Principles of Management for BBA by Tarique Jawaid

 

 

PAPER I

Principles of Management (POM)

BBA (H) PART 1 notes

Notes on Selected Questions and Answers for the Exam

Purnea University and other Universities in Bihar

 

 

 

 

By

M Tarique Jawaid

MBA, UGC-NET in Management, Faculty at BBA Dept. Purnea College, Purnia  

 

 

 

Question 1. What is Management? What are the functions of management?

A successful organization does not achieve its goals by chance but by following a deliberate process or by making calculated moves called management. Management generally refers to the administration of a business or non-profit organization, encompassing people, work, operations, and resources through the processes of planning, organizing, staffing, directing, and controlling. According to Henry Fayol, management is: "to manage is to forecast and to plan, to organize, to command, to coordinate and to control." Similarly, Fredmund Mallik defines management as "the transformation of resources into utility." The whole purpose of management is to achieve any specific goal effectively and efficiently by getting things done. It concerns the effective and efficient utilization of resources and operations. Management techniques are constantly evolving in response to the changing business environment, from the first industrial revolution to the era of Artificial Intelligence.

Different scholars of management view the function of management differently; for example, Henry Fayol proposed the functions of planning, organizing, commanding, coordinating, and controlling. Peter Drucker saw management in two-fold: marketing and innovation.

According to Harold Koontz, “Management is an art of getting things done through and with the people in formally organized groups. It is an art of creating an environment in which people can perform, and individuals can cooperate towards the attainment of group goals”.

According to F.W. Taylor, “Management is an art of knowing what to do, when to do, and see that it is done in the best and cheapest way”.

Functions of Management

Management is the process of interdependent, interrelated, continuous functions; these functions are as follows.

 

Planning

Planning is the process of deciding in advance what should be accomplished, when, and how. In a business organization, planning is generally a function of top management that determines the organization's vision, mission, and goals and objectives, expressed as a strategy. It is broken down by the middle management for performing operational activities. A business organization prepares various types of plans at different levels, such as a strategic, tactical, operational, and contingency plan. These plans are prepared at the corporate, business, and unit levels.

Organizing

Under this management function, resources and operations are organized to achieve the goals. Resources can be money, materials, machines, manpower, methods, etc., known as the 5Ms. Operations are activities needed to achieve goals. By organizing resources and operations, a well-defined organizational structure is created. Organizing involves following

·       Identifying all the activities or tasks that are needed to achieve the organizational goal.

·       Identify skills (Human Resources) to perform these activities or tasks

·       Dividing all the activities of the organization into tasks or jobs

·       Grouping these activities in different homogeneous groups (department, functional unit)

·       Establishing a superior and subordinate relationship (Hierarchy in an organization /Organizational structure)

·       Distributing resources to achieve the organizational goal

Staffing

Staffing is the process of placing the right employee at the right place and at the right time.  Under this management function, employees are recruited, selected, trained, and placed in the right positions. Employees' performance is also evaluated, and feedback is provided, along with promotion, rewards, and recognition.

Directing

Directing is instructing and guiding the employees. Generally, in a business organization, senior or superior personnel guide or supervise subordinate or junior employees. direction start of human resources into action. Direction involves following, communicating, motivating, and supervising.   

 

Controlling

Planning is not enough for achieving goals; it should be accompanied by control. Controlling is not the last function of management; it goes hand in hand.  At certain intervals, managers need to ensure that activities are being performed according to plan, or not, and whether resources are being utilized effectively or efficiently. For that, the actual performance of each activity is compared with the planned or standard performance. if any deviation between the two is found, the reasons for the deviation are identified, and corrective actions are taken.

 Question 2. Discuss the needs and importance of management.

Importance of management can be explained under the following heads

Ensuring the Profit or Financial Performance of the Business: The financial performance, ROI (Return on Investment), or market success of any business is the responsibility of management.

Growth and Expansion of the Business: Survival, growth, and expansion of the business are possible only through effective management.

Management helps achieve goals: It helps achieve goals and objectives effectively and efficiently through planning, organizing, coordinating, directing, and controlling. The organization's goals may include financial performance, business growth and expansion, and the optimization of every business activity.

Optimum Utilization of Resources: Management ensures the effective and efficient utilization of resources such as time, money, manpower, raw materials, plant, and machine etc.

Improves Efficiency: Through effective management, employee performance and the organization's productivity are increased.

Facilitate Innovation and Growth: Good management encourages innovation and leads the organization towards sustainable growth.

Establishing Sound Organization: A sound organization is built on a strong structure, a better working culture, and effective resource and operational management.

A Dynamic organization is one that can easily adapt to changes in the business environment; for instance, it can adopt new technology, trends, or other changes. Management enables the organization to adapt to these changes.

 Management helps develop societies: It helps provide high-quality products and services at a fair price. It creates employment opportunities for societies and contributes to their growth and development.  Efficient management leads to better economic production, which, in turn, increases people's welfare. Good management makes a difficult task easier by avoiding the wastage of scarce resources. It improves the standard of living. It increases profits, which are beneficial to businesses and society, and maximizes output at the minimum cost by creating employment opportunities that put income in people's hands. Organization comes with new products and research beneficial for society.

Question 3. Discuss the nature of management or the essential characteristics of management.

The nature of management refers to the essential characteristics that define its roles and functions within an organization.

1. Goal-oriented: Management focuses on achieving specific goals and objectives effectively and efficiently.

2. The Universality of Management: Principles and theories of management apply to all types of organizations regardless of size or type of industry, or country. Management principles are universally accepted worldwide.

3. Continuous Process: Management is the continuous process of planning, organizing, directing, and controlling. It’s not a one-time activity. 

4. Multidisciplinary: The principles and theories of management have been developed by including the concept of various disciplines such as social science, economics, statistics, IT, decision science, and many others. Management applies economics, statistics, decision science, and accounting to make various critical decisions. Similarly, it draws on sociology, psychology, and other disciplines to manage human resources.

5. Group Activity: Management is the function of group activities, where the efforts of various people are coordinated to achieve common goals. For instance, to ensure successful production and operation, the management coordinates the activities of purchasing, delivering, storing, and issuing raw materials from the store to production.

6. Dynamic Function: Management is a dynamic function that adapts to any changes in the business environment.  Theories and principles of management are highly dynamic and can be adjusted to the needs of the business environment.

7. Intangible: Management is not visible, but its impact but its impacts are reflected in the performance and productivity of the organization

8. Management as Science and Art: Management is both art and science. Theories and principles of management have been developed on the basis of experimentation or experience, and they are universally accepted worldwide, with slight variations. Therefore, it can be called a science, but not an exact science like natural science. It has all the features of art; therefore, it can also be called art.

Question 4. What is the scope of management?

The scope of management refers to the range of activities, functions, and areas of management. We can explain the scope of management through its functional areas.

