OCM-12th-Class-Textbook.pdf

Standard XII ST DIR AFF EC I T NIS G...

Standard XII ST DIR AFF EC I T NIS G NG G G ORGA NIN IN IN PL A N MANAGEMENT CO CO NTROL ING OR 12 DINATING CORPORATE SOCIAL RESPONSIBILITY (CSR) 12 102.00  The Coordination Committee formed by GR No. Abhyas - 2116/(Pra.Kra.43/16) SD - 4 Dated 25.4.2016 has given approval to prescribe this textbook in its meeting held on 30.01.2020 and it has been decided to implement it from the educational year 2020-21. Organisation of Commerce and Management STANDARD - XII 2020 Maharashtra State Bureau of Textbook Production and Curriculum Research, Pune - 411 004 Download DIKSHA App on your smartphone. If you scan the Q.R.Code on this page of your textbook, you will be able to access full text and the audio-visual study material relevant to each lesson provided as teaching and learning aids. First Edition : 2020 © Maharashtra State Bureau of Textbook Production and Curriculum Research, Pune- 411 004. Maharashtra State Bureau of Textbook Production and Curriculum Research reserves all rights relating to the book. No part of this book should be reproduced without the written permission of the Director, Maharashtra State Bureau of Textbook Production and curriculum Research, Pune. Cover, Illustrations and Computer Drawings Commerce Stream Commitee Members Shri. Sandip Koli, Artist, Mumbai Dr. Narendra Pathak (Chairman of Commerce Commitee) Co-ordinator Shri. Narayan Patil (Member) Ujjwala Shrikant Godbole Dr. Mukund Tapkir (Member) I/C Special Officer for Mathematics Dr. Prashant Sathe (Member) CS. Mahesh Athawale (Member) Shri. Surendra Nirgude (Member) Typesetter Dr. Jyoti Gaikwad (Member) M/s. Shree Graphic Centre, Mumbai Shri. Mohan Salvi (Member) Dr. Sangeeta Mandke (Member) Shri. Anil Kapre (Member) Production Smt. Anantlaxmi Kailasan (Member) Smt. Laxmi Pillai (Member) Sachchitanand Aphale Chief Production Officer Smt. Mrinal Phadke (Member) Smt. Ujjwala Godbole (Member-Secretary) Sanjay Kamble Production Officer Prashant Harne Asst. Production Officer Organisation of Commerce and Management Study Group Members Paper Shri. Narayan Patil 70 GSM Cream wove (Chairman and Coordinator) Print Order No. Dr. Minal Bhandari Dr. Chandan Bora Dr. Rupsen Kamble Shri. Manik Ghumai Printer Shri. Arun Chavan Shri. Avinash Takawale Smt. Rupali Deshpande Smt. Madhuri Pawar Shri. Dnyandeo Yewale Shri. Sanjay Patil Shri. Amit Gokhale Smt. Ashwini Kulkarni Publisher Smt. Sangeeta Joshi Vivek Uttam Gosavi, Controller Maharashtra State Textbook Bureau, Prabhadevi Mumbai- 400 025 NATIONAL ANTHEM  PREFACE Dear students, In standard XI you studied about commerce and business, forms of business organisations, institutional support to business, management and business environment. This standard XII textbook takes you further from where you left in standard XI. This book gives you an insight about 'Principles of Management' and 'Functions of Management' which are essential for any business organisation. After learning about management, in 'Enterprenuership Development' you will learn about entrepreneur and scope for you as an entrepreneur in future. In today's scenario various activities are going on round-the-clock. 'Business Services' advocates importance of business services to various business organisations. We are now part of globalisaton, so 'Emerging Modes of Business' focuses on various emerging modes in business. Students, you wi1l also learn ' Social Responsibilities of Business'. 'Consumer Protection' and 'Marketing' put an emphasis on need of consumer protection and its Act 2019 and importance of marketing for business organisations respectively. ln every chapter, pictures, diagrams, activity boxes are included for better understanding of the concepts. An exercise and answer key are given for practice. Newly introduced 'Just to Know' is brain teaser and self explanatory itself. This book is designed in such a manner that it will simplify teaching - learning process and students as well teachers will enjoy this textbook. This restructured syllabus is capable enough to enhance the understanding ability of the students. The implementation of this new syllabus will be from the academic year 2020-2021 for standard XII Commerce. More information has been given in the Q.R. Code on the title page. We are confident that this book will guide the students properly in this competitive world of business. We ore greatful to subject committee members, study group members, reviewers, experts, designers, translators as they have rendered their thorough co-operation in the preparation of this book. (Vivek Gosavi) Pune Director Date : 21 February 2020 Maharashtra State Bureau of Textbook Bharatiya Saur : 2 Phalguna 1941 Production and Curriculum Research, Pune.  ORGANISATION OF COMMERCE AND MANAGEMENT STANDARD XII Competency Statement Unit No. Chapter Name Competency Statements Principles of Management Understands meaning and definitions of principles of management. 1) Understands the nature and significance of principles of management. Understands theories of management. Understands Henry Fayol’s theory of management. Understands Taylor’s scientific management theory in detail. 2) Functions of Management Understands functions of management Understands meaning, definition and importnace of functions of management 3) Entrepreneurship Development Understand entrepreneur intrapreneur and Understands entrepreneurship development. Understands initiatives in entrepreneurship development. 4) Business Services Understands various business services. Understands types of banks Understands e-banking Understands principles and types of insurance Understand different types of communication. Understands functions and types of ware houses. Understands types of transport. 5) Emerging Modes of Business Understands e-business. Understands scope and benefits of e-business. Understands online transaction process. Understands outsourcing. Understands BPO, KPO, LPO 6) Social Responsibilities of Understands social responsibility of Business organisations business. Understands social responsibilities of business towards different groups of society.  Understands protection of environment. Understands business ethics. Understands CSR. 7) Consumer Protection Understands consumer protection. Understands importance of consumer protection. Understands rights of consumers. Understands responsibilities of consumers. Understands consumer redressal mechanism. Understands role of NGO’s 8) Marketing Understands marketing. Understands types of market Understands importance and functions of marketing. understands marketing mix.  E INDEX Sr.No. Chapter Page No. 1. Principles of Management 1 2. Functions of Management 17 3. Entrepreneurship Development 37 4. Business Services 54 5. Emerging Modes of Business 95 6. Social Responsibilities of Business 113 7. Consumer Protection 133 8. Marketing 151  Principles of Management 1 1.1 Introduction 1.2 Meaning and Definition 1.3 Nature of Principles of Management 1.4 Significance of Management Principles 1.5 Theories of Management 1.6 Henry Fayol's Administrative Theory of Management 1.7 Fredrick Winslow Taylor's Scientific Management Theory Summary Exercise 1.1 INTRODUCTION Dear friends, in XI standard, we have studied that management is everywhere. In every type of business organisation, non-business organization and even in social life; management is required. Management is the key to success in achievement of goal. Management is considered as one of the required sources of business organization like machines, materials and money. For establishing coordination between all other sources of organization, one needs to know about management. Therefore, it is observed that the importance of management is growing rapidly. Various management thinkers have introduced different management theories as per their field observation and systematic study. There are various principles, theories and techniques of management which give results in same direction. But its use is varying from organization to organization, situation to situation and person to person. In brief, management sets the strategic goals in accordance with the vision-mission of the organization and makes decisions on how the overall organization will operate. Management is often included as a factor of production. It harmonizes all functions of business organization such as planning, organizing, staffing, coordinating and controlling, which are termed as functions of management. 