Principles of Management & Organizational Behavior - Unit 2 PDF

**SYLLABUS: UNIT-2** 1. **PLANNING** I. Definitions II. Purposes of Planning III. Benefits of Planning IV. Elements of Planning V. Types of Plans a. Based on Breadth i. Strategic ii. Operational b. Based on Time Frame i. Long Term ii. Short Term c. Based on Specificity i. Spec...

**SYLLABUS: UNIT-2** 1. **PLANNING** I. Definitions II. Purposes of Planning III. Benefits of Planning IV. Elements of Planning V. Types of Plans a. Based on Breadth i. Strategic ii. Operational b. Based on Time Frame i. Long Term ii. Short Term c. Based on Specificity i. Specific ii. Directional d. Based on Frequency of Use i. Single Use ii. Standing VI. Establishing Goals & Developing Plans a. Traditional Goal Setting VII. Planning Process (9-Step Process) VIII. Contemporary Uses/Criticisms in Planning 2. **Management by Objectives (MBO)** I. MBO Strategy: Three Basic Parts II. Features of MBO III. Pro & Con of MBO 3. **Management by Exception** 4. **DECISION MAKING** I. Definition II. Need for Decision Making III. Steps for Decision Making IV. Types of Decision a. Programmed b. Rational c. Bounded-Rationality d. Non-Programmed 5. **CONTROL** I. Definitions II. Features of Controlling III. Control System IV. Types of Control a. Feedforward Control b. Concurrent Control c. Feedback Control V. Controlling Process VI. 4 Types of Organizational Control a. Output Control b. Behaviour Control c. Bureaucratic Control d. Clan Control VII. Techniques of Managerial Control (Traditional vs Modern) a. Traditional i. Personal Observations ii. Statistical Reports iii. Break-even Analysis iv. Budgetary Control b. Modern i. ROI ii. Ratio Analysis iii. Responsibility Accounting iv. Management Audit v. PERT & CPM 6. **PRINCIPLES OF ORGANIZATION (URWICK PRINCIPLES)** 7. **ORGANISING** I. Definition II. Function III. Importance IV. Steps V. Organization Structure VI. Formal & Informal Groups 8. **TYPES OF ORGANIZATION STRUCTURE** I. Line II. Line & Staff III. Functional IV. Committee V. Project Organization VI. Matrix Organization 9. **SPAN OF MANAGEMENT** I. 2 TYPES OF SPAN a. Narrow Span b. Wide Span 10. **DEPARTMENTATION** I. Types a. Function b. Products c. Territory/Geography d. Process of Equipment e. Customers f. Time & Number II. SUMMARY of basic structures of all types of Departmentation 11. **CENTRALIZATION & DECENTRALIZATION** I. Centralization II. Decentralization III. Comparative Analysis between Centralization & Decentralization IV. Key factors to Centralize or Decentralize Authority V. No absolutes VI. Summary 12. **AUTHORITY & RESPONSIBILITY** I. Authority a. Definiton b. Features II. Responsibility a. Features III. Accountability IV. Difference between Authority & Responsibility 13. **DELEGATION OF AUTHORITY** I. Key Aspects of Delegation II. Principles of Delegation III. Process of Delegation 1. **[PLANNING:]** **[DEFINITIONS:]** 1. "Generally speaking, planning is deciding in advance what is to be done." -- **W.H Newmann** 2. "Planning is deciding in advance what to do, how to do, when to do & who is to do it. Planning bridges a gap between from where we are to where we want to go." -- **Harold, Koontz & O'Donnel** 3. "Planning is that function of manner in which he decides in advance what he will do. It is a decision-making process of a special kind; its essence is futurity." -- **Haynes & Massie** **Planning** is the **primary function of management**. It is the determination of **future** course of actions in advance. It is the blueprint of action & operation. In other words, Planning is a **primary managerial activity** that specifies the objectives to be achieved in the **future** and selects the alternative course of action to reach defined objectives. Thus, it involves: 1\. **Defining** the organization's **goals** 2\. **Establishing** an overall **strategy** for achieving those goals 3\. **Developing plans** for organizational work activities **[PURPOSES OF PLANNING:]** (Points from Benefits can be included) 1. Provides **direction** 2. **Reduces uncertainty** 3. **Minimizes waste & redundancy** 4. Sets the **standards for controlling** **[BENEFITS OF PLANNING:]** (Points from Purposes can be included) 1. Goal focus 2. Improve **efficiency** 3. Innovation & Creativity 4. Better **coordination** 5. Ensures commitment 6. Aid to business success 7. Brings **systematization** **[ELEMENTS OF PLANNING:]** 1. **[GOALS/OBJECTIVES -- ]** - Desired outcomes for individuals, groups or entire organizations. - Provide direction & evaluation performance criteria 2. **[PLANS -- ]** - Documents that outline how goals are to be accomplished - Describe how resources are to be allocated & establish activity schedules **[TYPES OF PLANS --]** A. **[PLANS based on BREADTH:]** 1. **[STRATEGIC PLANS: ]** - Apply to the **entire organization** - Establish the organization's **overall goals** - Seek to position the organization in terms of its environment - Cover **[extended periods of time]** 2. **[OPERATIONAL PLANS:]** - Specify the **details of** how the overall **goals** are to be achieved - Cover **[short time period]** B. **[PLANS based on TIME FRAME:]** 1. **[LONG TERM PLANS:]** Time frames extending **[beyond 3 years]** 2. **[SHORT TERM PLANS:]** Time frames of **[1 year or less]** C. **[PLANS based on SPECIFICITY:]** 1. **[SPECIFIC PLANS:]** **Clearly defined** plans which leave **no room for interpretation** 2. **[DIRECTIONAL PLANS:]** **Flexible** plans that set out general guidelines, provide focus, yet allow discretion in implementation. D. **[PLANS based on FREQUENCY OF USE:]** 1. **[SINGLE USE PLANS:]** **One time** plans specifically designed to meet the need of a **unique situation** 2. **[STANDING PLANS:]** **Ongoing** plans that provide guidance for **activities performed repeatedly**. **[ESTABLISHING GOALS & DEVELOPING PLANS:]** **[TRADITIONAL GOAL SETTING-]** - **Broad goals** are set **at** the **top** of the organization - Goals are then broken into **sub-goals** for **each organizational level** - **Assumes** that **top management knows best** because they can see the 'bigger picture' - Goals are intended to direct, guide & constrain from above - Goals lose clarity & focus as lower-level managers attempt to interpret & define the goals based on their areas of responsibility **[PLANNING PROCESS: (9 STEP PROCESS)]** 1. **[Establish objectives]** -- Objectives may be set for the entire organisation and each department or unit within the organisation 2. **[Develop strategies]** 3. **[Determination of premises]** -- Planning is concerned with the future which is uncertain and every planner is using conjecture about what might happen in the future 4. **[Determination of alternatives ]** 5. **[Evaluation of alternatives]** -- The next step is to weigh the pros and cons of each alternative 6. **[Selecting a course of action]** -- This is the real plan of decision making. The best plan has to be adopted & implemented 7. **[Formulation of derivative plans]** 8. **[Implementation of plans]** -- Putting the plans into action 9. **[Reviewing the planning process]** -- Monitoring and following up the actions in the plan are equally important to ensure that objectives are achieved. **[CONTEMPORARY ISSUES/CRITICISMS IN PLANNING:]** 1. Planning may create **rigidity** 2. Plans can**not** be developed **for dynamic environments** 3. Formal plans **cannot replace intuition & creativity** 4. Planning **focuses manager's attention on today's competition, not tomorrow's survival** which might lead to **tomorrow's failure.** 2. **[MANAGEMENT BY OBJECTIVES (MBO) --]** A **management model** introduced by **[Peter Drucker]** in his book '**The Practice of Management'(1954)** , that helps **align individual and organizational goals** & is a key part of performance management. MBO is a process whereby the **subordinates and the superiors jointly identify common goals**; the employees set their goals to be achieved, the standards to be taken as the criteria for measurement of their performance and contribution & **deciding the course of action to be followed.