1. Production and Operations Management

Production and Operations Management is the process of planning, organizing, directing, and controlling the activities related to the production of goods and delivery of services. It aims to efficiently transform raw materials into finished products or services while optimizing resource use. It includes the following activities

Product Design and Development

Process Design

Capacity Planning

Production Planning and Control (PPC)

Inventory Management

Quality Management

Maintenance Management

Supply Chain and Logistics

2. Marketing Management

Marketing management is the process of planning, organizing, directing, and controlling the marketing activities to satisfy customer needs and achieve organizational goals. It involves tools and techniques for transferring goods or services from producers to final consumers. These techniques are commonly known as the marketing mix- Product, Price, Place, and Promotion, commonly known as the 4Ps of marketing. It includes the following activities

Marketing Research and Analysis

Product or Service Management

Pricing Strategy

Promotion and Communication

Distribution Management

Customer Relationship

Digital Marketing

3. Financial Management

Financial Management is concerned with the procurement and utilisation of funds for the business organization. Alternatively, we can say that the effective and efficient management of the financial resources of the business. It includes the following.

Financial Planning and Forecasting

Capital Structure

Investment Decision (Capital Budgeting)

Working Capital Management

Financing Decision

Dividend Decision

Financial Control

4. Human Resources Management

Human Resources Management concerns the management of people within the organization. Generally, this management function optimises the utilisation of human resources. It includes human resources planning, job evaluation, job design, recruitment, selection, training and development, performance management, compensation and benefits management, employee relations and engagement, compliance and labour law management, etc.

Question 5. What is the difference between Management and Administration?

Definition of Administration

The administration is the systematic management of a business organization, an educational institution such as a school or college, a government office, or any nonprofit organization. The main function of administration is to formulate plans, policies, and procedures, set goals and objectives, and enforce rules and regulations. Administration lays down the fundamental framework within which an organization's management functions. The nature of administration is bureaucratic. It is a broader term as it involves forecasting, planning, organizing, and decision-making functions at the highest level of the enterprise. Administration is the top layer of the organization's management hierarchy. These top-level authorities are either owners or business partners who invest their capital in starting the business. They receive their returns in the form of profits or dividends.

The major differences between management and administration are given below:

       i.          Management is a systematic way of managing people and things within the organization. Administration is the act of overseeing an entire organization by a group of people.

     ii.          Management is an activity of the business and functional level, whereas Administration is a high-level activity.

   iii.          While management focuses on policy implementation, policy formulation is performed by the administration.

   iv.          Functions of administration include legislation and determination. Conversely, management functions are executive and governing.

     v.          Administration takes all the important decisions of the organization, while management makes decisions within the boundaries set by the administration.

   vi.          A group of persons, who are employees of the organization, is collectively known as management. On the other hand, administration represents the organization's owners.

  vii.          Management can be seen in a profit-making organization like a business enterprise. Conversely, the Administration is found in government and military offices, clubs, hospitals, religious organizations, and all non-profit-making enterprises.

viii.          Management is all about plans and actions, but the administration is concerned with framing policies and setting objectives.

   ix.          Management plays an executive role in the organization. Unlike administration, whose role is decisive.

     x.          The manager looks after the management of the organization, whereas the administrator is responsible for the administration of the organization.

   xi.          Management focuses on managing people and their work. On the other hand, administration focuses on making the best possible utilization of the organization’s resources.

Theoretically, it can be said that both are different terms, but practically, you will find that the terms are more or less the same. You would have noticed that a manager performs both administrative and functional activities. Although the managers at the top level are said to be part of the administration, the managers at the middle or lower levels represent management. So, we can say that administration is above management.

 

A Comparison Chart of Management Vs Administration

BASIS FOR COMPARISON	MANAGEMENT	ADMINISTRATION
Meaning	An organized way of managing people and things of a business organization is called Management.	The process of administering an organization by a group of people is known as Administration.
Authority	Middle and Lower Level	Top level
Role	Executive	Decisive
Concerned with	Policy Implementation	Policy Formulation
Area of operation	It works under the administration.	It has full control over the organization's activities.
Applicable to	Profit-making organizations, i.e. business organizations.	Government offices, military, clubs, business enterprises, hospitals, religious and educational organizations.
Decides	Who will do the work? And how will it be done?	What should be done? And when should it be done?
Work	Putting plans and policies into action.	Formulation of plans, framing policies, and setting objectives
Focus on	Managing work	Making the best possible allocation of limited resources.
Key person	Manager	Administrator
Represents	Employees who work for remuneration	Owners, who get a return on the capital invested by them.
Function	Executive and Governing	Legislative and Determinative

 

 

Question 6. Explain the development of management principles.

Management theories and principles have been evolving continuously due to changing needs of business organizations, advances in industrial practices, a growing understanding of human behavior, and technological and industrial advancements. The development of management principles can be categorized into the following stages. Principles of management have been developed during different periods. 

Early Perspective of Management: The earliest evidence of management can be traced back to the construction of the Egyptian pyramids and the Indus Valley civilization, where it was applied.   

Classical Management Theory (late 19^th – Early 20^th Century):

During this period, three key classical scholars attempted to formalize the theories of management. These theories are Scientific Management by Frederick Winslow Taylor, Administrative Theory of Management by Henry Fayol, and Bureaucratic Theory of Management by Max Weber.  Taylor emphasized efficiency, productivity, and time-and-motion studies. He proposed various techniques such as scientific job analysis, standardization, work-study, and incentive-based wages. Henry Fayol proposed 14 principles of management. Max Weber advocated a structured hierarchy, rules, and impersonality.

Neoclassical Theory (1930 to 1950) (Human Relations approach): It is sometimes called the early behavioral approach to management.  The Neoclassical approach to management emerged in the 1930s through the human relations movement led by Elton Mayo, who conducted the Hawthorne studies as a response to and improvement of classical theories, which were mechanistic and focused only on structure and efficiency.  The neoclassical approach focused on human elements, recognized that productivity depends on social-psychological factors, and laid the foundation for behavioral theories of management. Other contributors during that period were Chester Barnard, Douglas McGregor, and Abraham Maslow.  

Behavioral Science Approach (1950s onwards): The neoclassical and behavioral approaches to management are closely related and often overlap. The behavioral science approach evolved from neoclassical theories of management. It is a broader, deeper, and more scientific analysis of human behavior. A more specialized field of study, organizational behaviour, has evolved. The major contributors to this approach included Abraham Maslow, Chris Argyris, Rensis Likert, Herbert Simon, and others.

Quantitative Approach (1940 to 1950): It emphasizes research on operations and quantitative techniques for making managerial decisions.  

Modern Approaches (1960 to present): Modern approaches include the System Approach, the Contingency Approach, Total Quality Management (TQM), Lean Management, and Contemporary Trends such as strategic management, knowledge management, agile practices, and AI-powered decision making.  

Question 7. Define the principles of management and discuss the 14 principles given by Henry Fayol

Principles of management are general guidelines for managers for making decisions that have evolved over time. Fayol proposed 14 classical principles of management, which are also known as the administrative theories of management.

1. Division of work: This principle of management suggests that work should be divided into small jobs or tasks, and these tasks should be performed by trained specialists who are competent to perform these jobs. Division of work creates specialists for each job.

2. Authority and Responsibility: According to Fayol, authority is the right to give orders and obtain obedience, and responsibility is the result of authority. A manager should have the authority to fulfill their responsibilities. An organization should also build a safeguard against the abuse of managerial power. 

3. Discipline: Discipline is the obedience of the organizational rules and employment agreement, which are necessary for the smooth functioning of the organization.