1.2 MEANING AND DEFINITION While achieving goal of an individual or an organization, it is always important to use different systems or techniques. Some of these techniques are accepted universally, hence, they are called as principles. It provides guideline to manager to conduct all organizational activities on specific bases. It helps the manager to take effective decisions and to achieve organizational goal. "Principle is defined as a fundamental truth or proposition that serves as the foundation for a system of belief or behaviour or for a chain of reasoning." 1  In simple words, techniques or systems which give one directional result are called as principles. These principles are universal and applicable everywhere. Due to the basis of principles, managers need not to work on trial and error basis. For Example, in cricket or in any other game, total play is designed and divided between the players according to their qualities and capabilities. In terms of management, it is called as division of work which is one of the principles of management. 1.3 NATURE OF PRINCIPLES OF MANAGEMENT Management principles are formed to guide and influence the behavior of employees. These principles insist on improving efficiency of organizational resources in terms of profit. These principles also focus on best coordination between superior, subordinates and all the members of organization. The nature of management principles is given below: 1) Universal application: The principles of management are universal in nature. That means they can be applied to all types of organizations, irrespective of their size and nature. Their results may vary and application may be modified but these are suitable for all kinds of organizations. Similarly, they are applicable to all levels of management. 2) General guidelines: Management principles provide general guidelines in tackling the organizational situations wisely as well as in solving the problems. They are not rigid. Which management principles are to be applied depends upon the situation, size and nature of organisation. For example, when we say fair remuneration, then the term 'fair' can vary as per the nature, size and financial condition of the organisation. 3) Principles are formed by practice and experiments: The management principles are developed gradually with thorough research work. Systematic observations and experiments are conducted before developing them. The results of such experiments have been developed as a principle after its practice in organizations. 4) Flexibility: Management principles are flexible in nature. It means they can be changed or modified according to the situation. Managers can be flexible while implementing principles to suit the requirement. The business situations keep on changing. Management principles can be adjusted or modified and can be used in the organisation according to its need. 5) Behavioral in nature: Management is group activity. Management aims at achieving certain goal through a group of human being. Management principles are designed to influence human beings. These principles control a group of persons and direct them to achieve the objectives. 6) Cause and effect relationship: Principles of management are the base for taking decisions. They determine the cause or reason for particular effect. For example, payment of good wages and incentives helps in increasing the output of workers or making effective advertisement increases the sale of a product. 2 7) All principles are of equal importance: All principles of management are of equal importance. Those are to be practiced simultaneously to get best results in the form of achievement of predefined goals. If any specific principle is focused more and others are not followed with same focus, then it affects the working of organization. Management principles are the principles of social science. The nature of principles of management is not absolute like pure sciences i.e. Chemistry, Mathematics etc. With some modifications according to requirement, organization needs to apply the principles of management. 1.4 SIGNIFICANCE OF MANAGEMENT PRINCIPLES As we have discussed the nature of principles of management, it can be said that management principles are applicable everywhere. They are in the form of pre-determined solutions for the prob- lems which are recurring. They are guiding the manager so it is important for every manager to know them. In every type of organization or in group activity, one needs to apply principles according to nature, size and requirement of the organization. These principles are tested and practiced worldwide from many years. Therefore, it is important to study the significance or importance of management principles with the help of the following facts: 1) Provides useful insight to managers: The principles of management help the manager to understand the organisation. The study of the principles helps to improve the understanding of the situations and problems. It further helps the manager to find out the solutions to the problems and handle situations. Management principles are an outcome of the experience of various professional people. The use of these principles is helping managers about the manner in which he should act in different situations. This type of timely guidance reduces the wastage of resources and the goals can be achieved in appropriate manner. 2) Helpful in efficient utilization of resources: In every organization two types of resources are used i.e. physical resources (material, machines, money etc.) and human resources (manpower). The basic function of management is to make proper balance between these resources by putting them to optimum use and control on wastage of resources. While maintaining discipline and healthy working environment, management always uses techniques and principles. It helps in establishing cordial relationship between management and employees which increases the efficiency level of employees and also affects the effective administration. For example, Use of standard tools and machinery helps in increasing quality or productivity as well as in increasing level of efficiency of human resources. 3) Scientific decisions: In business organization, a scientific decision means systematic or balanced decision. Principles train the managers to handle critical situations tactfully otherwise the managers have to work always with trial and error method. With the use of various management principles, one can get an idea about how to analyze the situations, to search alternative options and their results. 