** **[MBO STRATEGY: THREE BASIC PARTS --]** 1. **All individuals** within the organization are **assigned** a special **set of objectives** that they try to reach during a normal operating period. These objectives are mutually set & **agreed upon by individuals & their managers**. 2. **Performance reviews** are conducted **periodically** to determine how close individuals are to attain their objectives. 3. **Rewards** are given to individuals on the basis of how close they come to reaching their goals. **[FEATURES OF MBO:]** 1. **[GOAL SETTING]** -- Managers and employees work together to set clear, specific goals that are aligned with the company's objectives. 2. **[ACTION PLANS]** -- Once goals are set, employees and managers develop action plans to achieve them. These plans may include timelines, responsibilities & resources needed 3. **[PERFORMANCE REVIEWS]** -- Regular performance reviews are conducted to evaluate progress towards goals. If performance is below expectations, the reasons are explored and corrective plans are developed. 4. **[FEEDBACK]** -- Constructive feedback is provided to help employees understand what is working well and what needs improvement. 5. **[OBJECTIVE STANDARDS]** -- Objective standards are used to measure performance and identify areas of improvement 6. **[COMMUNICATION]** -- Clear communication between managers and employees is emphasized **[PRO AND CON OF MBO:]** **PRO** -- Some say that MBO can **improve motivation and communication** & help **organizations adapt to change more easily** **CON** -- However, others say that MBO can **skew employees' focus** and **ignore other important aspects of a company** 3. **[MANAGEMENT BY EXCEPTION]** **It is a system of identification and communication that signals the manager as to when & where his attention is needed.** 4. **[DECISION MAKING:]** **[DEFINITION:]** Decision making is the process of **choosing the best alternative** from a set of alternatives to reach objectives. **[NEED FOR DECISION MAKING:]** Effective decision making must be made to: - **Optimize** some set of factors such as **profit, sales, employee welfare, market share** OR - **Minimize loss, expenses** or **employee turnover** **[STEPS OF DECISION MAKING:]** 1. **[RECOGNIZE NEED FOR A DECISION]**- Managers must realise the need for which a decision must be taken 2. **[FRAME THE PROBLEM]**- Managers must frame the problem for which a decision must be taken 3. **[GENERATE & ASSESS ALTERNATIVES-]** Managers must develop feasible alternative courses of action & evaluate alternatives assessing the advantages & disadvantages of each alternative. 4. **[CHOOSE AMONG THE ALTERNATIVES]**- Managers are to rank alternatives & decide taking into consideration all the relevant information 5. **[IMPLEMENT CHOSEN ALTERNATIVE]** 6. **[LEARN FROM FEEDBACK]**- Without constructive feedback managers never learn from experience & might repeat the same mistake **[TYPES OF DECISION]** **Programmed Rational Bounded Rationality Non-Programmed** 1. **[PROGRAMMED DECISION]**: **EVERYDAY DECISIONS** which are **straightforward, mundane** & **less thoughtful**. For e.g. decisions on the kind of clothes to wear, food to eat daily etc. 2. **[RATIONAL DECISION]** (**IDEAL METHOD FOR MANAGERS** TO MAKE DECISIONS): Involves a series of steps the decision maker would consider if the goal of such decisions is to **maximize the decision's outcomes** **[THE RATIONAL DECISION-MAKING PROCESS]**: 1. **[INTELLIGENCE]**: a. Identify problems & opportunities b\. Define objectives and criteria for success 2. **[DESIGN]**: Develop & evaluate alternatives 3. **[CHOICE]**: Prioritize and select one or more alternatives 4. **[IMPLEMENT & EVALUATE]**: Implement the choice & monitor success 3. **[BOUNDED RATIONALITY DECISION]**: Decisions made under **severe time & resource constraints**. Helps manager in their decision-making process to limit their search in a manageable way for alternatives. 4. **[NON-PROGRAMMED DECISION]**: **Non-routine decision** made in response to unusual or **novel opportunities & threats**. **No rules followed** **since** non-programmed decisions are **new decisions**. 5. **[CONTROL:]** One of the managerial functions of P.O.L.**C.**S **[DEFINITIONS:]** 1. "**Control consists in verifying whether everything occurs in conformity with the plan adopted, the instructions issued & the principles established.**" -- **HENRY FAYOL** 2. "Controlling implies measurement of accomplishment/performance against the standard & correction of deviations to assure the attainment of objectives according to plans." -- KOONTZ & O'DONNELL Control is a fundamental managerial function. Managerial control regulates the organizational activities. **It compares the actual performance and expected organizational standards and goals. For deviation in performance between the actual and expected performance, it ensures that necessary corrective action is taken.** **[FEATURES OF CONTROLLING:]** 1. **[CONTINUOUS PROCESS]** -- Managerial control allows a definite pattern & time table, month after month & year after year on a continuous basis 2. **[COORDINATED-INTEGRATED SYSTEM]**- Data collected for different purposes should be reconciled with one another. **[CONTROL IS A SINGLE SYSTEM BUT MORE ACCURATE TO THINK OF IT AS A SET OF INTERLOCKING SUBSYSTEMS]** 3. **[Planning & Controlling are RECIPROCALLY RELATED]** -- Draws attention to situations where new planning is needed. Provides data upon which plans can be based. 4. **[CONTROL IS BOTH AN EXECUTIVE PROCESS & A RESULT]**: - Each manager has to perform control function in the organization - Nature, scope & limit of the control function may be different for different managers - The word 'control' is preceded by an adjective to designate control problems: Quality Control, Inventory Control, Production Control, Administrative Control etc. 5. **[FLEXIBLE & DYNAMIC PROCESS]** 6. **[FUTURE ORIENTED/FORWARD LOOKING]** 7. **[PROCESS OF GATHERING & FEEDING BACK INFORMATION]** about performance so that decision makers can compare actual results with planned results & decide what to do about any apparent discrepancies or problems. 8. **[HELPS TO CHECK ERRORS & TAKE CORRECTIVE MEASURES]** so that the deviation from standards are minimized & goals of the organization are achieved in a desired manner. **[CONTROL SYSTEMS:]** Format, target-setting, monitoring, evaluation & feedback systems that provide managers with information about whether the organization's strategy & structure are working efficiently and effectively. A **good control system** should: 1. Be **flexible** so managers can respond as needed 2. Provide **accurate information about** the **organization** 3. Provide **information** in a **timely** manner **[TYPES OF CONTROLLING:]** 1. [**FEEDFORWARD CONTROL**: ] - Used to **anticipate problems** before they arise so that problems do not occur later during the conversion process - Giving **stringent product specifications** to suppliers in advance - It can be **used to keep contact with suppliers** & to monitor their progress 2. **[CONCURRENT CONTROL:]** - Give managers **immediate feedback** on how efficiently inputs are being transformed into outputs - Allows managers to correct problems as they arise 3. **[FEEDBACK CONTROL: ]** - Used to provide information at the output stage about customer's reactions to goods & services so that corrective action can be taken if necessary. **[CONTROLLING PROCESS:]** 1. **[ESTABLISHMENT OF CONTROL STANDARDS & OBJECTIVES:]** PLANS -- Goals, Objectives & Targets to be achieved. Actual results are measured against them. **PRECISION**- - **GREAT PRECISION** -- Standards are set in **quantities**. For e.g. Physical -- Volume of products, man hours etc Monetary -- Costs, sales, profits, investment etc - **LESS PRECISION** -- Standards are set in **qualitative** terms For e.g. Human relations It is also important to decide the level of achievement which will be regarded as good or satisfactory. Desired level of performance -- reasonable, feasible, some amount of flexibility stated in terms of range (maximum & minimum) 2. **[MEASUREMENT OF ACTUAL PERFORMANCE]**: Involves measuring the performance in the work **in terms of control