4. Unity of command: This means an employee should receive orders from one boss only.  If an employee has to follow more than one boss, there will be a conflict of interest among the bosses, which may create confusion.

5. Unity of Direction: Whoever is engaged in the same activity should have a unified goal. This means that all the people working in a company should have a single goal and motive, which will make the work easier and help achieve the set goal.

6. Subordination of individual interest to general interest: This principle refers to the fact that employees should subordinate their personal interest to the common interest for achieving the goals of the organization. It means subordinating your individual goal to superordinate organizational goals.

7. Remuneration of Employees: Remuneration means salary and other benefits that are given to the employees. This plays an important role in motivating a company's workers. Remuneration can be monetary or non-monetary. However, it should be based on the individual’s efforts.

8. Centralization and decentralization: Centralization means decision-making power at top management, and decentralization means decision-making power distributed to lower levels. According to Fayol, decision-making power should be balanced across management levels.

9. Scalar Chain: Scalar Chain means the relationship of superior and subordinate in the organization. The formal line of authority from highest to lowest rank is known as the scalar chain.  Fayol, on this principle, highlights that the hierarchy steps should be from the top to the lowest. This is necessary so that every employee knows their immediate senior, also they should be able to contact any, if needed.         

10. Order: Order means a place for everything (everyone) and everything (everyone) in its place. A company should maintain well-defined work orders to foster a favorable work culture. A positive workplace atmosphere will boost productivity.

11. Equity: All employees should be treated equally and respectfully. It’s a manager's responsibility to ensure that no employees face discrimination.

12. Stability of personnel: An employee delivers the best if they feel secure in their job. The management has to offer job security to its employees.

13.  Imitative: The management should support and encourage the employees to take initiatives in an organization. It will help them to increase their interest and make them worthwhile.

14. Esprit De Corps: Esprit De Corps means team spirit, and management should develop teamwork. A manager should replace ‘I’ with we in all his conversations with workers to promote team spirit.

UNIT II (PLANNING)

 

Question 1. What is planning? What are the steps of planning?

Planning

Planning is an important management function for achieving goals and objectives effectively and efficiently. It is the process of setting objectives, deciding on a course of action in advance, and determining the activities and resources needed to achieve them. Objectives tell us what to do, and strategy guides us on how to achieve it. In a business organization, planning is the function of top management, which prepares a strategy that is broken down by middle management into tactical planning. Similarly, lower-level management decides on day-to-day activities known as operational planning. Planning is a comprehensive process that includes analysis, creativity, and collaboration.

 Process of Planning

The process of developing a business plan can be divided into the following stages.

I.                Understanding Business Environment

II.              Strategic Planning Phase

III.            Tactical and Operational Planning Stage

IV.            Action Plans and Scheduling

V.              Risk Management and Contingency Planning

VI.            Review and Evaluation

VII.         Strategic Review (Long-term Planning)

I. Understand Business Environment

A company starts planning after understanding and analysing the business environment, which comprises all the factors that influence the business. External factors are analysed using the PESTEL framework, and the business's internal environment is analysed using SWOT analysis.

II. Strategic Planning Phase

The strategic planning stage includes the following

(a)   Review of Vision and Mission: visions are the long-term goals or dreams of a company that it wants to achieve. Mission defines the purpose of a company or the reason for the existence of any company

(b)  Setting Goal: After the review of vision and mission, specific, measurable, achievable, relevant, and time-bound goals are set. These goals can relate to profitability, growth, expansion, market share, and employee well-being, for instance, setting a goal of a 10% increase in market share over the next 2 years. 

(c)   Developing Strategic Options: Top leaders of the company develop various strategic options, such as market expansion, product diversification, merger, and acquisition, etc.

(d)  Selecting Strategy:  Based on the above analysis, top leadership selects one or multiple strategic options for the specific period.  

III. Tactical and Operational Planning

Tactical and Operational Planning includes (a) Breaking down the Strategy, (b) Budgeting and Allocating Resources, (c) Developing Key Performance Indicators (KPI)

(a) Breaking down the Strategy: Under these steps strategy is broken down into objectives of functional areas, such as objectives of the marketing department, finance department, HR department, Production and Operation department, etc. for example, market expansion strategy can be broken down in terms of increasing sales for marketing department, increasing and optimizing production for production department and similarly for other departments.

(b) Budgeting and Allocating Resources: Each department prepares a detailed budget for achieving objectives, and resources are allocated.

(c) Developing Key Performance Indicators (KPI): Each department identifies the indicators or metrics through which its progress or performance is measured. Such indicators include customer acquisition rate for the marketing department, employee turnover, engagement for the HR department, and many others used to measure the progress of each department.

IV. Action Plans and Scheduling: This stage includes (a) Creating Detailed Action Plans, (b) Coordinating Across the Department.

(a) Creating Detailed Action Plans: specific steps, timeline, and responsibilities are outlined, such as the marketing department might launch a digital campaign, HR department plans for recruitment during the first quarter.

(b) Coordinating Across the Department: After the above functions proper coordinating and communication system is established across the departments. 

V. Risk Management and Contingency Planning

 During planning, companies need to identify potential external and internal risks, including market risk, supply chain disruptions, and financial and operational risks. At the same time, companies need to develop a contingency plan to minimize the impact if something goes wrong. It allows managers to take quick action.

VI. Implementation and Monitoring: It includes (a) Execution of Plan, (b) Monitoring Progress, and Adjusting Plans. Various individuals and teams execute plans by mobilizing resources, managing workflow, and maintaining ongoing communication. Progress is monitored through regular meetings, progress reports, and KPI. If any underperformance is noticed, due to internal or external factors, plans can be adjusted by reallocating resources, shifting the timeline, or revisiting the strategy.

VII. Review and Evolution: It includes

 (a) End of Period Review: Company review performance against the decided goals at the end of the planning cycle, and lessons are learned. 

 (b) Feedback Loop: It helps in preparing the plan. If a particular strategy worked well, it may be scaled; if not, it may be revised or abandoned.

VIII. Strategic Review (Long-term Planning):  After a certain period, such as 3 years, 5 years, etc. company’s vision, mission, goals, and objectives are reviewed and modified according to the progress or business environment.

In short, the steps of Planning can be answered by explaining the following steps

1.     Set Objectives:

2.     Analysing Business Environment

3.     Identify Alternatives

4.     Evaluate Alternatives

5.     Select Best Alternative

6.     Develop an Action Plan

7.     Implement the Plan.

8.     Monitor and Review.

Question 2. Discuss the importance of Planning

I.                Planning provides direction -   Goals or objectives of the organization are well defined, so it acts as a guide for deciding what action should be taken.

II.             Planning reduces the risk and uncertainties:  Planning also guides in dealing with uncertainties and unavoidable situations

III.           Planning reduces the overlapping and wasteful activities:

IV.           Planning promotes innovative ideas: Planning is a mental work; managers may come up with innovative ideas while formulating the plan.

V.              Planning facilitates decision making: Every course of action is planned, which helps employees to make decisions.

VI.           Planning establishes a standard for controlling: Standard Performance – Actual Performance = Deviation. If any deviation from the established standard is found, corrective action should be taken

Question 3. What is planning? Explain the different types of plans.