4) Understanding social responsibility: Management principles are based on every aspect of organization. They are not developed only from view point of handling the resources effectively but they guide management in understanding social responsibility of organization. So that they can focus on providing 3  quality products at reasonable prices, avoiding artificial monopolistic situations in market, fair competition, fair remuneration, change in environment, healthy working place, standard tools and machinery etc. 5) Encourages Research and Development (R and D): Principles of management are dynamic. Their nature goes on changing along with the chang- es in the business world. Over the years they have developed to suit the current need. It ena- bles the managers to bring consistent improvement in them. Management adopts new trends at working place automatically. These guidelines help management to make comparison of used principles with its expected outcome. If needed, management can modify the principles according to situation as the management is having liberty to take the decisions at their own. This training helps in developing scientific approach towards research and development and growth and development of organisation. For example, Rand D department always works on finding new techniques in the field of production, finance, marketing, human resources etc. 6) Helps to coordinate and control: Management principles are the guidelines for better coordination and control. It is very chal- lenging to create coordination and cooperation among different employees working in differ- ent departments. It is also difficult task for manager to keep control on the performances of employees. Management principles offer suitable systems while establishing coordination and control. 7) Develops objective approach: With the help of various principles of management, one can develop an objective approach. Managers can identify the business opportunities, root causes of the problems in correct manner and can provide appropriate solutions on it. It builds confidence in the minds of the managers. 1.5 THEORIES OF MANAGEMENT Management theories are the set of general rules that guide the managers to manage an organization. Theories are an explanation to assist employees to effectively relate to the business goals and implement effective means to achieve the same. Various management thinkers have introduced theories which are based on different approaches. Management thinkers such as Fredrick Winslow Taylor, Elton Mayo, Henry Fayol etc. have introduced the theories which are based on different approaches. These theories are applicable in all type of organizations. With appropriate modifications, every manager can use these theories by adding some innovative techniques and strategies. It means these old theories are the basis of modern management theories. Organizations, workforce and society are facing some common problems such as centralization of authority, stress, low motivation, environmental issues, behavioral problems, health problem, work-life balance, accountability etc. Theories of management definitely provide solution in such issues to the management people. 4 1.6 HENRY FAYOL'S ADMINISTRATIVE THEORY OF MANAGEMENT Henry Fayol (1841-1925) was a French mining engineer who turned a leading industrialist and a successful manager. He started his career as a mining engineer in a French mining company and rose to the position of the Chief Managing Director. After conducting many experiments and observations in organization, Fayol proposed 14 principles of management which are explained in his famous book 'General and Industrial Administration'. Due to his contribution in development of managerial thoughts he is called as 'Father of Modern Management'. Fayol suggested 14 principles of management. These statements serve as a guideline for decision-making and management actions. 14 principles are summarized as follows: 1) Principle of Division of Work 2) Principle of Authority and Responsibility 3) Principle of Discipline 4) Principle of Unity of Command 5) Principle of Unity of Direction 6) Principle of Subordination of Individual Principles Interest to Organisational Interest of Management 7) Principle of Centralization 8) Principle of Remuneration 9) Principle of Scalar Chain 10) Principle of Order 11) Principle of Equity 12) Principle of Stability of Tenure 13) Principle of Initiative 14) Principle of Esprit de corpse (Team work) 1) Principle of Division of Work: According to this principle, the work is divided into different kinds such as technical, financial, commercial, security operations, accounting and managerial. It is assigned to employees as per their qualities and capabilities. It helps in improving efficiency and expertise of employees which ultimately turns into expected productivity level. 5 2) Principle of Authority and Responsibility: Authority is the right to take decisions. It is necessary to get the things done appropriately from subordinates. Authority always comes with the responsibility. If the manager is given the authority to complete a task within a given time, he should be held responsible if he does not complete the work in given time. Manager should have proper authorities to take managerial decision on his own in respect to the goal. 3) Principle of Discipline: According to Fayol, discipline is the most essential thing in the organisation. Employees must obey and respect the rules that govern the organisation. Discipline helps to achieve the goals in the organisation. Good discipline is the result of effective leadership. There must be a clear understanding between the management and workers regarding the organisation's rules. Basic discipline should be observed at all levels of management. 4) Principle of Unity of Command: Each member of organization should receive orders from only one superior. This principle helps in managing conflicts and solving disputes among people in organization. It also helps in avoiding confusion. If an employee receives commands from more than one authority, he will get confused and will not be able to take decision about whose orders should be followed. This is wrong approach. For this organizational hierarchy should be well defined. Each em- ployee should know his immediate superior and should receive orders from him only. Right Approach Wrong Approach Superior Subordinate 5) Principle of Unity of Direction: This principle states that 'there should be one head and one plan' in every organization. Each group in the organization should have the same objective and the group should be directed by one manager using single plan. 6) Principle of Subordination of Individual Interest to Organisational Interest: According to this principle the interest of an individual must be given less importance than the interest of the organisation. While taking decision in the organisation the manager should always consider the interest of the whole group rather than the interest of a single employee. Similarly the employee should protect the interest of the organisation first and his personal interest should be subordinated. For example, in every game, the players are always thinking about winning the match as a team rather than their individual records. 7) Principle of Centralization: Centralization refers to the concentration of powers and authorities. In some organisations this power is vested in one hand or few hands. This situation occurs in the small organisations. But, if the size of organisation is large then there is a decentralization of the power or authority. 6  According to this principle there must be a proper balance between centralization and decentralization in the organisation. This is to be done according to the size of the organisation, nature of the activity etc. 8) Principle of Remuneration: Appropriate remuneration to staff or employees is the principle to keep them satisfied financially as well as retain them for long span of time within the organization. The fair remuneration affects on the productivity and efficiency level in total. The remuneration should be fixed by taking into consideration the skill, expertise, knowledge, tenure, cost of living, market trend, profitability of organization etc. 9) Principle of Scalar Chain: Scalar chain means the hierarchy of authority from the top level to the lower level for the purpose of communication. This helps to ensure the orderly flow of information and communication. Traditionally, organizations used to frame large scalar chain which is time consuming. For example, a General Manager informs the decision to respective Functional Manager, then Functional Manager will pass it to supervisor, the supervisor will inform it to Foreman and so on according to level of authority. For avoiding this longer chain and to take speedy decisions cross communication or direct communication is followed by various organizations which is known as Gang Plank. For direct communication, proper permission of the authorities is necessary. In the above diagram, the communication between 'D' and 'P' should flow through proper hierarchy. But to avoid delay or in emergency situation there will be direct communication. It is termed as Gang Plank. 