standards** Methods of measuring performance: i. **[Quantitative]**- Physical & Monetary terms, easily & **[precisely measurable]** For e.g. Volume of products, man hours, costs, sales, profits, investment etc ii. **[Qualitative]**- intangible, **[cannot be measured precisely]**. For e.g. Human relations etc. Techniques -- Psychological tests, opinion surveys Measurement must be a. Clear, **simple** & **rational** b. **Relevant** c. Direct attention & efforts d. **Reliable**, self-announcing & **understandable** without complicated interpretation or philosophical discussions 3. **[COMPARING ACTUAL & STANDARD PERFORMANCE]**: - **[STEPS]**: a. Finding out the extent of deviations b\. Identifying the causes of such deviations - Accurate standards & accurate measurements of actual performance are very important for clear revelation of variations. - **[IF REQUIRED STANDARDS ARE ACHIEVED]**- **No further managerial action** is necessary. **Control process** is **complete**. - **[IF REQUIRED STANDARDS ARE NOT ACHIEVED]**- Extent of variation may differ from case to case, depends upon the type of activity. **Strict compliance with standards or permissible limits of variation**. For e.g. Engineering products- a very minute variation may be significant - When the deviation between standard & actual performance is beyond the prescribed limit, an analysis is made of the causes of such deviation. CONTROLLABLE FACTORS -- Person concerned will take necessary corrective action UNCONTROLLABLE FACTORS -- Person concerned cannot be held responsible COMMUNICATION OF DATA to the person who can take corrective action 4. **[TAKE CORRECTIVE ACTIONS/CORRECTION OF DEVIATIONS]**: - **Organization** is **not a self-regulating system** - Actions should be taken to maintain the desired degree of control in the system or operation. - **CONTROL ACTIONS**: A. **Review of plans & goals** & **change** therein on the basis of such review B. **Change in** the **assignment of tasks** C. Change is the existing techniques of direction D. Change in the organization structure E. Provision for new facilities **[4 TYPES OF ORGANIZATIONAL CONTROL:]** +-----------------------------------+-----------------------------------+ | **TYPES OF CONTROL** | **MECHANISM** | +===================================+===================================+ | 1. **OUTPUT CONTROL** | - Financial measurements | | | | | | - Organizational goal | | | | | | - Operational budget | +-----------------------------------+-----------------------------------+ | 2. **BEHAVIOUR CONTROL** | - Direct supervision | | | | | | - Management of Objectives | +-----------------------------------+-----------------------------------+ | 3. **BUREAUCRATIC CONTROL** | - Rules & Standard Operating | | | Procedure | +-----------------------------------+-----------------------------------+ | 4. **CLAN CONTROL** | - Shared values | | | | | | - Standing values | | | | | | - Standard of behaviour | | | expectation | | | | | | - Standard of socialization | +-----------------------------------+-----------------------------------+ 1. **[OUTPUT CONTROL:]** - **OPERATING BUDGETS** -- Blueprint that states how managers intend to use organizational resources to achieve organizational goals efficiently - Objective financial measures - Challenging goals & performance standards - Appropriate operating budgets - Managers must create output standards that motivate at all levels - Should not cause managers to behave in inappropriate ways to achieve organizational goals 2. **[BEHAVIOUR CONTROL]**: - **DIRECT SUPERVISION**: a. **Managers** who **actively monitor** & observe the behaviour of their **subordinates** b. Teach subordinates appropriate behaviours c. **Intervene to take corrective action** d. Most immediate and potent form of behavioural control e. Can be an effective way of monitoring employees - **Very expensive** because a manager can personally manage only a relatively small number of subordinates effectively - Can **demotivate subordinates** if they feel that they are under such close scrutiny that they are not free to make their own decisions. 3. **[BUREAUCRATIC CONTROL]** - Control through a system of **rules and** standard operating procedures (**SOPs**) that shapes and regulates the behaviour of divisions, functions and individuals. - Rules are easier to make than discarding them, leading to bureaucratic "red tape" & slowing organizational reaction times to problems. (NOTE: Bureaucratic red tape is a term used to describe a series of unnecessary or overly complex government or organizational procedures that delay or prevent action) - Firms become **too standardized** & **lose flexibility** to learn, to create new ideas & to solve new problems. 4. **[CLAN CONTROL:]** - The control exerted on individuals and groups in an organization by shared values, norms, standards of behaviour and expectations. **[TECHNIQUES OF MANAGERIAL CONTROL (TRADITIONAL VS MODERN):]** **Management** is an **art as well as a science**. So, management and its functions keep evolving to stay up with the times. Controlling function of management also advances with passing time. So let us learn the traditional and modern techniques of managerial control. There are various techniques of managerial control which can be classified into two broad categories namely- Traditional techniques & Modern techniques **[TRADITIONAL TECHNIQUES of Managerial Control]** Traditional techniques are those which have been used by the companies for a long time now. These include: 1. **Personal observation** 2. **Statistical reports** 3. **Break-even analysis** 4. **Budgetary control** **1. [Personal Observation]** This is the **[most traditional method of control]**. Personal observation is one of those techniques which enables the **manager** to **collect** the **information** as **first-hand** information. It also creates a phenomenon of **psychological pressure on the employees** **to perform** in such a manner so as to achieve well their objectives as they are aware that they are being observed personally on their job. However, it is a very **time-consuming** exercise & cannot effectively be used for all kinds of jobs. 2\. **[Statistical Reports]** Statistical reports can be defined as an overall analysis of reports and data which is used in the form of averages, percentage, ratios, correlation, etc., present useful information to the managers regarding the performance of the organization in various areas. This type of useful information when presented in the various forms like **charts, graphs, tables**, etc., enables the managers to read them more easily & allow a comparison to be made with performance in previous periods & also with the benchmarks. 3\. **[Break-even Analysis]** Breakeven analysis is a technique used by managers to study the **relationship between costs, volume & profits**. It determines the overall picture of probable profit & losses at different levels of activity while analysing the overall position. **[The sales volume at which there is no profit, no loss is known as the breakeven point]**. There is no profit or no loss. Breakeven point can be calculated with the help of the following formula: **Breakeven point = Fixed Costs/Selling price per unit -- variable costs per unit** 4\. **[Budgetary Control]** Budgetary control can be defined as such technique of managerial control in which all operations which are necessary to be performed are executed in such a manner so as to perform and plan in advance in the form of budgets & actual results are compared with budgetary standards. Therefore, the **budget can be defined as a quantitative statement prepared for a definite future period of time for the purpose of obtaining a given objective**. It is also a **statement which reflects the policy of that particular period**. Some of the types of budgets prepared by an organisation are as follows, **Sales budget**: A statement of what an organization 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 estimated quantity & cost of materials required for production **Cash budget**: Anticipated cash inflows & outflows for the budgeted period **Capital budget**: Estimated spending on major long-term assets like a new factory or major equipment **Research & development budget**: Estimated spending for the development or refinement of products & processes **[MODERN TECHNIQUES of Managerial Control]** Modern techniques of controlling are those which are of recent origin & are comparatively new in management literature. These techniques provide a refreshingly new thinking on the ways in which various aspects of an organization can be controlled. These include: 1. **Return on investment** 2. **Ratio analysis** 3. **Responsibility accounting** 4. **Management audit** 5. **PERT & CPM** 1\. **[Return on Investment]** Return on investment (**ROI**) can be defined as one of the important and useful techniques. It provides the basics and guides for measuring whether or not invested capital has been used effectively for generating a reasonable amount of return. ROI can be used to measure the overall performance of an organization or of its individual departments or divisions. It can be calculated as under- Net income before or after tax may be used for making comparisons. **[Total investment includes both working as well as fixed capital invested in the business.]