Planning is an important management function for achieving goals and objectives effectively and efficiently. It is the process of setting objectives, deciding on a course of action in advance, and determining the activities and resources needed to achieve them. Objectives tell us what to do, and strategy guides us on how to achieve it. In a business organization, planning is the function of top management, which prepares a strategy that middle management breaks down into tactical planning. Similarly, lower-level management decides on day-to-day activities known as operational planning. Planning is a comprehensive process that includes analysis, creativity, and collaboration.

Types of Plans

1. Strategy or Strategic Plan

Strategic plans are long-term plans prepared by the top-level management. It includes vision, mission, and long-term strategic goals. Vision is the long-term dream a company wants to achieve, and mission explains a company's purpose or reason for existence. These long-term strategic plans may include expansion, mergers and acquisitions, growth, and increased profitability.    

2. Tactical Plan

Middle-level management or departmental heads break the strategic plan into departmental objectives, a process called tactical planning. For example, the sales department needs to increase sales beyond the current market, and the HR department needs to recruit employees to support the business's expansion.

3. Operational Planning

Based on the strategic planning, day-to-day activities are also decided to achieve the goals and objectives, known as operational planning. Generally, lower-level management prepares an operational plan. Operational plans outline how things need to happen or provide guidelines for accomplishing the mission. This type of planning typically describes the day-to-day running of the company.  It can be further divided into the single-use plan and the standing plan.  

Single-use plan: also known as an operational plan. formulated for a time event or a Project, such as a budget, a program, and a project

Program: It is a single-use plan. It is a sequence of activities designed to implement policies and accomplish objectives. It provides a step-by-step approach to guide the actions needed to reach predetermined targets. It is an instrument of coordination, i.e., a timetable of action. A good programme ensures smooth and efficient operation. A procedure tells how it is to be done, whereas a programme tells what is to be done.

Budget: A budget is a projection (and a plan) that defines the anticipated costs of attaining an objective. It is an appraisal of expected expenses against anticipated income for a future period. It may be stated in terms of time, materials, money, or other units required to perform the work and secure a specified result.

Standing Plan: Formulated for the activities that occurred regularly over time, such as policies, procedures, and methods. Ongoing plans include policies for addressing problems, rules or specific regulations, and procedures for accomplishing particular objectives in a step-by-step process. It includes (a) Rules, (b) Procedure, (c)Policy, (d) Method

4. Contingency Planning

Contingency plans are made when something unexpected happens or when something needs to be changed. Business experts sometimes refer to these plans as a special type of planning. Contingency plans are put in place when the main plans fail due to an unexpected situation. For instance, a delay in the supply of raw material may hinder the production process, so there should be an alternative plan for such a situation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNIT III (ORGANIZING)

 

Question 1. What is organizing? Discuss the important elements of organizing.

Resources and activities need to be organized to achieve planned goals and objectives. Human resources are organized in a hierarchy, and reporting and communication relationships are established among them. They are grouped into functional units based on their specialization or expertise. Similarly, resources such as plant and machinery, material, and money are arranged. Along with the resources, the activities needed to achieve the goals are identified and grouped. Other elements, such as span of control, centralization and decentralization, and coordination systems, are decided during the process of organizing the resources and operations. The outcomes of organizing are the creation of an organizational structure.    

Elements of Organizing

Work Specialization

During the process of organizing, work is divided into specialist units or departments, creating specialization and increasing efficiency.

Departmentalization

Grouping similar jobs and activities creates departments or divisions within an organization. For example, the HR department, the Marketing department, the Finance department, etc.; similarly, activities are grouped by brand line or geographical location.

Chain of Command:

During the process of organizing human resources, a line of authority is created, communication relationships are established responsibilities are assigned.

Span of Control

During the process of organizing span of control for managers is decided. It defines how many subordinates a manager will have or report to.

Centralization and Decentralization

Centralization refers to the concentration of power at top levels of management, and decentralization refers to the distribution of power at lower levels. During the process of organizing, centralization and decentralization are determined.  

Formalization

Formalization refers to the rules and regulations that govern an organization. During the organization process, it is also decided to what extent rules and regulations should be imposed within the organization.                              

Question 2. Explain the process of organizing.

Organizing consists of the following steps.

1. Establishing Objectives:

Although this first step is part of the planning process, it is important to understand the enterprise's objectives. Objectives determine the activities that need to be performed and the type of structure that must be built to achieve the goal. Keeping this in view, Alfred Chandler has said, “Structure follows strategy.” For example, the structure required for a hospital or educational institution is different from the structure required for a manufacturing company

2. Identification and Classification of Activities:

Organizing begins by identifying all activities needed for a business based on its mission, goals, and objectives. The process then involves ‘division of labor’ that divides the work process into a certain number of tasks. For example, in a bank, every individual is assigned a job. One cashier accepts cash, one cashier makes payments, one person issues cheque books, one person receives cheques, etc. With the division of work into jobs, the banks work very smoothly and systematically.

3. Grouping the Jobs and Departmentalization: After dividing the work into smaller jobs, related and similar jobs are grouped and put under one department. The departmentalization or grouping of jobs can be done by the organization in different ways. But the two most common ways are:

(a) Functional departmentalization: Under this method, jobs related to a common function are grouped under one department. For example, all the jobs related to production are grouped under the production department; jobs related to sales are grouped under the sales department, and so on.

(b) Divisional departmentalization: When an organization is producing more than one type of product, it prefers divisional departmentalization. Under this, jobs related to a single product are grouped into a single department. For example, if an organization produces cosmetics, textiles, and medicines, then jobs related to the production, sale, and marketing of cosmetics are grouped under one department, those related to textiles under another, and so on.

 

4. Assignment of Duties:

After dividing the organization into specialized departments, each individual is assigned a duty that matches their skills and qualifications. The work is assigned based on individuals' abilities. Employees are assigned duties through job descriptions. This document clearly defines the job's contents and responsibilities.

5. Establishing Reporting Relationship:

In this step of the organizing process, all individuals are assigned the authority required to perform their assigned job. The assignment of authority creates a superior-subordinate relationship and clarifies who reports to whom. The individual with greater authority becomes the superior, and the one with less authority becomes the subordinate. With the establishment of authority, a managerial hierarchy (chain of command) is created, and the principle of the scalar chain governs it. The establishment of authority also helps create the managerial level. The managers with the most authority are considered top-level managers; managers with a little less authority are part of middle-level management; and managers with the least authority are grouped in lower-level management. So, with the establishment of the authority, individuals can perform their jobs, and everyone knows who reports to whom.

6. Determining the Span of Control

During the process of organizing span of control for managers is decided. It defines how many subordinates a manager will have or report to.

7. Determining the Centralization and Decentralization

Each company must decide for itself how much decentralization of authority and responsibility it desires. Also, the levels at which various major and minor decisions will be made must be determined.

8. Setting up a Coordination Mechanism: During work, the overall goals of the company may become submerged, or conflicts between work units or members may develop. Hence, the organization must provide a mechanism to coordinate employees' efforts so they can work together in a team spirit. James Stoner says, “Coordinating mechanisms enable members of the organization to keep sight of the organization’s goals and reduce inefficiency and harmful conflicts.”

9. Providing Physical Facilities and the Right Environment:

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

The various processes of organization explained above are technically performed through-

(a) Departmentation,

(b) Delegation of authority and fixation of responsibilities, and

(c) Decentralization of authority subject to central control through centralization of decision-making.