10) Principle of Order: This principle is based on 'A place for everything and everything in its place'. Human resources and materials should be in the right place at the right time for maximum efficiency. Human resources should be placed at right place and on right job. The principle focuses on the proper utilization of physical and human resources. 11) Principle of Equity: Management should be fair as well as friendly to the subordinates. While dividing the work, delegating the authorities, deciding the monetary terms etc.. there should not be any discrimination between the employees. It is also suggested that the remuneration should not depend on the department but at the level on which subordinates are working. The employees 7  working on the same level but in different departments should be paid same wages. This equity will help in avoiding conflicts in the organisation. 12) Principle of Stability of Tenure: At the time of recruitment of employees, the management should assure them about stability of tenure or job security. It plays very important role in creating sense of belongingness among the employees. Insecurity in job always affect the efficiency of employees adversely whereas job security minimizes employee turnover ratio. 13) Principle of Initiative: Initiative refers to volunteering to do the work in an innovative way. The freedom to think and work on new ideas encourages employees to take initiative while working on given task. This initiative should be welcomed by the manager including thorough discussion on those new ideas. It also helps in creating healthy organizational culture. 14) Principle of Esprit de corpse: (Team work) Henry Fayol has given emphasis on team work. Esprit de corps means union is strength. Running any organization is a group activity and human resources are the valuable asset of the organization. If all employees are working as a union and with mutual trust, the difficulties can be solved quickly. Therefore, as a leader, manager should create a spirit of team work and understanding among employees to achieve organizational goal easily. Above 14 principles of Henry Fayol are very useful to manage the organization efficiently and effectively. These are also supportive to functions of management. These principles are very logical and therefore are applicable in modern management era. Discuss an example of your favourite game like cricket. You will find each activity is based on-Fayol's Principles of management. Take the help of your Teacher. 1.7 FREDRICK WINSLOW TAYLOR'S SCIENTIFIC MANAGEMENT THEORY Taylor (1856-1915) was an American who started his career as a machinist in Midvale Steelworks, Philadelphia and gradually through his hard work and progress, rose to the position of the Chief Engineer. He introduced his observations and experiments based on scientific data. Taylor's approach towards management is termed as scientific management. For this contribution in development of management thoughts, he is known as the "Father of Scientific Management". Taylor's management theory is based on scientific experiments. This theory involves the application of scientific approach to decision making and solving them at the same time. According 8 to Taylor, problems should be solved by scientific techniques rather than the rule of thumb and a trial and error approach. Definition of Scientific Management by Fredrick Taylor: "Scientific Management consists of knowing what you (i.e. management) want men to do exactly; and seeing it that they do it in the best and the cheapest manner." Principles of Scientific Management: These principles are as follows: 1) Science, Not Rule of Thumb: In order to increase organizational efficiency, the 'Rule of Thumb' method should be substituted with the methods developed through scientific analysis of work. Rule of thumb decisions are based on personal judgments of the manager. Taylor insisted upon scientific method for every small work. This principle is concerned with selecting the best way of performing a job after scientific analysis of that job and not by trial and error methods. Standard required time and standard output should be defined by the manager. This will help in saving time and human energy and will result into expected standard output. According to Taylor, even a small production activity like loading iron sheets into box cars can be scientifically planned. 2) Harmony, Not Discord: According to this principle, there should be harmony between the employees and management. This coordination will help in minimizing conflicts between them. Perfect understanding between employees and management will be helpful in creating healthy work environment for achieving the desired goal i.e. success. Organization should think about maximum prosperity of employees also. 3) Mental Revolution: Taylor introduced the concept of "Mental Revolution". This principle focuses on change in the attitude of employees and management towards each other. Both should realize their equal importance in organization. They should give full cooperation for achieving goal of organization. This will increase productivity and profits. 4) Cooperation, Not Individualism: This principle emphasizes on mutual cooperation between workforce i.e. employees and management. Due to cooperation, trust, team spirit etc. internal competition will turn into healthy working environment. Management should always consider the suggestions given by employees in decision making process. Employees should be treated as an integral part of organisation in all respects. At the same time employees should resist themselves from going on strikes and making unnecessary demands from management. They should treat each other as two pillars of organization. 5) Division of Responsibility: Proper division of work should always be accompanied with division of responsibilities between the managers and employees. Major planning is done by the top and middle level management authorities whereas employees are concentrating on its execution. The reporting is done as per the instructions given by their superiors. Managers should always help, encourage and guide the employees. It helps for best performances of managers as well as employees. 9 6) Development of employer and employees for greater efficiency and maximum prosperity: Best performance of any organization always depends on the skills and capabilities of its, employees to a great extent. Thus, providing training and development programmes to the employees whenever required, is very essential. It ultimately affects the profitability of the, organization. Each employee should be given proper opportunity to attain greater efficiency and maximum prosperity. Techniques of Scientific Management Some of the major techniques of scientific management are as follows: 1) Work Study: Before assigning the work to the available workforce, proper work study should be done by management. Work study consists of an organized, systematic and critical assessment of the various activities or functions. Work study is based on the techniques such as time study, motion study, method study and fatigue study. A) Time Study: It is the technique of observing and recording the time taken by an employee to complete a given task. With the help of time study, the precise time required for each element of work is determined. It is the technique used for fixing the standard time required to do a particular task