bad Culture? No, because the culture as a whole is built up by all the employees but surely the foundation is the higher management.

2. The Mission/Vision of the Organization that gives a direction, a belief to the organization and its people and in turn the culture. It has been seen that organizations with vague and unrealistic Mission/Vision are uncertain about their way ahead and generally succumb midway.

3.  Policies of an organization are the behavioral guidelines for the employees of the organization which gives a color to the Culture. It helps any new player on the block to get into the groove immediately.

4. Process/ Procedures provide guidelines for the functioning of the organization. This gives an identity to the organization.

5.  Rules and Regulations may seem to be like restrictions but they are important to rectify the hitched, the spills midway.

6.  State of Organizational Development is the most important and includes all the above stated points. Organization at young, growing, maturing or mature state of development. It directly impacts the Organization Culture.

The above stated points can be concluded as the formal components of the Organization Culture but there are components that can fall under the category of informal components of Organization Culture and have an equally important effect on the same. They are:-

1.  External Environment – It influences as this is where the organization interacts for business.

2.  Industry – Industry as obvious influencer as it determines all the other factors.

3. Size and nature of the Organization’s Workforce is also a great influencer to the Culture of an Organization as it affects the control of the Organization.

4. Technology used as it directly effects the functioning of the Organization.5.  Leaders of the organization as they are the people who recruit new

employees and judge their cultural fitment, the way they react to critical incidents, what they pay attention to, control, the behaviors they model for others, the way the allocate rewards and resources.

6. The Organization History and ownership as it creates a legacy and continues to reflect in the culture of the Organization through cultural transmissions(e.g. rites, stories.)

The above stated factors influence or in other words build up the Culture of any Organization in question. Now the most difficult task ahead of describing a Culture to be the best or better than any other culture as every culture has its unique identity, color, history and as stated the influencing factors. So vividly it can be said that the Culture is best that suits and works for an Organization. I don’t find much of a difference between the social culture and organization culture. Our social culture has also a great influence on our Organization Culture. 

Now, what we to find is that what is a healthy Organization Culture and how important is it for the success or failure of an Organization?

But, first we have to understand and contemplate that a Culture is build for, by and with the people and not the machines though technology is one of the influencing factors but it also exists for people. 

One of the great all time example of this is actually between two of the best known companies in the world: IBM and Microsoft. In this example, IBM didn't even necessarily have a terrible organizational culture, but they did fall into several of the traps that caused them to become stagnant.

This example is from the late 1980s. Microsoft was a fairly good company, with revenues in the tens of millions--but a long way from what they are now. At the time, IBM had the largest market share by far with over 80% of the mainframe market. Although long forgotten history by most people, at that time IBM spent a large amount of time and money investing in a software system that was supposed to "take over everything." 

It was called OS/2, and at the time many people complained that there would be no more experimentation because obviously OS/2 would be with every IBM which would put a strangle hold on the industry. Obviously that didn't happen . . . but why? With 80% of the market cornered, an international market, and their own new software, how did IBM not take over?

One of the obvious reasons is Microsoft. Microsoft has done what everyone thought IBM was going to do in the late 1980s. What ended up happening was the OS/2 was really memory heavy and not nearly as functional as it could have been. Bill Gates and Microsoft took advantage of IBM's blunders to take over the market. IBM stopped analyzing its own corporate culture because they were so dominate the thought became "everything we're doing is right," and in retrospect, the higher ups at IBM were completely concerned with internal measures, internal goals, and proving production. 

They were so obsessed with keeping track of how many lines of programming were getting done that many programmers did not write the best of most efficient programming--because it wasn't enough lines!Meanwhile, Microsoft's entire organizational culture was not focused on bureaucracy, but on getting things done. The bottom line was a better product, followed by an even better product, and so on. While IBM became so entangled with bulkier and bulkier programming and bureaucracy (they even had a class on how to order document manuals from the main company--just to get help). 

Microsoft took advantage by making a product aimed at the customers, not at internal specs. Because of this they absolutely dominated the computer market. IBM had a series of setbacks that resulted in the stock tumbling and the need to hire a complete outsider to re-invent the company.