 Question 3. What is Organizational structure? Discuss the types of organizational structure.

An organizational structure defines how jobs and tasks are formally divided, grouped, and coordinated. The organizational structure would depend on the organization itself and its operations. An organizational structure is a visual diagram of a company that describes what employees do, who they report to, and how decisions are made across the business organization.  Simply, it is like a map that explains how your company works and how its roles are organized. Organizational structures help define at least three key elements of how a business will run.  Like, how will the chain of command be (long or short?), the span of control (wide or narrow?), and the decision-making (centralized or decentralized)?

Types of organizational structure

Line Organization

This is the simplest and oldest form of organizational structure. This organization is also known as a scalar organization. In such organizations, authority flows from the top down. Every person is in charge of many persons under him, and he himself is accountable only to his superior. The organization is a vertical structure where one person delegates authority to their Subordinates. Authority flows vertically & from the top person to all persons responsible for executing the work. Responsibility, on the other hand, flows upward. Everybody is responsible for their work and is accountable to their superior. Since authority and responsibility flow in an unbroken straight line, it is called the line organization.

In the words of J.M. Lundy, “It is characterized by direct lines of authority flowing from the top to the bottom of the organizational hierarchy and lines of responsibility flowing in an opposite but equally direct manner.” This form of organization is followed in military establishments. The Commander-in-Chief is at the top, with various other officers at the lower levels. Officers in lower positions derive their authority from those above them. The modern military organizations do not entirely rely on a line organization. They have staff wings like intelligence, medical, and so on

Line & Staff Organization

In this organizational structure, there are two types of relationships: line and staff. The line relationship is a decision maker, and the staff personnel are advisors.

According to Henry Fayol, “Staff is a group of men who have the strength, knowledge, and time which the line manager may lack.”

According to Allen, “Line refers to those positions and elements of organisation, which have the responsibility and authority and are accountable for the accomplishment of primary objectives. Staff elements are those which have responsibility and authority for providing advice and service to the line in the attainment of objectives.” In this type of organization, functional specialists are added to the line, giving it the advantages of specialists. Staff is advisory and usually does not possess or command authority over line managers.

The staff consists of two types: General Staff, Specialized Staff: 

   

 

Functional Structure of Organization:

When dividing and grouping tasks and work by functional areas such as marketing, HR, Finance, and production, it is known as the functional structure of the organization. Functional departmentalization is the basis for grouping jobs that relate to a single organizational function or specialized skill, such as marketing, finance, production, and so on. The chain of command in each function leads to a functional head who, in turn, reports to the top manager.

The functional design enhances operational efficiency and product quality by involving specialists in each functional area and allocating resources by function rather than duplicating or diffusing them throughout the organization.

 

Divisional Organization

The divisional or departmental organization groups people or activities with similar characteristics into a single department or unit. It includes- Product-Based Divisional Structure, Market-Based Divisional Structure, and Geographical Divisional Structure; Process-Based Structure

 

Comparison of Functional and Divisional Structure

Basis	Functional Structure	Divisional Structure
Formation	Based on function	Based on the product line supported by the functional unit
Specialization	Functional Specialization	Product specialization
Responsibility	Difficult to fix in the department	Easy to fix the responsibility
Managerial Development	Less opportunity	Opportunity for managerial development
Cost	Functions are not duplicated	Duplication of resources in various divisions hens costly
Coordination	Difficult for a multiple-product company	Easy because all functions related to a particular product are integrated in one department

 

Project Organization

These are temporary organizational structures formed for specific projects over a specific period; once the goal is achieved, they are dismantled. For example, an organization's goal may be to develop a new automobile. For this project, specialists from various functional departments will be brought together to work together. These functional departments include production, engineering, quality control, and marketing research. When the project is completed, these specialists go back to their respective duties. These specialists are selected based on task-related skills and technical expertise rather than decision-making experience or planning ability.

Matrix Organization

Matrix organization is a combination of functional organization and project organization

Matrix Organization = Functional Structure + Project Structure

It consists of groups of persons drawn from various functional departments, deputed to work on a project under the guidance and direction of a Project Manager appointed by the top management. The Project Manager is given the necessary authority to complete the assigned project within the scheduled time and at the specified cost, and in accordance with the quality and other conditions laid down by top management.

The Project Manager assigns work to the various functional groups, coordinates their activities, and gets the project completed. After the project is completed, he will report to the chief executive (i.e., the top management of the organization). When the specified project is completed, individuals from various functional departments will return to their respective departments for further assignment to other projects. Even the Project Manager is reassigned back to the functional department. A matrix organization is a permanent organizational structure designed to accomplish a specific project (or to achieve a specific result) by using teams of specialists drawn from different functional departments within the organization.

 

UNIT IV (STAFFING)

 

Question 1. What is Staffing? What are the functions of staffing?

Staffing is a part of Human Resources Management that involves placing the right person for the right job at the right time. It is the process of analysing the organization's human resource needs (Human Resource Planning/Workforce Planning), job analysis and design, sourcing and recruitment, selection, onboarding and orientation, Training and development, Performance management, retention, and succession planning.

Human Resource Planning/ Workforce Planning: Through workforce planning, staffing or HR teams assess the organization’s current or future staffing needs. It forecasts the availability and demand of specific skills and roles.

Job Analysis and Job Design: Job analysis is the systematic process of identifying and analyzing the nature and responsibilities of a particular job. Knowledge, skills, and abilities required to perform that particular job. The result of the job analysis is the job description, which is needed for recruitment and selection, training and development, and other purposes. The components of job analysis are job description, job specification, and job evaluation. On the other hand, job design is the process of combining elements to form a complete job.

Sourcing and recruitment: The word source means to get something from a particular place; therefore, sourcing and recruitment are almost similar words. It is the process of searching for prospective candidates for a particular position. It is the process of attracting, identifying, and encouraging potential candidates to apply for job openings in an organization. It involves advertising, candidate screening, and shortlisting. The purpose of recruitment is to create a pool of applicants.

Selection: It is the process of choosing the best candidate from the pool of applicants, which involves preliminary screening, selection test, Employment interview, reference and background checks, selection decision, medical examination, job offer, and contract of employment.

 

Onboarding and orientation: it is the process of integrating or welcoming new employees into an organization. It includes orientation, training, integration, and the provision of resources and workstations. It also clarifies job role expectations, organizational culture, and related factors. 

Training and Development: Training is the process by which employees' aptitudes, knowledge, skills, and abilities are enhanced to perform a specific job. Through training, technical, behavioral, and soft skills are improved. Development refers to the learning opportunities. It helps the employee advance their career. Training focuses on current jobs, whereas development is long-term and futuristic, focusing not only on jobs but also on other aspects of the career.

Performance Management: It is the process of monitoring and improving employee performance, which involves setting goals and performance metrics, conducting performance appraisal and reviews, and providing regular feedback, rewards, and recognition for achievements.

Retention and Succession Planning: Management's staffing function attempts to retain employees to prepare them for the organization's future needs. Succession planning is the process of identifying and developing future leaders for key roles in an organization.

Question 2. What is Human Resources Planning (HRP)? Explain it.