under given condition. It is useful to measure the efficiency of an employee and to control the cost of work. B) Method Study: There are always various methods of completing the task. For best quality and cost effective- ness, identifying the best method of doing a particular job is very important but challenging task for a manager. It helps in reducing the wastage of time, raw material and in improving the utility of all resources as per predefined objetives. It is helpful in determining the methods for handling the raw materials, transportation, inspection, storage etc. C) Motion Study: The study of required motion means movement of an employee as well as of machine while completing a particular task is very important. It is helpful in eliminating unnecessary motions and finding the best method of doing a particular job. It also helps in improving the efficiency of the employees. Motion technique is used to know whether some elements of a job can be eliminated or their sequence can be changed for smooth flow of task. D) Fatigue Study: Generally long working hours without sufficient breaks, target pressure, heavy working tools, and poor working conditions result into physical and mental stress i.e. fatigue. It has an adverse effect on the health and efficiency of the employees. The study of fatigue and steps to reduce the level of fatigue is very important to maintain the operational efficiency of the employees. 2) Standardization of Tools and Equipments: With the result of experiments conducted at work place, Taylor advocated standardization of tools and equipments. Standardized working environment and methods of production help to reduce spoilage and wastage of material, cost of production, fatigue among the workers and it improves quality of work. 10 3) Scientific Task Setting: Taylor emphasized the need for fixing a fair day's work. Scientific work setting is important to prevent the employees from doing work much below their capacity. By using this technique, employees will complete the task according to standards given and management can keep proper control on optimum utilization of workforce. 4) Scientific Selection and Training: Management can select right persons for the right jobs by using scientific selection procedures. It needs to fix job specifications as per requirement. Employees are selected according to pre- determined standards in an impartial way. After selection, management should provide the proper training programmes to increase their efficiency. : 5) Functional Organization: In this concept of Taylor, planning is separated from implemetation. That means, planning is done by different people and actual work is supervised by different people. Thus, every worker will be supervised by two different sets of supervisors. He recommended total eight foremen to control the various aspects of production. They are categorized as follows: A) At Planning Level: 1. Route Clerk- tells how work moves from one machine to other. 2. Instruction Clerk- records instructions to complete the work. 3. Time and Cost Clerk- determines time in which work should be completed and workout the cost 4. Discipline- ensures that the workers are working as per factory rules. B) At Implementation Level: 1. Gang Boss-actually gets the work done. 2. Speed Boss- ensures that the work is completed in specified time. 3. Repair Boss- handles security and maintenance of mechanism 4. Inspector- ensures that the work is done as per the specified standards. According to Taylor, with the help of proper division of all activities into planning and implementation; management can definitely achieve the required performance from the employees. 6) Differential Piece-Rate Wage Plan: Remuneration should be fixed in such a way that average worker is motivated to attain a standard output. Taylor suggested the differential piece-wage system. Higher rates are offered to employees who complete the work more than the standard quantity under this system. On the other hand, if an employee is performing below the standard; he shall be given lower rate of wages. This technique motivate the employees to attain higher standard performance and earn wages i.e. remuneration at higher rate. Theories of management are the bases of organizational development and of achieving success for every type of business. In this modern era of liberalization, privatization and globalization the scope of management has been widened in a greater extent. Various types of business environmental changes are responsible for increasing significance of management. These traditional theories are proving very effective in handling businesses with some modifications according to change in situations. 11  These changes resulted into various trends in management. Disaster Management, Supply and Logistics Management, Event Management, Stress Management, Corporate Social Responsibility, Total Quality Management etc. are some of the recent trends in management. Summary Definition: "Principle is defined as a fundamental truth or proposition that serves as the foundation for a system of belief or behaviour or for a chain of reasoning." Nature of Principles of Management: 1. Universal application 2. General guidelines 3. Principles are formed by practice and experiments 4. Flexibility 5. Behavioral in nature 6. Cause and effect relationship 7. All principles are of equal importance Significance of Management Principles: 1. Provides useful insight to managers 2. Helpful in efficient utilization of resources 3. Scientific decisions 4. Understanding social responsibility 5. Encourages Research and development (R and D) 6. Helps to coordinate and control 7. Develops objective approach Theories of Management: Management theories are the set of general rules that guide the managers to manage an organization. 1) Henry Fayol's Administrative Theory of Management (1841-1925) Henry Fayol is called as a "Father of Modem Management." Henry Fayol's 14 Principles of Management: 1. Division of Work 2. Authority and Responsibility 3. Discipline 4. Unity of Command 5. Unity of Direction 6. Subordination of individual interest into organizational interest 7. Centralization 8. Remuneration 9. Scalar Chain 10. Order 11. Equity 12. Stability of Tenure 13. Initiative 14. Esprit de corps 12 2) Fredrick Taylor's Scientific Management Theory (1856-1915) Fredrick Taylor is known as "Father of Scientific Management." Principles of Scientific Management: 1. Science, Not Rule of Thumb 2. Harmony, Not Discord 3. Mental Revolution 4. Cooperation, Not Individualism 5. Division of responsibility 6. Development of employer and employees for greater efficiency and maximum prosperity Techniques of Scientific Management: 1. Work Study: A) Time Study B) Method Study C) Motion Study D) Fatigue Study 2. Standardization of Tools and Equipments 3. Scientific Task Setting 4. Scientific Selection and Training 5. Functional Organization 6. Differential Piece Rate Wage Plan Just to know Contribution to Management C. K. Pralhad (1942-2010): The first recipient of the Lal Bahadur Shastri Award for contributions to Management and Public Administration in 1999. In 2018, he was named the world's most influential business thinker on the Thinkers50.com list. He was a proactive thinker who regularly produced startling insights that managers would never have considered. C. K. Pralhad is famous for his contribution to the development of the Core Competence Model and Co-creation. (A Core Competency is a concept in management theory introduced by C.K.Pralhad and Gary Hamel.) Famous Quotes by C. K. Pralhad "The essence of strategy lies in creating tomorrow's competitive advantages faster than competitors can mimic the ones you possess today." "Executives are constrained not by resources, but by their imagination." "Never accept silence as agreement because you'll regret it later." "There's a heightened awareness of the need to be, and to be seen as, a good corporate citizen." "If you are honest about helping others rather than showing how smart you are, things are very easy." For detailed study, search Scholarly Articles on internet. 