This is an example where becoming overconfident, falling into dangers of bureaucracy, and internal numbers and goals caused a company that never should have lost its near monopoly on the market to almost bust, while an upstart company who "had no business competing with IBM" according to most sources, had an outstanding organizational culture based on customers needs and getting things done (as opposed to how they were done and measured--IBM's downfall). 

Microsoft is a sample organizational culture that showed how a company could work, and how important that culture was. While IBM has recovered into a great company, the late eighties to early nineties shows the cost of falling into the trap of weak organizational culture.

Organization Culture - II (Healthy Organizational Culture)

We just can’t leave the discussion after categorizing the Organization Cultures as weak and strong, soft and hard or formal and informal as all have some advantages and disadvantages for e.g. as stated a strong culture has very hard lined processes and it acts as a drawback sometimes as it may be difficult for a new incumbent to adapt to this culture easily and such cultures are generally abstain from goodies in form of changes.

Hence, Organizations should strive for what is considered a “healthy” organizational culture in order to increase productivity, growth, efficiency and reduce employee turnover and other counterproductive behavior. On a broader prospect the following characteristics describe a healthy culture, including:

Acceptance and appreciation for diversity  Regard for and fair treatment of each employee as well as respect for each

employee’s contribution to the company Employee pride and enthusiasm for the organization and the work performed Equal opportunity for each employee to realize their full potential within the

company Strong communication with all employees regarding policies and company

issues Strong company leaders with a strong sense of direction and purpose Ability to compete in industry innovation and customer service, as well as

price Lower than average turnover rates (perpetuated by a healthy culture) Investment in learning, training, and employee knowledge

Additionally, performance oriented cultures have been shown to possess statistically better financial growth. Such cultures possess high employee involvement, strong internal communications and an acceptance and encouragement of a healthy level of risk-taking in order to achieve innovation. Additionally, organizational cultures that explicitly emphasize factors related to the demands placed on them by industry technology and growth will be better performers in their industries.

According to Kotter and Heskett (1992), organizations with adaptive cultures perform much better than organizations with unadaptive cultures. An adaptive culture translates into organizational success; it is characterized by managers paying close attention to all of their constituencies, especially customers, initiating change when needed, and taking risks. An unadaptive culture can significantly reduce a firm's effectiveness, disabling the firm from pursuing all its competitive/operational options.

What is a healthy organizational culture? A healthy organizational culture is one which should help all the supervisors and employees of the company to be on the same page as those in charge. A good organizational culture is of benefit to every member of the company from the very top to the very bottom. If any group of workers feels marginalized, then the culture can be improved.

A good organizational culture has the ability to maximize employees' creative ideas and strategies. There are certain behaviors that can undercut this type of a culture, and one way to get an idea of a healthy culture is to look at some of the common traits of an unhealthy culture. Some of the most common traits of a weak and ineffective organizational culture are:

Process is more importance than purpose. When supervisors are more concerned about doing x number of say lines of programming, or phone calls, versus how good the programming is or how effective the phone calls

were, this is one example. Think of that English teacher who gave a six page essay an 'A' even if it didn't make any sense while a well thought out three page essay got a 'C' because it wasn't long enough. Same concept.

Authority is more important than service. Any time people in power positions feel that it is necessary for them to constantly exercise that power by riding the people under them, it is assumed that it’s their exercise of authority that makes them work or deliver. It's only a matter of time until the system collapses.

Form is more important than reality. Remember the recent global market collapse? Well people kept buying stock when a company talked about "new strategy to corner the market" but they never showed a profit in three years. What happened? They went broke. No fancy marketing plans can pull you out of that. Companies keep on saying that we are in a control of the situation while pieces are crumbling around.

Precedence is more important than adaptability. This often happens with really large companies and is always a warning sign. See IBM's fall from goliath, to another company, and how Microsoft took their place by being the most adaptable company out there.

In contrast to this, a healthy organizational culture has several trademarks. Some of the most common include the following:Clearly defined purpose : A company with a good organizational culture knows exactly what its goals are and what each employee's job entitles in order to get there.

Service : Service not only to customers, but a sense of service from each employee to the company itself. They should want to work for the company and want to see the company succeed.

Realistic : They know when they can expand, and when they can't. They can look at numbers and instead of giving a glowing report when it looks like recession to keep the stock up, they can analyze and see that hard times are coming and adjust accordingly.