Human Resources planning is the process of analyzing and identifying an organization's current and future human resources requirements to achieve its goals. Through this process, management ensures it has the right number of people, with the right skills, at the right time, in the right place, to achieve its objectives. It analyzes the requirements and supply of human resources, not just in quantity but also in terms of the right skills.

Process of HRP 

1. Analysing organizational objectives

Before analysing the demand and supply of human resources, management needs to understand the organization's strategic goals and align human resource needs with the organization's plans.

2. Assessing Current Human Resources

In this step, management assesses the current skills, performance, experience, demographics, etc., of the workforce to determine skill shortages or surpluses.

3. Forecasting Demand and Supply

It involves forecasting future human resource requirements, known as demand forecasting. Similarly, management forecasts the availability of needed talent within and outside the organization. The following questions arise at this step. 

§  Which jobs will need to be filled in the upcoming period?

§  What skill sets will people need?

§  How many staff will be required to meet the strategic goals of our organization?

§  Is the economy affecting our work and ability to appeal to new employees?

§  How is our community evolving or expected to change in the upcoming period?

4. Gap Analysis

At this step, the demands for and supply of human resources are compared to determine skill shortages, excesses, or mismatches. The aforementioned question is answered under this step.

5. Developing HR Strategies

Based on the above analysis, HR strategies are developed to meet organizational needs. These strategies may include: Recruitment Strategy, Training and Development Strategy, Outsourcing Strategy, and Collaboration Strategy.

Question 3. What is recruitment? What are the sources of recruitment?

Recruitment is the process of identifying prospective candidates for vacancies within an organization, in which the HR team encourages them to apply for specific positions. The purpose of recruitment is to create a pool of applicants from right candidates are shortlisted for selection. During the recruitment process, vacancies and job descriptions are advertised through newspapers or posted on job portals, social media, and professional networking sites. Applications are managed, screened, and shortlisted for selection.

Prospective candidates are either sourced through internal or external means. 

Internal Sources: When an organization recruits the right candidate from within, it is an internal source of recruitment and an internal method of recruitment that includes the following.

Promotions

In the organization, vacancies are sometimes filled by promoting employees to higher positions.

Transfers

When employees are moved to different roles or departments without changing their level of authority is known as a transfer.

Internal Job Postings

Many times, the organization advertised vacancies on internal portals for existing employees. Internal employees of the organization apply against those advertised vacancies.

Employee Referrals

Existing employees are encouraged to recommend suitable candidates from their acquaintances or network.

Benefits of an Internal source of recruitment

Cost-effective.

Motivates employees through career advancement.

Reduces onboarding time as internal candidates are already familiar with the

External Sources

Job Portals:

These days, Job portals are the most common source of prospective candidates. The organization posts vacancies on job portals such as Indeed, LinkedIn, or Glassdoor. Times, Monster, and prospective employees apply on these job portals. Similarly, candidates also upload their resumes or CVs on these job portals to be hired. Employers source the applicants' CVs from these portals and shortlist them for an interview after preliminary screening and a telephonic discussion. Job portals connect employees and employers.

Recruitment Agencies

Recruitment agencies or Recruitment firms support organizations as consultants in recruiting the right candidates. These recruitment firms specialize in recruiting candidates across different categories or industry-specific candidates. Organizations generally outsource their recruitment function to these firms. 

Campus Recruitment

When an organization requires fresh graduates, it directly recruits candidates from colleges and universities.

Social Media

Social media becomes an important and effective tool for advertising vacancies and sourcing the right candidates 

Advertisements

Job vacancies are announced in newspapers, magazines, on the radio, or online.

Walk-ins and Job Fairs

Sometimes, employers organize job fairs to recruit candidates directly.  Candidates are invited to apply for the positions.

Benefits of an external source

Brings fresh perspectives and skills.

Increases the talent pool.

Useful for filling specialized or entry-level roles where internal candidates may not be available.

Factors Influencing Recruitment

Organizational Needs: Current and future staffing requirements.

Budget: Costs associated with recruitment methods.

Job Market Conditions: Talent availability and unemployment rates.

Technology: Use of AI, applicant tracking systems, and social media in recruitment.

Company Brand: Employer reputation impacts the ability to attract talent.

Question 4. What is Selection? What is the process of Selection?

Selection is the process of choosing the best candidate among the shortlisted candidates, which starts with screening. The process may start with the screening of applications. It may continue even after the offer of employment, the candidate's acceptance, and the candidate's joining.

Process of Selection

Preliminary Screening: Helps the manager eliminate unqualified or unfit job seekers based on information provided in application forms. Preliminary interviews help reject misfits for reasons that did not appear in the application forms

 Selection Tests: After preliminary screening, selection tests are taken for the shortlisted candidates.

 (a) Intelligence Tests: This is one of the important psychological tests used to measure the level of intelligence quotient of an individual. It is an indicator of a person’s learning ability, decision-making, and judgment skills.

(b) Aptitude Test: It is a measure of an individual's potential for learning new skills. It indicates the person’s capacity to develop. Such tests are good indicators of a person’s future success.

(c) Personality Tests: Personality tests provide clues to a person’s emotions, her reactions, maturity, and value system, etc. These tests probe the overall personality. Hence, these are difficult to design and implement.

 (d) Trade Test: These tests measure the existing skills of the individual. They measure the level of knowledge and proficiency in a profession or technical field. The difference between an aptitude test and a trade test is that the former measures potential to acquire skills, while the latter measures the actual skills possessed.

 (e) Interest Tests: Every individual has a fascination for some jobs more than others. Interest tests are used to determine a person's pattern of interests or involvement.

(iii) Employment Interview: An Interview is a formal, in-depth conversation conducted to evaluate the applicant’s suitability for the job. The role of the interviewer is to seek information, and that of the interviewee is to provide the same. Though in present times, the interviewee also seeks information from the interviewer.

 (iv) Reference and Background Checks: Many employers request names, addresses, and telephone numbers of references for the purpose of verifying information and gaining additional information on an applicant. Previous employers, known persons, teachers, and university professors can act as references.

 (v) Selection Decision: The final decision has to be made from among the candidates who pass the tests, interviews, and reference checks. The views of the concerned manager will generally be considered in the final selection, as he/she is responsible for the new employee's performance.

 (vi) Medical Examination: After the selection decision and before the job offer is made, the candidate is required to undergo a medical fitness test. The job offer is made to the candidate who is declared fit after the medical examination.

(vii) Job Offer: The next step in the selection process is a job offer to those applicants who have passed all the previous hurdles. A job offer is made through a letter of appointment/confirm his acceptance. Such a letter generally contains a date by which the appointee must report on duty. The appointee must be given a reasonable time for reporting.

(viii)Contract of Employment: After the job offer has been made and the candidate accepts the offer, certain documents need to be executed by the employer and the candidate.

Question 5. What is Training and Development? Discuss the various techniques of training

The term training refers to the process by which the attitudes, skills, and abilities of employees to perform specific jobs are enhanced. But the term development means the growth of the individual in all respects. Training is a short-term process, but development is ongoing. Also, development includes training. Training is any process that increases employees' aptitudes, skills, and abilities to perform specific jobs. It is a process of learning new skills and applying knowledge. It attempts to improve their performance on the current job or prepare them for any intended job. Development refers to the learning opportunities designed to help employees grow. It covers not only those activities that improve job performance but also those that foster personality growth, help individuals progress towards maturity, and actualize their potential.