13  EXERCISE Q.1.A) Select the correct option and rewrite the sentences. 1)............. was regarded as Father of Scientific Management. a) Henry Fayol b) F W Taylor c) Philip Kotler 2) Principle of............. is based on 'A place for everything and everything in its place'. a) discipline b) order c) equity 3) Member of organization should receive orders from.............. a) many superior b) one superior c) all superiors 4) Scalar chain means the hierarchy of............. from the top level to the lower level for the purpose of communication. a) discipline b) unity c) authority 5) Taylor recommended total............. foremen to control the various aspects of production. a) eight b) three c) two B) Match the pairs. Group A Group B A) Henry Fayol 1) Eight Foremen B) Principle of Unity of Direction 2) F.W. Taylor C) Principles of Management 3) Proper division of all activities D) Scientific Management Theory 4) general guidelines E) Functional Organization 5) A place for everything and everything in its place 6) One head-one plan 7) Low wage rate 8) Harmony between the employees and management 9) German engineer 10) Modern Management C) Give one word/phrase/term for the following statements. 1) The study of movement of an employee as well as machine while completing particular task. 2) The technique of observing and recording the time required by an employee to complete a given task. 3) Study consists of an organized, systematic and critical assessment of various activities. 4) The principle which deals with 'to do work with innovative way'. 5) The principle which is based on 'a place for everything and everything in its place'. D) State whether following statements are true or false. 1) The principles of management are universal in nature. 2) Management principles are applied differently under different situations. 3) Only some principles of management are important. 14 4) Henry Fayol has given different techniques of management. 5) F W Taylor has proposed 14 principles of management. 6) Each member of organization should receive orders only from one superior. E) Find the odd one. 1) Principle of Authority and Responsibility, Motion Study, Principle of Division of Work, Principle of Discipline. 2) Fatigue Study, Principle of Unity of Command, Work Study, Motion Study. F) Answer in one sentence. 1) What is principle of unity of command? 2) What is standardization of tools and equipments? 3) What is differential wage rate? 4) What is Subordination of individual interest into organizational interest? 5) What is the meaning of principle? G) Correct the underlined word and rewrite the following sentences. 1) Security in job always affects adversely on the efficiency of employees. 2) Esprit de corps means 'division is strength'. 3) Each member of organization should receive orders from only one subordinate. 4) Decentralization means concentration of powers and authorities at a specific position. 5) Management techniques are applied differently under different conditions. Q.2. Explain the following terms/concepts. 1) Motion Study 2) Differential Piece Rate System 3) Fatigue Study 4) Time Study Q.3. Study the following case/situation and express your opinion. 1) Mr. Harshad is an entrepreneur and engaged in production of eco-friendly utensils. Both male and female workers are working in his factory. All male employees are directly working on machines whereas female employees are working in Packaging Department. Mr. Sharath is working as Finance Manager while Mrs. Naina is working as HR Manager who is responsible for recruiting employees in the factory. On this basis: i) Identify any one principle of management in above case. ii) What is the designation of Mrs. Naina in this organization. iii) Who is responsible for overall planning of the organisation? 2) In 'Fine Diamonds Ltd.' 200 employees are working in three shifts. In first shift 60 employees, in second shift 60 employees and in third shift 80 employees are working without sufficient breaks except lunch break and shift change break. No employee is able to complete the work in designated time due to inappropriate time management which results into delay for next shift employees. i) Identify which scientific principle needs to be followed by the company. ii) Suggest two scientific techniques which can be used for smooth flow of work in 'Fine Diamonds Ltd. ' iii) Why the work is not being completed in time? 15 Q.4. Answer in brief. 1) Explain any five principles of management of Henry Fayol. 2) Describe any four techniques of scientific management. Q.5. Justify the following statements. 1) Principles of management are flexible in nature. 2) Management principles are helpful in optimum utilization of resources. 3) Principle of equity is important. 4) Taylor emphasized on standardization of tools and equipment. 5) Differential piece wage rate plan is necessary. Q.6. Attempt the following. 1) Explain in detail any five Henry Fayol's principles of management given by Henry Fayol. 2) Describe different techniques of scientific management. 3) Elaborate principles of scientific management. 4) Explain nature of principles of management. Q.7. Answer the following. 1) What are the techniques of scientific management? Explain in detail. 2) Explain 14 principles of Henry Fayol in detail. Answer Key Q.1. (A) 1. F W Taylor 2. order 3. one superior 4. authority 5. eight. (B) A-lO , B-6 , C-4, D-2 , E-1. (C) 1. Motion Study 2. Time Study 3. Work Study 4. Principle of Initiative 5. Principle of Order (D) True-1,2,6 False-3,4,5 (E) 1. motion study 2. Principle of Unity of Command (G) 1. Insecurity 2. Unity 3. Superior 4. Centralization 5. principles REFERENCES: 1. Management Principles and Practices, N.K.Sharma, MANGAL DEEP PRAKASHANS, JAIPUR 2. Management, James A. F. Stoner, R. Edward Freeman, Daniel R. Gilbert, JR, PEARSON 3. Principles and Practice of Management, T.N.Chhabra, S.CHAND & COMPANY LTD., NEW DELHI 4. Principles of Management, R.N. Gupta, S.Chand. 5. yourarticlelibrary.com ³³³³³ 16  Functions of Management 2 2.1 Introduction 2.2 Functions of Management 2.2.1 Planning 2.2.2 Organising 2.2.3 Staffing 2.2.4 Directing 2.2.5 Co-ordinating 2.2.6 Controlling Comparative Study Summary Exercise 2.1 INTRODUCTION We have discussed various management principles in the first chapter in detail. These principles are very important in managing the organization. While achieving any objective, we need to go through various functions. For example, in joint hindu family business, the KARTA is doing proper planning for every work and for every member. The KARTA organizes various things which are required to fulfill the objective. He also takes help of other members for support. For smooth functioning of family as well as family business the KARTA directs, guides, coordinates and keeps strict control on every task. Whatever, the KARTA is doing with the help of others is called as a management. Similarly, the success of every business organization is an outcome of effective and efficient management. The tasks which are taken to achieve organizational goal is called management. Management is a set of principles which relate to the various functions such as planning, organizing, staffing, directing, coordinating, controlling etc. which are helpful in achieving organizational goals. 2.2 FUNCTIONS OF MANAGEMENT According to L.A.Allen, "Management is what manager does". This definition focuses on the role of manager in the form of different functions. The functions of manager start with planning and end with controlling. But every function is interrelated with other function. They are inseparable in nature. Management functions concern with all levels of management. Different management think- ers have classified functions of management differently. According to Henry Fayol, "To manage is to forecast and to plan, to organize, to command and to control." 