Adaptability : Companies with healthy organizational cultures are very adaptable. They can roll with good and bad markets, seize an advantage/opportunity when one comes along, and can deal quickly with the unexpected.

These are all the signs of a strong company with a healthy organizational culture.

There are many different ways to measure a company's organizational culture. There are exceptional corporate cultures, as well as disastrously bad ones, and obviously most companies are going to fall somewhere in the middle of these two extremes. There are many characteristics that make up a healthy corporation, and here is a ten point list of some of the most common factors that will be found in virtually all healthy organizational cultures:

1. Organizational pride. Employees who are embarrassed to mention where they work are obviously not in a good environment. Employees who work for a company that they are will defend against slander, libel, or just plain criticism are a good sign of a company doing something right with their

culture.

2. Ambition towards being better. The difference between ambition for the sake of power or respect and ambition to keep improving for the sake of improving is the difference between night and day. Strong company culture focuses on improving and getting better at every level.

3. Obvious teamwork and communication. The more open discussion there is, the more open exchange of ideas, the more competitive and cutting edge that company is capable of becoming. Period, end of statement.

4. Quality leadership. This isn't just at the very top. A brilliant CEO can have his greatest plans destroyed by a few low level managers who alienate employees and can't lead by example. Good managers are really interested in the problems that others are having, and are happy to offer help when asked.

5. Constant review of profits and costs. It is not written in GEETA that it can be reviewed from year to year. All financial records are studied, and especially expenses. Are expenses justified? Are they really effective in making the company stronger and more profitable? If not, they look for alternatives.

6. Employee relationships. A cut throat environment does not bring out the best in a company. The corporations with employees who work together is far more likely to succeed than a company where it's every man for themselves. Are employees willing to sacrifice their co-workers and advance themselves over other people's blunders, or do they aim for promotion through improvement? Huge difference. The team players will help a company out far more in the long run.

7. Client and consumer relations. The customer is always right. As annoying as this can be at times, the company that takes customer service as their true motto and keeps that focus will succeed and create great organizational culture.

8. Honesty and safety. No one should ever be asked to do anything unsafe or blatantly dangerous. Likewise, there are no five finger discounts from employees: they don't even think about stealing from an employer who is treating them so well.

9. Education and developmental programs. The company is heavily invested in training its employees and providing whatever education is necessary for them to succeed.

10.Cutting edge thinking. Companies with healthy organizational culture are innovative and can think outside of common trends to move ahead of the pack. New ideas are always considered, and employee participation in brain storming is encouraged.

These are ten of the most common traits you will find among the companies with the healthiest organizational culture.A recent example of the effect of change in the Organization Culture was the news of the job market flooded with the Resumes of Senior Executives of Wipro after the change in the Top Leadership.

Definition of PlanningPlanning managerial functions where managers are required to establish

goals and state the ways and means by which these goals are to be attained. Therefore planning is taken as the foundation for future activities. Or in simple terms; planning is deciding in advance what is to be done. Planning is the thinking before doing. Management every time has to look for planning long-range and short-range future direction by estimating and evaluating the future behavior of the relevant environment and by determining the enterprise's own desired role. Plans have two basic components: goals and action statements. Goals represent an end state the targets and results that managers hope to achieve. Action statements represent the means by which an organization goes ahead to attain its goals. Planning is a deliberate and conscious work by means of which managers determine a future course of action for attaining a specific goal. To a manager means planning is thinking about what is to be done, who is going to do it, and how and when he will do it. Planning also required thinking about past events and about future opportunities and impending threats. Planning process finds the organizational strengths and weaknesses.

The Importance of Planning in an Organization Planning brings about success through teamwork.Planning helps an organization chart a course for the achievement of its goals. The process begins with reviewing the current operations of the organization and identifying what needs to be improved operationally in the upcoming year. From there, planning involves envisioning the results the organization wants to achieve, and determining the steps necessary to arrive at the intended destination--success, whether that is measured in financial terms, or goals that include being the highest-rated organization in customer satisfaction.

Efficient Use of Resources : All organizations, large and small, have limited resources. The planning process provides the information top management needs to make effective decisions about how to allocate the resources in a way that will enable the organization to reach its objectives. Productivity is maximized and resources are not wasted on projects with little chance of success.