Difference between Training and Development

Training	Development
It is a process of increasing knowledge and skills.	It is a process of learning and growth.
It is to enable the employee to do the job better.	It is to enable the overall growth of the employee.
It is a job-oriented process.	It is a career-oriented process.

Methods of Training

On the Job Method

Apprenticeship Programs: Apprenticeship programmes put the trainee under the guidance of a master worker. These are designed to acquire a higher level of skill. People seeking to enter skilled jobs, such as plumbers, electricians, or ironworkers, are often required to undergo apprenticeship training. These apprentices are trainees who spend a prescribed amount of time working with an experienced guide or trainer

Coaching: In this method, the superior serves as the coach, guiding and instructing the trainee. The coach or counsellor sets mutually agreed-upon goals, suggests ways to achieve them, periodically reviews the trainee's progress, and suggests changes in behaviour and performance. Classically, the trainee is being groomed to replace the senior manager and relieve him of some of his duties.

Internship Training: It is a joint training programme in which educational institutions and business firms collaborate. Selected candidates carry on regular studies for the prescribed period. They also work in factories or offices to gain practical knowledge and skills.

 Job Rotation: This type of training involves rotating the trainee between departments or jobs. This enables the trainee to gain a broader understanding of all parts of the business and how the organization as a whole functions.

Off-the-Job Methods

Classroom Lectures/Conferences: The lecture or conference approach is well adapted to conveying specific information, rules, procedures, or methods. The use of audiovisuals or demonstrations can often make a formal classroom presentation more interesting, increase retention, and provide a vehicle for clarifying more difficult points.

Films can provide information and explicitly demonstrate skills that are not easily conveyed by other techniques. Used in conjunction with conference discussions, it is a very effective method in certain cases.

Case Study: Taken from actual experiences of organizations, cases represent attempts to describe, as accurately as possible, real problems that managers have faced. Trainees study the cases to identify problems, analyse causes, develop alternative solutions, select the solution they believe is best, and implement it.

 Computer Modelling: It simulates the work environment by programming a computer to replicate some of the realities of the job, allowing learning to take place without the risks or high costs that would be incurred if a mistake were made in a real-life situation.

Vestibule Training: Employees learn their jobs on the equipment they will be using, but the training is conducted away from the actual work floor. Actual work environments are created in a classroom, and employees use the same materials, files, and equipment. This is usually done when employees are required to handle sophisticated machinery and equipment.

Programmed Instruction: This method involves a prearranged, step-by-step acquisition of specific skills or general knowledge. Information is broken into meaningful units, which are arranged in a logical, sequential order to form a logical and sequential learning package, i.e., from simple to complex. The trainee completes these units by answering questions or filling in blanks.

Question 6. What is a Performance Appraisal? What are the methods of Performance Appraisal?

Performance appraisal is the systematic process of evaluating and documenting employees’ job performance over a specific period. It assesses how well employees perform and discharge their roles and responsibilities. It helps make decisions on promotion, compensation, training, and development.  Some of the common performance appraisal methods are as follows

Traditional Method

Ranking Method

Under this appraisal method, employees and departments within the organization are ranked by performance.

Graphic Rating Scale

Under this technique, employees are rated on traits such as quality of work, communication, punctuality, teamwork, initiative, etc. Employees' ratings are shown through the line or Bar with clear labels such as 1 to 5 points or with short phrases like “exceed expectation”, “meet expectation”, “need improvements”, etc.

Essay Method

Under this method, the evaluator writes a complete narrative detailing the employee's performance.

Modern Methods of Performance Appraisal

360-degree Feedback

As the name suggests, under this method, feedback is taken from every stakeholder, such as the employee themselves, supervisor, peer, and subordinate, to evaluate the performance of the employee. 

Management by Objectives (MBO)

Under this method, management and employees collectively set targets, and performance is evaluated based on how well they achieve those targets. Generally, management sets a target after consulting the employee, which is used for performance evaluation. 

Behaviourally Anchored Rating Scale (BARS)  

This method combines a behavior example with a rating scale. It is an improvement over the graphic rating scale. It uses critical incident techniques to collect data on expected job-specific behavior against which employees are evaluated. 

 

UNIT V (MOTIVATION)

 

Question 1. Define motivation and discuss Maslow’s Need Hierarchy Theory

It is an inner state that causes people to behave in certain ways. The common frame of reference includes drives, goals, incentives, desires, wants, and needs in definitions of motivation. Motivation is the process that accounts for an individual’s intensity, direction, and persistence of effort toward the attainment of a goal. Motivation is one of the critical factors that drive employee performance and the organization's survival and growth. The organization needs motivated employees in a rapidly changing workplace.

Maslow’s Need Hierarchy Theory of Motivation

Abraham Maslow in his book. Motivation and Personality (1954) proposed that humans have a hierarchy of five needs, beginning with the basic need for physiological well-being and progressing to the realization of one’s potential. These needs are physiological, safety, social, esteem, and self-actualization, as shown in Figure

                          

Maslow saw human needs as a hierarchy, ascending from the lowest to the highest, and he concluded that when one set of needs is satisfied, that need ceases to be a motivator.

1. Physiological needs:

a. These needs are the basic human needs of an individual for survival, such as food, clothing, shelter, and sleep.

b. These needs have the highest strength and intensity. The intensity of these needs keeps changing with time.

c. However, they have to be repeatedly satisfied within a relatively short time.

2. Safety and security needs:

With their physical needs relatively satisfied, the individual’s safety needs take precedence and dominate behavior. These needs are second in the hierarchy. Safety needs manifest in preferences for job security, grievance procedures, and job safety.

Safety and security needs include the following:

a. Personal security

b. Financial security

3. Social needs:

After physiological and safety needs are fulfilled, the third layer of human needs is social and involves feelings of belonging. Social needs add meaning to work life. Social needs are primarily satisfied through family picnics, get-togethers, cultural and sports activities. They form the basis for team spirit in an organization.

a. Friendship

b. Intimacy

c. Family

4. Ego and esteem needs:

All humans have a need to be respected, to have self-esteem, and self-respect. Esteem presents the normal human desire to be accepted and valued by others. Most people need a sense of stability and self-esteem. Fulfillment of these needs provides a feeling of self-confidence, achievement, self-respect, and usefulness, and their non-fulfillment produces feelings such as inferiority and unhelpfulness. Ego and esteem needs are met by the organization through promotion policies that provide greater status and appreciation.

5. Self-actualization needs:

This level of need pertains to a person’s full potential and to realizing that potential. Maslow describes this desire as the desire to become more and more what one is, to become everything that one is capable of becoming. This is a broad definition of the need for self-actualization, but when applied to individuals, it becomes specific. Very few people have such needs. An individual may have a strong desire for a challenging job and a higher promotion. For example, Sunil Gavaskar entered into modelling (Dinish Suiting). Organizations can provide employees with the challenge and the opportunity to reach their full career potential.