17  Luther Gullick has given a keyword 'POSDCORB' for management functions where P stands for Planning, O for Organizing, S for Staffing, D for Directing, Co for Co-ordination, R for reporting & B for Budgeting. Reporting and Budgeting functions are summarized in the function called as Controlling. 2.2.1 Planning: Meaning: Planning is the basic function of management. Every function of management is based on planning. It includes deciding the things to be done in advance. Planning is an intellectual process of logical thinking and rational decision making. It focuses on organization's objectives and develops various courses of action. Designing a proper planning and implementing accordingly is the key of achieving the objectives of an organization. In short, planning is a detailed programme of future courses of action Definition: Following are some of the important definitions of planning: 1) Koontz and O'Donnell: "Planning is deciding in advance what to do, how to do it, when to do it, and who is to do it. Planning bridges the gap from where we are and where we want to go it makes possible things to occur which would not otherwise occur." 2) James Stoner: "Planning is the process of establishing goals and a suitable course of action for achieving these goals." Importance of Planning: It is the fundamental function which gives an outline about where to go, how to go and reduces the risk of uncertain future with the help of forecasting. The importance of planning is as follows: 1) Helps to set clear objectives: Planning is concerned with setting objectives, targets, and formulating plans to achieve them. It helps managers to analyze the present condition of the organization and on that basis to identify the ways of attaining the desired position in future. 2) Provides path of action: Planning ensures that the goals or objectives are clearly stated. They act as a guide and they provide direction for doing the right things at the right time with right way. It helps employees to know what organization has to do and what they must do for achieving the goals. 3) Planning improves performance: It helps managers to improve future performances of employees by establishing objectives and selecting a course of action. It is beneficial for the organization. Planning leads to efficient working of the employees. Due to proper planning, the employees can work according to timely guidelines. This improvement in performances results into higher profitability of the organization. 4) Minimizes the risk: Planning is based on forecasting technique. It is the process of looking into the future and anticipating the future changes. By deciding in advance the tasks to be performed, planning 18  shows the way to deal with changes and uncertain events. Changes or risks cannot be eliminated totally but they can be anticipated and can be tackled with preventive measures. It minimizes the risk of future or uncertainties of future. 5) Planning leads to optimum utilization of resources: Organizational plans are prepared by taking into consideration the availability of resources and proper allocation of resources for various activities. It also facilitates optimum utilization of resources which brings higher efficiency and better results. One can avoid wastage of resources by proper planning. 6) Helps in decision making: There are various alternatives in front of the management. For achieving goals planning helps the management to select the best alternative by considering all positive and negative outcomes of all the alternatives. Decisions are taken after selecting alternative courses of action to achieve a predefined goal. It helps the manager to take rational decisions. 7) Useful in setting the standards for controlling: Planning set out standards for controlling. So, the actual performance can be compared with the standards and managers can find out the deviation, if any between the actual and the standard performance. Such deviation can be bridged by taking controlling steps. Therefore, planning provides basis for control. It is also important for maintaining discipline at working place of organization. 8) Facilitates Coordination of all activities: Planning facilitates the coordination of activities. It reduces overlapping among activities. All activities of business organization are closely linked with each other which is considered in the process of planning. Sound planning inter-relates all the activities and resources of an organization. Thus, various departments work as per the overall plan and coordination is achieved. 9) Facilitates other management functions: Every organisation functions towards achieving goal and goal is set at the planning stage. Unless the plan is ready, other management functions such as organizing, staffing etc. cannot be undertaken thus, planning facilitates all other functions of management. 10) Promotes innovative ideas: Planning is the basic function of management. It is a process of decision making which involves promotion of innovative ideas after critical thinking. Ultimately, these innovative plans result into attainment of the goals of the organization. It is the most challenging activity for the management as it guides all future actions leading to growth and prosperity of the organization. In short, planning plays vital role in every walk of life of an organization as well as of an individual. Future is highly uncertain and the business environment is changing. With the help of proper planning , the risks and uncertainties can be minimized definitely. Hence, planning is the basic requirement of any organization for the survival, growth and success. Prepare a plan for one day picnic of your class or field trip. 19 2.2.2 Organising: Meaning: Organizing is the process of identifying, bringing the required resources together such as men, money, material, machine and method, grouping and arranging them properly for achieving the objectives. In planning, the management decides what is to be done in future whereas organizing function decides the ways and means to achieve what has been planned. This function is important for execution of the plans which have been prepared by top level management people. The synchronization and combination of workforce, physical, financial and information resources are established in the process of organizing. Definitions: The term 'organization' is used to denote the structure. It is a unit or a group of people who come together to achieve a common goal whereas 'organizing' is a process and a function. Some of the definitions are as follows: 1) Mooney and Railey: "Organization is the form of every human association for the attainment of a common purpose." 2) Koontz and O'Donnell: "Organization involves the grouping of activities necessary to accomplish goals and plans, the assignment of these activities to appropriate departments and the provision of authority, delegation and co-ordination." 3) Theo Haimann: "Organizing is the process of defining and grouping the activities of the enterprise and establishing the authority relationships among them. In performing the organizing function, the manager defines, departmentalizes and assigns activities so that they can be most effectively executed." Importance of Organizing: Organizing is concerned with grouping and assigning the organizational activities among different departments and workforce. The importance of organizing can be stated as follows: 1) Facilitates Administration as well as Operation: Organizing process leads to identify and to group the activities. Grouping and assigning the activities is the task of administration whereas processing according to it is operational activity. Thus, organizing facilitates administration as well as operation of the organization. Due to proper grouping of the tasks and the employees, there is increase in production and reduction in wastage. Duplication of work is restricted and effective delegation becomes possible. 