** 2\. **[Ratio Analysis]** The most commonly used ratios used by organizations can be classified into the following categories: a. **Liquidity ratios** b. **Solvency ratios** c. **Profitability ratios** d. **Turnover ratios** 3\. **[Responsibility Accounting]** Responsibility accounting can be defined as a system of accounting in which overall involvement of different sections, divisions & departments of an organization are set up as '**[Responsibility centres]**'. The head of the centre is responsible for achieving the target set for his centre. **[Responsibility centres]** may be of the following types: Cost centre Revenue centre Profit centre Investment centre 4\. **[Management Audit]** Management audit refers to a **systematic appraisal** of the **overall performance of the management of an organization**. The purpose is to review the efficiency & effectiveness of management & to improve its performance in future periods. 5\. **[PERT & CPM]** **PERT (Programmed Evaluation & Review Technique)** & **CPM (critical path method)** are **important [network techniques] useful in planning & controlling**. These techniques, therefore, help in performing various functions of management like **planning; scheduling & implementing time-bound projects involving the performance of a variety of complex, diverse & interrelated activities.** Therefore, these techniques are **interrelated and deal with factors such as time scheduling & resources allocation for these activities**. 6. **[PRINCIPLES OF ORGANIZATION]** **[(URWICK PRINCIPLES):]** **1. [Principle of Objective:]** The enterprise should set up certain aims for the achievement of which various departments should work. A **common goal** to be devised for the business as a whole and the organization is set up to achieve that goal. In the absence of a common aim, various departments will set up their own goals and there is a possibility of conflicting objectives for different departments. So there must be an objective for the organization. **2. [Principle of Specialisation:]** The organization should be set up in such a way that every individual should be assigned a duty according to his skill and qualification. The person should continue the same work so that he specialises in his work. This helps in increasing production in the concern. **3. [Principles of Co-ordination:]** The co-ordination of different activities is an important principle of the organization. There should be some agency to co-ordinate the activities of various departments. In the absence of co-ordination there is a possibility of setting up different goals by different departments. The ultimate aim of the concern can be achieved only if proper co-ordination is done for different activities. **4. [Principle of Authority and Responsibility:]** **[The authority flows downward in the line]**. Every individual is given authority to get the work done. Though authority can be delegated but responsibility lies with the man who has been given the work. **[If a superior delegates his authority to his subordinate, the superior is not absolved of his responsibility, though the subordinate becomes liable to his superior. The responsibility cannot be delegated under any circumstances.]** **5. [Principle of Definition:]** The scope of authority and responsibility should be clearly defined. Every person should know his work with definiteness. If the duties are not clearly assigned, then it will not be possible to fix responsibility also. Everybody's responsibility will become nobody's responsibility. The relationship between different departments should also be clearly defined to make the work efficient and smooth. **6. [Span of Control:]** Span of control means **how many subordinates can be supervised by a supervisor**. The number of subordinates should be such that the supervisor should be able to control their work effectively. Moreover, the work to be supervised should be of the same nature. If the span of control is disproportionate, it is bound to affect the efficiency of the workers because of slow communication with the supervisors. **7. [Principle of Balance:]** The principle means that assignment of work should be such that every person should be given only that much work which he can perform well. Some person is over worked and the other is under-worked, then the work will suffer in both the situations. The work should be divided in such a way that everybody should be able to give his maximum. **8. [Principle of Continuity:]** The organization should be amendable according to the changing situations. Everyday there are changes in methods of production and marketing systems. **The organization should be dynamic and not static.** There should always be a possibility of making necessary adjustments. **9. [Principle of Uniformity:]** The organization should provide for the distribution of work in such a manner that the uniformity is maintained. Each officer should be in-charge of his respective area so as to avoid dual subordination and conflicts. **10. [Principle of Unity of Command:]** There should be a unity of command in the organization. **A person should be answerable to one boss only**. If a person is under the control of more than one person then there is a like-hood of confusion and conflict. He gets contradictory orders from different superiors. This principle creates a sense of responsibility to one person. The command should be from top to bottom for making the organization sound and clear. It also leads to consistency in directing, coordinating and controlling. **11. [Principle of Exception:]** This principle states that **top management should interfere only when something goes wrong**. If the things are done as per plans then there is no need for the interference of top management. The management should leave routine things to be supervised by lower cadres. It is only the exceptional situations when attention of top management is drawn. This principle relieves top management of many botherations and routine things. Principle of exception allows top management to concentrate on planning and policy formulation. Important time of management is not wasted on avoidable supervision. **12. [Principle of Simplicity:]** The organizational structure should be simple so that it is easily understood by each and every person. The authority, responsibility and position of every person should be made clear so that there is no confusion about these things. A complex organizational structure will create doubts and conflicts among persons. There may also be overlapping's and duplication of efforts which may otherwise be avoided. It helps in smooth running of the organization. **13. [Principle of Efficiency:]** The organization should be able to achieve enterprise objectives at a minimum cost. The standards of costs and revenue are pre-determined and performance should be according to these goals. The organization should also enable the attainment of job satisfaction to various employees. **14. [Scalar Principle:]** This principle refers to the vertical placement of supervisors starting from top and going to the lower level. The scalar chain is a pre-requisite for effective and efficient organization. 