Question 2. Explain the Herzberg Two Factor Theory of Motivation

Frederick Herzberg proposed two sets of factors that influenced job satisfaction and dissatisfaction. These factors are known as motivators (satisfiers) and hygiene factors (Dissatisfiers)

Hygiene or Dissatisfiers

According to Herzberg, the absence of hygiene factors dissatisfies employees, and the presence of these factors prevents them from being dissatisfied. Hygiene factors do not motivate the employee directly, but they must be present before motivators can be used to stimulate the employee. These factors are as follows

Ø  Working conditions

Ø  Policies and administrative practices

Ø  Salary and Benefits

Ø   Supervision

Ø  Status

Ø  Job security

Ø  Co-workers

Ø   Personal life

Motivators or Satisfiers

The presence of a motivator or satisfier motivates or satisfies employees, and the absence of these factors leads to no satisfaction or no motivation. It should be noted that the opposite of satisfaction is no satisfaction. These factors are as follows.

Ø  Recognition

Ø  Achievement

Ø  Advancement

Ø  Growth

Ø  Responsibility

Ø  Job challenge

 One cannot use motivators until all the hygiene factors are met. Herzberg's needs are specifically job-related and reflect some of the distinct things that people want from their work, as opposed to Maslow's Hierarchy of Needs, which reflects all the needs in a person’s life

UNIT VI (CONTROLLING)

 

Question 1. What is Controlling? What are the steps of Controlling? Or explain the main elements of controlling

Controlling is the process of checking and monitoring the performance of every activity at certain intervals and taking corrective actions to achieve goals. Controlling involves setting clear objectives, monitoring progress, providing timely feedback, and ensuring resources are allocated efficiently. It ensures that activities in an organization are performed as per the plans and the organization's resources are being used effectively and efficiently for the achievement of predetermined goals

In other words, we can say that a manager at any level needs to exercise effective control over subordinates' activities to achieve desired results. Through the controlling function, we identify the difference between actual and standard performance and analyze the causes of the difference to take corrective actions. This helps us achieve goals and targets as per the plans and formulate new plans. 

Steps Controlling

1. Setting a Performance Standard
2. Measurement of Actual Performance
3. Comparison of Actual Performance with Standards
4. Analysing deviations
5. Taking Corrective Actions

Setting a Performance Standard: For controlling, standards need to be set up in qualitative and quantitative terms. Standards are the criteria or benchmarks against which actual performance would be measured. For example, standards can be set in terms of cost to be incurred, revenue to be earned, product units to be produced and sold, time to be spent in performing a task, improving goodwill, motivation level of employees

Example of the standard used in functional areas

Production Department - Quality, Quantity, Cost, Individual Job Performance,

Marketing: Sales Volume, Sales Expenses, Advertisement Expenditure, Individual Sales Person’s Performance,

Personnel Management: Labour Relations, Labour Turnover, Absenteeism, Labour Ability to change,

Measurement of Actual Performance: Actual Performance is measured during performance through observation, sample checks, performance reports, etc. Performance may be measured in the form of performance reports by a supervisor, Gross profit ratio, Net profit ratio, and sales reports, at certain intervals.

Comparing Actual Performance with Standard Performance: At this step, actual performance is compared with the standard to identify deviations.

Analysing the deviation: if the deviation or difference between actual performance and standard performance exceeds the acceptable limit or range, it should be brought to notice, and the causes of the deviation should be identified to take corrective actions. It should be addressed more urgently if the deviation affects key or critical areas of the business. For analyzing deviation, two important things are considered by the management

1. Critical Point Control: It's not easy to keep checking each activity of the organization; therefore, focus on Key Result Areas (KRAs) of the business, which are critical to the success of the business. The KRAs are set as critical points: if anything goes wrong, the entire organization suffers.
2. Management by Exception: It is also called control by exceptions, which believes that if you try to control everything, you may control nothing; therefore, only significant deviations that go beyond permissible limits should be brought to notice, and insignificant deviations should be ignored.

Taking corrective action: The final step in controlling is taking action when deviations exceed acceptable limits. No corrective actions are required if deviations are within the acceptable limit. Corrective actions may be in the form of employee training, additional workers and equipment, overtime, etc.

 

Question 2. Explain the various techniques of controlling.

Traditional Techniques

Personal Observation: The manager monitors employee performance and other operational activities through direct observation. Personal observation creates psychological pressure on the employee to perform well

Statistical Reports: Statistical tools such as averages, percentages, ratios, and correlations are very useful for measuring performance and comparing with benchmarks or standards.

Breakeven Analysis: The sales volume at which there is neither profit nor loss is known as the breakeven point, which helps determine expected profit and losses at different levels of activity. It is a technique for analyzing the relationship between cost, sales volume, and profits.

 Budgetary Control:

A budget is the statement of expected income. Under this technique, all activities are planned as budgets, and actual expenses are compared with the budgets. 

Sales Budget: A statement of what an organisation expects to sell in terms of quantity as well as value

Production Budget: A statement of what an organization plans to produce in the budgeted period

Material Budget: A statement of the estimated quantity and cost of materials required for production

Cash Budget: Anticipated cash inflows and outflows for the budgeted period

Capital Budget: Estimated spending on major long-term assets like a new factory or major equipment

Research and Development Budget: Estimated spending for the development or refinement of products and processes

Modern Techniques

ROI

Ratio Analysis

Responsibility Accounting

Management Audit

PERT and CPM

MIS

Return on Investment: Return on investment is useful for measuring an organization's overall performance or the performance of individual departments or divisions.  ROI is considered a yardstick for measuring the effective utilization of invested capital. It answers whether invested capital generates a sufficient amount of return.

Ration Analysis:

Liquidity Ratio: Liquidity ratios are calculated to assess a business's short-term solvency. It determines the firm's ability to pay its short-term debt.

Solvency Ratio: Calculated to determine the short-term solvency of the business. It determines the firm’s ability to pay its long-term debt.

Profitability Ratio: It is calculated to analyze the profitability position of the business by calculating the ratio of profits to sales or funds

Turnover Ratio: Turnover ratios are calculated to determine operational efficiency based on the effective utilization of resources. 

Responsibility accounting: under this control technique, different departments, sections, and divisions of the organization are set up as Responsibility Centers, and their heads are responsible for achieving their centers’ targets.

The responsibility center may follow the types

1. Cost Center:
2. Revenue Center
3. Profit center
4. Investment Center

Management Audit: A management audit is a systematic appraisal of an organization's management performance. It helps identify performance deficiencies and improve future performance.

PERT and CPM: 

PERT and CPM are useful for planning, scheduling, and implementing time-bound projects that involve performing a variety of complex, diverse, and interrelated activities. These techniques address time scheduling and resource allocation for these activities and aim to ensure the effective execution of projects within a given schedule and cost structure.

The steps involved in using PERT/ CPM are as follows:

●      The project is divided into several activities, which are then arranged in a logical sequence.

●      A network diagram is prepared to show the sequence of activities, the starting point, and the termination point of the project.

●      Time estimates are prepared for each activity. PERT requires the preparation of three time estimates: the optimistic (or shortest) time, the pessimistic (or longest) time, and the most likely time. In CPM, only one time estimate is prepared. In addition, CPM requires cost estimates for completing the project.

●      The longest path in the network is identified as the critical path. It represents the sequence of activities that are important for the timely completion of the project and for which no delays can be allowed.