Establishing Goals : Setting goals that challenge everyone in the organization to strive for better performance is one of the key aspects of the planning process. Goals must be aggressive, but realistic. Organizations cannot allow themselves to become too satisfied with how they are currently doing--or they are likely to lose ground to competitors. The goal setting process can be a wake-up call for managers that have become complacent. The other benefit of goal setting comes

when forecast results are compared to actual results. Organizations analyze significant variances from forecast and take action to remedy situations where revenues were lower than plan or expenses higher.

Managing Risk And Uncertainty : Managing risk is essential to an organization’s success. Even the largest corporations cannot control the economic and competitive environment around them. Unforeseen events occur that must be dealt with quickly, before negative financial consequences from these events become severe. Planning encourages the development of “what-if” scenarios, where managers attempt to envision possible risk factors and develop contingency plans to deal with them. The pace of change in business is rapid, and organizations must be able to rapidly adjust their strategies to these changing conditions.

Team Building : Planning promotes team building and a spirit of cooperation. When the plan is completed and communicated to members of the organization, everyone knows what their responsibilities are, and how other areas of the organization need their assistance and expertise in order to complete assigned tasks. They see how their work contributes to the success of the organization as a whole and can take pride in their contributions. Potential conflict can be reduced when top management solicits department or division managers’ input during the goal setting process. Individuals are less likely to resent budgetary targets when they had a say in their creation.

Creating Competitive Advantages : Planning helps organizations get a realistic view of their current strengths and weaknesses relative to major competitors. The management team sees areas where competitors may be vulnerable and then crafts marketing strategies to take advantage of these weaknesses. Observing competitors’ actions can also help organizations identify opportunities they may have overlooked, such as emerging international markets or opportunities to market products to completely different customer groups.

Definition of Decision-making Decision-making is the process of identifying a set of feasible alternatives and choosing a course of action from them. Decision-making is a part in planning. Decision-making is an intermediate-sized set of activities which begins with identifying problem and ends with choice making or decision giving.  Management is the constantly influencing organization’s action and decision making process is central to doing it.

In decision making process, a manager identifies a specific situation and finds the threats and opportunities that it offers. Than the manager must find the available alternatives to tackle with the situation. This is where planning comes in. By planning; manager finds these alternatives by testing and measuring their effectiveness. They identify the pros and cons of each alternative. After that the managers must use their decision-making skills for selecting one path of action. Decision making is the core of planning. Unless a decision has been made, a plan cannot be implemented in the field. So we can say that planning and decision-making, both are interrelated. Decisions can be made without planning but planning cannot be done without

making decisions. Planning can be defined as the process of selecting future course of action. Decision-making defined as the process of selecting a course of action from the alternatives. They need to be accurate for the welfare of the organization.

The term personality is derived from the Latin word persona meaning a mask. Personality is a patterned body of habits, traits, attitudes and ideas of an individual as these are organized externally into roles and statuses and as they relate internally to motivation, goals and various aspects of selfhood. According to Robert Park and Earnest Burgess Personality is the sum and organization of those traits which determine the role of the individual in the group. According to Linton, personality embraces the total organized aggregate of psychological processes and status pertaining to the individual.Parsonality says Maclver is all that an individual is and has experienced so far as this all can be comprehended as unity. According to Lundberg the term personality refers to the habits, attitudes and other social traits that are characteristic of a given individual's behavior. By personality Ogburn means the integration of the socio-psychological behavior of the human being, represented by habits of action and feeling, attitudes and opinions. Davis regards personality a psychic phenomenon which is neither organic nor social but an emergent from a combination of the two. According to Young personality is the totality of behavior of an individual with a given tendency system interacting with a sequence of situations. On the basis of these definitions it may be said there are two main approaches to the study of personality:

1. The psychological 2. The sociological

The psychological approach considers personality as a certain style peculiar to the individual. This style is determined by the characteristic organization of mental trends, complexes, emotions and sentiments. The psychological approach enables us to understand the phenomena of personality disorganization and the role of wishes, of mental conflict and of repression and sublimation in the growth of personality. The sociological approach considers personality in terms of the status of the individual in the group, in terms of his conception of his role in the group of which he is a member. What others think of us plays a large part in the formation of our personality. Thus personality is a sum of the ideas, attitudes and values of a person which determine his role in society and form an integral part of his character. Personality is acquired by the individual as a result of his participation in group life. As a member of the group he learns certain behavior systems and symbolic skills which determine his ideas, attitudes and social values. These ideas, attitudes and values which an individual holds comprise his personality. In brief it can be said:

1. Personality is not related to bodily structure alone. It includes both structure and dynamics.

2. Personality is an indivisible unit. 3. Personality is neither good nor bad. 4. Every personality is unique 5. Personality refers to persistent qualities of the individual. It expresses

consistency and regularity. 6. Personality is acquired.

7. Personality is influenced by social interaction. It is defined in terms of behavior.

What is Personality?The personality is the typical pattern of thinking, feeling, and behaviors that make a person unique.When we say that someone has a "good personality" we mean that they are likeable, interesting and pleasant to be with. Everyone wants to be attractive to others. To that end, having a good personality is vital - probably even more so than good looks. In fact, approximately 85 percent of your success and happiness will be a result of how well you interact with others. Ultimately, it is your personality that determines whether people are attracted to, or shy away from you.While we can only enhance our looks to a certain extent, we have the ability to improve the personality as much as we want. We can develop or integrate any trait we deem fitting and agreeable.

Here are someways we can accomplish this:1. Be a better listener. Jacqueline Kennedy Onassis was considered one of the

most charming women in the world because she cultivated the skill of being an exceptional listener. She was known for the way she would look a person in the eyes, hang on their every word, and make them feel important. There is nothing more appealing than having someone listen to you intently making you feel like you're the only person in the world.

2. Read more and expand your interests.The more you read and cultivate new interests, the more interesting you are to others. When you meet new people it gives you the opportunity to share what you know and to exchange your views with them.

3. Be a good conversationalist. This relates to how much you read and know. Once you have much to contribute, learn how to talk about it with others. No one can read about or know everything, so it's refreshing to learn from others those things we don't have the time to about read ourselves. If you happen to be shy, join a group like Toastmasters that encourages you to talk about what you know. Enjoy the article: The Art of Conversation

4. Have an Opinion.There is nothing more tiresome than trying to talk to someone who has no opinion on anything. A conversation has nowhere to go if you have nothing to expound on. If, however, you have an uncommon point of view or differing opinion, you are more interesting and stimulating to be with socially (unless you're a know-it-all, of course). A unique outlook expands everyone's perspective.

5. Meet New People. Make the effort to meet new people especially those unlike you. It not only exposes you to different cultures and alternative ways of doing things, it broadens your horizons.

6. Be yourself. The next most tiresome thing after having no opinions is trying to be something you're not. Molding yourself in order to fit in, or be

accepted, usually backfires. Since each of us is unique, expressing that uniqueness is what makes us interesting. Attempting to be a carbon copy of someone else not only falls flat, but reveals a lack of authenticity.

7. Have a positive outlook and attitude. Who wants to be around people who are negative, complain a lot, or have nothing good to say? In fact, most of us run when we see them coming. Instead, be the kind of upbeat person who lights up a room with your energy when you enter it. Do it by looking for the best in people and things. Smile warmly, spread good cheer, and enliven others with your presence.

8. Be fun and see the humorous side of life. Everyone enjoys the company of someone who makes them laugh, or smile, so look for the humorous, quirky side in a situation - there always is one. Comic relief is a much welcome and needed diversion at times. When you can add fun and lightheartedness to an otherwise dull or gloomy setting, others will naturally be attracted to you, not to mention grateful.

9. Be supportive of others. Being supportive is probably the most endearing quality you can integrate into your personality. Just as you yourself welcome it, be the support for others when they need it. We all love a cheerleader in our corner; someone who is encouraging, believes in us and helps pick us up when we're down.

10.Have Integrity and treat people with respect. Being honest and true to your word will bring you the admiration, respect and gratitude of others. Nothing improves a person's personality more than integrity and respect - respect for others, as well as respect for yourself.

We humans have the power and ability to shape our personalities however we wish. When we develop ourselves to be all that we can be, we contribute to our own, as well as the happiness of others.