7. **[ORGANISING:]** **[DEFINITON:]** *\"**Organization is the process of identifying and grouping of the works to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives**\"**.*** - **Louis A. Allen** Organizing in a general sense means systematic arrangement of activities. **ORGANISING follows PLANNING** (P.O.L.C.S.) **[FUNCTIONS OF ORGANISING:]** Division of work into functions and sub-functions, grouping of activities that are closely related in their nature, assigning of duties and responsibilities to the employees and finally delegation of authority and power to each employee or the group to discharge their duties accordingly are the processes come under the function of management organizing. **[IMPORTANCE OF ORGANISING:]** ✓Organizing **helps** Organizations to **reap the benefit of specialization**. ✓Organizing provides for **Optimum utilization of resources**. ✓Organizing helps in **Effective administration**. ✓Organizing channels for **Expansion and growth**. ✓Organizing achieves **co-ordination among different departments**. ✓Organizing creates **scope for new change**. **[STEPS IN THE ORGANISING PROCESS:]** 1. **[*Division of work*:]** The first process of Organizing includes identification and division of work which shall be done in accordance with the plans that are determined previously. 2. **[*Departmentation*:]** once the work of identifying and dividing the work has been done those are similar are to be grouped. 3. [***Linking departments***:] When the process of departmentation was completed, linking of departments has to be done so that those departments operate in a co-ordinated manner which gives a shape to overall organization structure. 4. ***[Assigning Duties:]*** On completion of departmentation process assigning duties i.e. defining authority and responsibility to the employees on the basis of their skills and capabilities has to be done, which in consequence magnifies efficiency with regard to their work. 5. [***Defining hierarchal structure***:] Each employee should also know from whom he has to take orders and to whom he is accountable/responsible. **[ORGANIZATION STRUCTURE:]** A Design/Blueprint of the Organization movement **[DEFINITION:]** Organization structure explains the position and official relationship between various individuals in the organization. **[ORGANIZATION CHART]**: A diagrammatic representation of the organization structure which shows names, designations & functions of personnel in an organization. **[NATURE OF ORGANISING:]** - Learning objectives - Identifying the task - Grouping the activities - Delegation of authority - Coordination **[FORMAL & INFORMAL GROUPS:]** **[FORMAL GROUP]**- A formal group is a structure group which has a plan & positions each job's objective and functions **[CHARACTERISTICS OF FORMAL GROUP:]** 1. Formal means something **systematic** 2. It is an **official structure** 3. It provides **official relationship between individuals** 4. It is **objective oriented** 5. It **abides with rules and regulations** +-----------------------------------+-----------------------------------+ | **ADVANTAGES** | **DISADVANTAGES** | +===================================+===================================+ | - The **line of communication | - **Communication barriers due | | is very clear** | to potential communication | | | bottlenecks & hierarchical | | | communication challenges** | +-----------------------------------+-----------------------------------+ | - It is **systematic & | - **Rigidity & slow** | | efficient** | adaptation to **changes** | +-----------------------------------+-----------------------------------+ | - It is **objective oriented | - **Creativity constraints** | | i.e. objectives aligned with | | | organizational goals.** | | +-----------------------------------+-----------------------------------+ | - It has a **hierarchical | - **Bureaucratic** decision | | pattern** | making | +-----------------------------------+-----------------------------------+ **[INFORMAL GROUP]**- "An **aggregate** of **interpersonal relationships** **without** any **conscious purpose** but which may contribute to **joint results**." -- **CHESTER BARNARD** It is the outcome of personal, social & friendly relationship & it **develops spontaneously**. It **arises naturally** on the basis of friendship or some common interest which may or may not align with work. **[CHARACTERISTICS OF INFORMAL GROUP:]** 1. Informal group is created by the member of the organisation for their social and psychological satisfaction. 2. Informal groups are **unstable** in nature, it is **not permanent**. 3. Informal groups are **greater in number than formal groups.** 4. **Free interaction** +-----------------------------------+-----------------------------------+ | **ADVANTAGES** | **DISADVANTAGES** | +===================================+===================================+ | - **Social** support | - **Unpredictability** | +-----------------------------------+-----------------------------------+ | - **Communication efficiency** | - Potential **conflicts** | +-----------------------------------+-----------------------------------+ | - **Problem solving** by quick | - **Limited accountability** | | & adaptive solutions | | +-----------------------------------+-----------------------------------+ | - **Motivation** & | | | **satisfaction** | | +-----------------------------------+-----------------------------------+ **[FORMAL VS INFORMAL GROUP:]** **[FORMAL VS INFORMAL GROUP:]** **ASPECT** **FORMAL STRUCTURE** **INFORMAL STRUCTURE** ------------------- ----------------------- ------------------------------ **Origin** Deliberately designed Spontaneously emerged **Authority** Position-based Person-based **Communication** Vertical, structured Multidirectional, flexible **Stability** Permanent Temporary **Rules** Written, explicit Unwritten, implicit **Objectives** Organizational goals Social & psychological needs 8. **[TYPES OF ORGANIZATION STRUCTURE:]** 1. **LINE** STRUCTURE 2. **LINE & STAFF** STRUCTURE 3. **FUNCTIONAL** STRUCTURE 4. **COMMITTEE** STRUCTURE 5. **PROJECT ORGANIZATION** STRUCTURE 6. **MATRIX ORGANIZATION** STRUCTURE 1. **[LINE STRUCTURE:]** - It flows from **top to lower** level - It is the **simplest and oldest** method followed in many organizations - It is also called as **[MILITARY ORGANIZATION]**. - General Manager Production Manager Assistant Manager Supervisors Workers +-----------------------------------+-----------------------------------+ | **MERITS** | **DEMERITS** | +===================================+===================================+ | - Simple & **Easy** to | - **Lacks specialization** | | **establish** | | +-----------------------------------+-----------------------------------+ | - **Authority & | - Overburden with lots of | | Responsibility** is | administrative work | | **clear**ly defined | | +-----------------------------------+-----------------------------------+ | - Prompts decision | - **MAY RESULT IN AUTOCRATIC | | | CONTROL** as **managers enjoy | | | monopoly** in the matter of | | | decision making. | +-----------------------------------+-----------------------------------+ | - **Speedy action** taken | - **Downward communication | | | always possible but lacks | | | upward communication** | +-----------------------------------+-----------------------------------+ | - **UNITY OF COMMAND** since | - Suitable for **small** | | each will have full control | concerns employing few | | over subordinates | people. | +-----------------------------------+-----------------------------------+ | - Ensures **better discipline** | | +-----------------------------------+-----------------------------------+ | - **Economical** since it is | | | less elaborate | | +-----------------------------------+-----------------------------------+ | - Provides **better** scope for | | | **supervision** | | +-----------------------------------+-----------------------------------+ 2. **[LINE & STAFF STRUCTURE:]** - The staff is attached to line - The **staff** are **experts** specialised in **specific areas** - They **give ideas to personnel** - The staff supports the line personnel +-----------------------------------+-----------------------------------+ | **MERITS** | **DEMERITS** | +===================================+===================================+ | - **Expert advice** | - **Conflicts** arise | | | frequently between line & | | | staff | +-----------------------------------+-----------------------------------+ | - **Relief** to **top | - Leads to confusion since | | executives** | **RESPONSIBILITY NOT WELL | | | DEFINED** | +-----------------------------------+-----------------------------------+ | - Quality decisions | - Ineffective staff | +-----------------------------------+-----------------------------------+ | - **Flexible** | - Suitable for **LARGE | | | ORGANIZATIONS** | +-----------------------------------+-----------------------------------+ | - Specialization is not | | | violated | | +-----------------------------------+-----------------------------------+ | - **Unity of command is not | | | violated** | | +-----------------------------------+-----------------------------------+ 3. **[FUNCTIONAL STRUCTURE]**: Separate departments for different actions/activities **Functional Structure Divisional Structure** +-----------------------------------+-----------------------------------+ | **MERITS** | **DEMERITS** | +===================================+===================================+ | - **Specialization** is | - **Unity of command is | | possible | violated** | +-----------------------------------+-----------------------------------+ | - **Work load** is **less** | - Interdepartmental conflicts | +-----------------------------------+-----------------------------------+ | - **Better control over | - **DELAY** IN **DECISION** | | subordinates** | MAKING | +-----------------------------------+-----------------------------------+ | - Scope for **expansion** | | +-----------------------------------+-----------------------------------+ | - Higher **efficiency** | | +-----------------------------------+-----------------------------------+ 4. **[COMMITTEE STRUCTURE]**: A group of persons entrusted in a task. **[TYPES]**: a. **Standard** or **permanent** committee b. **Temporary** or **AD HOC** c. **Executive** Committee d. **Advisory** Committee e. **Formal** Committee f. **Informal** Committee +-----------------------------------+-----------------------------------+ | **MERITS** | **DEMERITS** | +===================================+===================================+ | - Scope of group judgement | - **Expensive affair** to | | | constitute a committee | +-----------------------------------+-----------------------------------+ | - **Proper coordination & | - **Time consuming** or slow | | control** among individuals & | decision | | departments. | | +-----------------------------------+-----------------------------------+ | - Motivation through | - Compromise decision | | participation is possible | | +-----------------------------------+-----------------------------------+ | - Various interest groups | - **Suppression of ideas** | +-----------------------------------+-----------------------------------+ | - Check against misuse of | | | powers | | +-----------------------------------+-----------------------------------+ 5. **[PROJECT ORGANIZATION]**: - It varies from one organization to another - Any organization which executes a **large project for a long period of time** adopt this project organization. - Usually some company have large number of small projects - The term leader organize the expert or specialist. +-----------------------------------+-----------------------------------+ | **MERITS** | **DEMERITS** | +===================================+===================================+ | - Maximum use of specialized | - Difficulty in decision making | | knowledge & skills | | +-----------------------------------+-----------------------------------+ | - **Unity of command exist** in | - **Pressure & uncertainty due | | organization | to some specialists** | +-----------------------------------+-----------------------------------+ | - Flexibility of operation | - Difficulty in coordination | +-----------------------------------+-----------------------------------+ | - Fixation of individual | - **Evaluation of performance | | responsibility for results | of various specialist is | | | difficult**. | +-----------------------------------+-----------------------------------+ | - Focuses attention on the | | | specific results | | +-----------------------------------+-----------------------------------+ 6. **[MATRIX ORGANIZATION STRUCTURE:]** - It is suitable where there is **[large number of small projects]** - It is also called as **[multiple command system]** - It is also called as **[linking pins]** +-----------------------------------+-----------------------------------+ | **MERITS** | **DEMERITS** | +===================================+===================================+ | - Best utilization of | - **AGAINST UNITY OF COMMAND** | | organizational resources | | +-----------------------------------+-----------------------------------+ | - Benefits to both functional & | - Quick decision may not be | | technical specialist | possible | +-----------------------------------+-----------------------------------+ | - It promotes communication | - It gives scope of conflicts | +-----------------------------------+-----------------------------------+ | - Permits **higher degree of | | | flexibility & adaptability** | | +-----------------------------------+-----------------------------------+ 9. **[SPAN OF MANAGEMENT:]** - It is also called **[span of control]** or **[span of supervision]** - It refers to the **[number of subordinates that report directly to a single manager or supervisor.]** **[2 TYPES OF SPAN:]** 1. **[NARROW SPAN OF MANAGEMENT-]** - **Tall** organization - Manager oversees "few" subordinates - Better communication - Examples: **Handicrafts, Ivory Work** etc. 2. **[WIDE SPAN OF MANAGEMENT:]** - **Flat** organization - Manager oversees "large" number of subordinates - **Less overhead cost** - Examples: **Large firms** 10. **[DEPARTMENTATION:]** It is a process of grouping individual jobs into departmentation. **[TYPES:]** - Departmentation by **Function** - Departmentation by **Products** - Departmentation by **Territory/Geography** - Departmentation by **Process or Equipment** - Departmentation by **Customers** - Departmentation by **Time & Number** 1. **[DEPARTMENTATION BY FUNCTIONS:]** +-----------------------------------+-----------------------------------+ | **MERITS** | **DEMERITS** | +===================================+===================================+ | - Provides scope of | - Interdepartmental conflicts | | specialization | | +-----------------------------------+-----------------------------------+ | - Eliminates cost of | - Difficulty in coordination of | | duplication of work | activities | +-----------------------------------+-----------------------------------+ | - Effective control of | - Increases responsibility of | | duplication of work | departmental heads | +-----------------------------------+-----------------------------------+ | - Facilititates delegation of | | | authority | | +-----------------------------------+-----------------------------------+ 2. **[DEPARTMENTATION BY PRODUCTS:]** It is suitable for different lines of products. +-----------------------------------+-----------------------------------+ | **MERITS** | **DEMERITS** | +===================================+===================================+ | - Reduces problems of | - High chances of duplication | | coordination | | +-----------------------------------+-----------------------------------+ | - Leads to specialization | - There may be underutilization | | | of plant capacity when the | | | demand of product is less | +-----------------------------------+-----------------------------------+ | - Performance evaluation can be | | | done easily | | +-----------------------------------+-----------------------------------+ | - It is flexible & adaptable to | | | change | | +-----------------------------------+-----------------------------------+ 3. **[DEPARTMENTATION BY TERRITORY:]** Used for large scale enterprises whose activities are geographically spread over. **MERITS** **DEMERITS** ------------------------------------------------------ ------------------------------------------------------- It helps in achieving benefits of local operation Problem of communication due to geographical distance Better coordination of activities Control becomes less effective Opportunity to train managers Facilitates expansion of business to various regions 4. **[DEPARTMENTATION BY PROCESS OR EQUIPMENT:]** - The activities are grouped according to process or equipment. - It is generally used in manufacturing industries. - Lead to specialization - No confusion - Proper utilization of manpower and machine engaged in proper way. 5. **[DEPARTMENTATION BY CUSTOMERS:]** Each department will serve the particular type or class of customers. It is basically market oriented in which **departments are created around the market served or around marketing channels**. **[CUSTOMERS ARE THE KEY TO THE WAY ACTIVITIES ARE GROUPED.]** +-----------------------------------+-----------------------------------+ | **MERITS** | **DEMERITS** | +===================================+===================================+ | - Offer scope of specialization | - Leads to duplication of | | | activities | +-----------------------------------+-----------------------------------+ | - Enterprise gain ultimate | | | knowledge about the needs of | | | various categories of | | | customers | | +-----------------------------------+-----------------------------------+ 6. **[DEPARTMENTATION BY TIME & NUMBER:]** **[TIME:]** The activities or group on basis of time Examples: Call centres/any factory **[NUMBER]**: The activities or group on basis of performance by certain number of persons. **[SUMMARY OF BASIC STRUCTURES OF ALL TYPES OF DEPARTMENTATION:]** 11. **[CENTRALIZATION]** **[& DECENTRALIZATION:]** Centralization & Decentralization of Authority are basic, overall management philosophies of an organization that indicate where decisions are to be made. **[NOTE]**: **[Chain of Command]**: It is an unbroken line of authority that links all persons in an organization & shows who reports to whom. **[CENTRALIZATION:]** - Centralization is the **concentration of authority at the [top]** of an organization or department. - It is the process of systematically of retaining **power & authority in the hands of higher-level managers.** +-----------------------------------+-----------------------------------+ | **ADVANTAGES** | **DISADVANTAGES** | +===================================+===================================+ | - **Consistent decision | - **Slow decision-making | | making** | process** | +-----------------------------------+-----------------------------------+ | - Tight Control Mechanism | - Limited local adaptability | +-----------------------------------+-----------------------------------+ | - **Resource Optimization** | - **Reduced employee | | | motivation** | +-----------------------------------+-----------------------------------+ | - Strategic alignment with | - Potential **communication | | clear organizational goals. | bottlenecks** | +-----------------------------------+-----------------------------------+ | - **Faster implementation** of | - Increased **bureaucratic | | strategic **goals** | complexity** | +-----------------------------------+-----------------------------------+ **[DECENTRALIZATION:]** - Decentralization is the delegation of **authority to lower level** of employees or departments - It is the process of **systematically delegating power and authority** throughout the organization to middle & lower-level managers. +-----------------------------------+-----------------------------------+ | **ADVANTAGES** | **DISADVANTAGES** | +===================================+===================================+ | - It **frees top managers** to | - Potential **inconsistent** | | develop organizational plans | practices | | & strategies. Lower-level | | | managers & employees handle | | | routine, day-to-day | | | decisions. | | +-----------------------------------+-----------------------------------+ | - It **develops the skills of | - **Reduced centralized | | lower-level managers**, | control** | | develops their | | | self-management & planning & | | | administrative competencies. | | +-----------------------------------+-----------------------------------+ | - Because subordinates often | - Higher **coordination | | are closer to the action than | complexity** | | higher level managers, they | | | may have a better grasp of | | | the facts. This knowledge may | | | enable them to make sound | | | decisions quickly. Valuable | | | time can be lost when | | | subordinate or team must | | | check everything with a | | | manager. | | +-----------------------------------+-----------------------------------+ | - It fosters a **healthy, | - Risk of misaligned strategies | | achievement-oriented & goal | | | focused atmosphere among | | | employees.** | | +-----------------------------------+-----------------------------------+ **[COMPARATIVE ANALYSIS BETWEEN CENTRALIZATION & DECENTRALIZATION OF AUTHORITY:]** **ASPECT** **CENTRALIZATION** **DECENTRALIZATION** ------------------------ -------------------- ---------------------- **DECISION AUTHORITY** Top Management Multiple levels **COMMUNICATION** Vertical Multi-directional **FLEXIBILITY** Limited High **EMPLOYEE AUTONOMY** Low High **RESPONSE SPEED** Slow Fast **CONTROL MECHANISM** Strict Adaptive **[KEY FACTORS TO CENTRALIZE OR DECENTRALIZE AUTHORITY:]** A. **[COST OF DECISIONS: ]** - Cost is perhaps the most important factor in determining the extent of centralization. As a general rule, the more costly the outcome, the more likely top management is to centralize the authority to make the final decision. - [The **costlier and riskier the decisions, the more pressure there is to centralize**.] B. **[ENVIRONMENTAL INFLUENCES:]** - [The **greater the complexity and uncertainty of the environment, the greater is the tendency to decentralize.**] - Another crucial factor is the history of the organization where the organization has a tendency of doing what has been done in the past. So there is likely to be some relationship between what an organization did on its early history & what it chooses to do today in terms of centralization & decentralization. - External factors such as unions, government & state regulatory agencies & tax policies etc. affect the degree of centralization in organization. - For e.g. Certain laws & government regulations regarding hours, wages, working conditions & safety make it difficult to decentralize authority in those areas. C. **[COMPETENCY LEVELS:]** - One also needs to consider the decision-making ability of the lower-level managers. - **[If lower-level managers are not competent enough to make high quality decisions, there is likely to be high level of centralization.]** - If lower-level managers are well qualified and competent to take high quality decisions then top management can take advantage of their talents by decentralizing; in fact if top management does not, talented lower-level managers may leave the organization. - The organizations must ensure that there is consistent & adequate supply of competent managers & employees- an absolute necessity for decentralization. - Extensive training and practical experiences are essential to develop the competency level of lower-level managers. - Organization has to permit employees to commit mistakes involving small costs so as to learn from them. D. **[UNIFORMITY OF POLICY:]** **[Managers who value consistency favour centralization of authority.]** These managers normally want to ensure that customers are treated equally in terms of price, quality, credit, delivery & service. Uniform policies have definite advantages for cost accounting, production & financial departments. They also enable managers to compare the relative efficiencies of various departments. Uniform policies also aid in the administration of labour agreements regarding wages, promotions, fringe benefits & other personnel matters. E. **[CONTROL MECHANISMS:]** **[Even the most successful decentralized organizations insist on controls and procedures to prevent mistakes & to determine whether actual events are meeting expectations.]** They have control mechanisms in place which help to analyse and control important aspects of the organization's operations. If the organization's operations don't fall within certain guidelines, top management may shift to centralization. **[NO ABSOLUTES:]** - **[Neither centralization nor decentralization is absolute in an organization]**. No one manager can make all decisions, even in a highly centralized setting - Total centralization would end the need for middle and first-line managers. Thus there are **only degrees of centralization or decentralization**. - No organization is ever completely decentralized or completely centralized; some position themselves toward one end of the continuum & some lean the other way. **[SUMMARY:]** The organization decides best which philosophy it needs to adopt; whether to centralize or decentralize on the merits of its advantages & disadvantages while considering the key factors to decentralize or authority. 12. **[AUTHORITY & RESPONSIBILITY:]** **[AUTHORITY]** **[DEFINITION: ]** "**Authority is the right to give orders & power to exact obedience**"-HENRY FAYOL Authority is the formal & legitimate right of a manager to make decisions, issue orders & allocate resources to achieve organizationally desired outcomes. In other words, authority is the formal right of the superior to command & compel his subordinate to perform certain acts. **[FEATURES OF AUTHORITY:]** 1. Authority **can be assigned to some other person** 2. It is related to the post i.e. with change in post even authority changes. 3. It makes implementation of decisions possible. 4. Lastly, it is the key to a managerial job, because a post without authority cannot be a managerial post. **[RESPONSIBILITY]** It is the **obligation of a subordinate to whom a duty has been assigned to perform.** **[RESPONSIBILITY is the flipside of AUTHORITY]**. RESPONSIBILITY is to perform the task or activity as assigned. **[FEATURES OF RESPONSIBILITY:]** 1. It is the obligation to complete a task 2. **[IT IS ABSOLUTE & CANNOT BE DELEGATED TO ANYONE]** 3. **[IT FLOWS UPWARDS.]** **[ACCOUNTABILITY:]** ACCOUNTABILITY means people with AUTHORITY & RESPONSIBILITY that are brought into alignment, are subject to justifying task outcomes. **[DIFFERENCE BETWEEN AUTHORITY & RESPONSIBILITY:]** 13. **[DELEGATION OF AUTHORITY:]** 1. **Responsibility**: The manager assigns tasks or shares responsibilities with a subordinate. 2. **Authority**: The manager gives the subordinate the power to make decisions. 3. **Accountability**: The manager ensures that the delegated authorities are assigned appropriately. 4. **Manager\'s focus**: Delegation allows the manager to focus on more important tasks. 5. Subordinate growth: Delegation gives subordinates a sense of responsibility and helps them grow. 6. **Manager\'s accountability**: Even though the manager delegates tasks, they are ultimately responsible for everything within their purview. 7. **Limits to delegation:** Some tasks, such as those related to finance, policy, and planning, cannot be delegated. **[PRINCIPLES OF DELEGATION:]** 1\. **[Functional Definition]** When delegating authority, there should be clarity regarding the tasks to complete, the methods of operation and the expected results. Further, goals and targets should be clearly defined. For example, if the marketing team is expected to prepare two social media posts every day, the team leader should communicate and allocate responsibility to every person on the team. 2\. **[Unity Of Command]** According to this principle, every individual should be solely accountable to someone. This gives a sense of personal responsibility because that individual is ultimately answerable to someone. Although it's possible for someone to be accountable to multiple people, it's best to avoid that as it can create complications and conflict. For example, if a team has two leaders, then every employee should be answerable to only one leader at any given time. 3\. **[Absoluteness Of Responsibility]** This principle states that a person can delegate authority but not responsibility. If a manager has delegated their authority to someone on their team, the manager can't turn a blind eye to mishaps or hurdles later. The ultimate responsibility remains with the manager. For example, if you've taken some time off and your employees make some changes to an ongoing project, you should validate those changes in order to finalize them. 4\. **[Authority And Responsibility]** There should be a balance between authority and responsibility. If someone is given the responsibility to carry out a task, then you should give them enough independence to carry out the task effectively. On the other hand, you shouldn't give the person so much authority that they may abuse their positions. 5\. **[Authority Level]** Authority should always be well-defined. To avoid any overlaps, there should be a clear indication of everybody's roles. Moreover, one can't delegate authority unless that person is clear about the scope of their own authority. For example, if you're responsible for shortlisting new candidates for your team, you can't ask others to perform that task for you. Maybe they could assist you in rejecting the applications that don't meet the minimum requirements, but that's about it. 6\. **[Scalar Principle]** The scalar principle emphasizes the need for a chain of direct authority relationships throughout an organization. It helps to understand where everyone stands in the organization in relation to another. Knowing this also helps people quickly reach out to the right person in case of any emergencies. This principle is especially useful in places with flat organizational structures, where hierarchy isn't very prominent. 7\. **[Principle Of Proper Motivation]** When you motivate someone through rewards and recognition, they're bound to push themselves harder and perform better. This process is called 'positive reinforcement' in psychology. You should provide incentives so that others are motivated to take responsibility willingly. Acknowledging a person's efforts can make a big difference. 8.**[Principle of Exception:]** This principle asserts that employees should be given complete freedom to fulfill their responsibilities within the purview of their authority. Managers should therefore refrain from interfering with the day-today work of their subordinates, even if minor mistakes are recognized.This level of control leads to more efficient results. In some exceptional cases, managers are able to interfere on matters deviating significantly from the norm; in this case the authority delegated to the subordinate may even be withdrawn. **[PROCESS OF DELEGATION:]** The process of delegation does not always follow a set structure, however, some aspects which are typically involved are: 1. **[Allocation of duties]**: the delegator communicates to their subordinate the task which is to be performed. Resources are provided and a time limit is informed. 2. **[Delegation of authority]**: In order for the subordinate to perform the task, authority is required. The required authority is granted to the employee when the task is delegated. 3. **[Assignment of responsibilities]**: When authority is delegated, the subordinate is assigned with the responsibility of this task. When someone is given the rights to complete a task, they are assigned with the corresponding obligation to perform. Responsibility itself cannot be entirely delegated; a manager must still operate under equal responsibility to the delegated authority. 4. **[Creation of accountability]**: At the completion of the delegation process, it is essential that the manager creates accountability, meaning that subordinates must be answerable for the tasks which they have been authorised to carry out.