2) Brings Specialization: Organizational structure is a network of relationships in which the work is divided into units and departments. This division of work helps in bringing specialization in various activities of organization. Specialization in activities leads to increase in organizational efficiency. 3) Defines the Jobs Properly: Organizational structure helps in putting right men on right job which can be done by selecting people for various departments according to their qualification, skill and experience. This is helping in defining the jobs properly which clarifies the role of every person. 20 4) Clarifies Authority and Responsibility: Organizational structure defines the role to every manager. This can be done by delegating the authority to every manager and clarifying the way he has to exercise those powers. So that misuse of powers does not take place. Well defined jobs and responsibilities helps in bringing efficiency into managers working. This helps in increasing productivity. 5) Establishes Coordination: This function helps in establishing co-ordination among different departments of organization. It creates clear cut relationships among positions and ensures mutual co-operation among individuals. Coordination or synchronization between all departments and different level of managers is important for smooth functioning of organizational activities. 6) Helps for Effective Administration: This function determines different positions, departments, activities and the roles are clearly structured. The utmost care is taken while placing right person in right job with right authorities and responsibilities. It is achieved through division of work and delegation of authorities. This all leads to efficient and effective administration. 7) Helpful for Growth and Diversification: The growth of every organization depends on its smooth and efficient functioning. Clearly defined roles and responsibilities, coordination among all levels of management personnel and use of appropriate control techniques bring efficiency at work place and organization grows well. This is possible only when the organization structure is well- defined. 8) Creates Sense of Security: Organizational structure clarifies the job positions. It clearly states the duties and responsibilities of everyone. Everyone can work accordingly. Clarity in jobs and powers helps in increasing mental satisfaction and it creates sense of security among the employees. 9) Scope for Innovation: Organizing function clears the roles and activities to be performed. Employees can work by using their new ideas. This provides enough space to the manager to develop talent and flourish the knowledge. This scope for innovation into adopting new changes in methods of work is possible only through a set of organizational structure. 10) Helps in Optimum Utilization of Resources: This function provides different jobs to different employee according to the job specification. Due to this, specialization of work becomes possible. This right workforce utilizes other resources at its optimum level so that desired results are achieved within defined period. Organize Teacher's Day in your college 2.2.3 Staffing: Meaning: Staffing is the function of execution according to plan and organizational structure. It is the process of attracting, recruiting, selecting, placing, appraising, remunerating, developing and retaining the best workforce. Overall growth and success of every venture is based on appropriateness of staffing function. It is very challenging for organization to focus on best utilization of workforce 21 by using their talents and skills, retaining them and arranging training and development programmes. The function emphasizes managing human and not material or financial resources. The need of staffing arises since the initial period of organization. Due to promotion, transfer, business expansion, retirement, resignation, accidents, death of employee etc. vacancies are created in organization. In this context, staffing function plays very important role in organization. Right person at right job with right pay is the basic principle of staffing. Definitions: Following are some of the important definitions of staffing: 1) Theo Haimann: "The staffing function pertains to the recruitment, selection, development, training and compensation of subordinate managers." 2) Luther Gullick: "Staffing is the whole personnel function of bringing in and training the staff and maintaining favorable conditions of work". 3) S. Benjamin: "Staffing is the process involved in identifying, assessing. placing, evaluating and directing individuals at work." Importance of Staffing: 1) Effective Managerial Function: Staffing is the key to effective performance of other functions of management such as planning, organizing, directing and controlling. Competent workforce can work effectively in different functional areas like production, sales, finance etc. The outcome of other functions is based on the effectiveness of staffing. 2) Leads to Effective Utilization of Human Resources: Staffing function leads to effective utilization of human resources i.e. workforce. Proper care is taken at every stage such as recruitment, selection, placement, remuneration, training, development etc. Excessive burden of work is avoided. Optimum utilization of human resources results in improvement in performances and progress of organization. 3) Builds Cordial Relationship: This function is helpful in building healthy relationships among all levels of employees in the organization. A smooth human relation is the key to better communication and coordination of managerial efforts in an organization. 4) Helps Human Resource Development: Skilled and experienced employee is an asset of a business organization. Staffing helps to inculcate the organizational culture into employees. It trains and develops the existing workforce. It also ensures smooth functioning of all the managerial aspects of the business organization. 5) Helps in Effective use of Technology and Other Resources: Trained employees can use the latest technology, capital, material and methods of work effectively. It helps in building competitive strength of the organization. It is also helpful in improving standard of work and productivity in terms of quality and quantity. 22 6) Improves Efficiency: Training and development programmes are offered to the employees for self-development and organizational development. Through proper selection, the organization gets quality employ- ees and through proper training the performance level of the employees can be improved. 7) Long Term Effect: Qualified, efficient and skillful workforce is always an asset of the organization. Proper selection of employees leads the organization towards the path of success. Naturally, long term positive effects can be observed on the efficiency of an organization. 8) Essential Contribution: Staffing ensures the continuity and growth of the organization through development of employees. Selection is based on the ability of the prospective employees. So that organization can meet the future challenges wisely. Therefore, the contribution of the staff in their future roles is taken into account in staffing function. 9) Provides Job Satisfaction: Employees can be motivated through financial and non-financial incentives. Adequate remuneration increases job satisfaction and morale of the employees. Training and development programmes, fair remuneration and job security are the factors which are important in providing job satisfaction. 10) Maintains Harmony: In staffing process, individuals are recruited, selected and placed as well as their performance is regularly appraised and promotions are given on the basis of merit. For this, criteria is made and duly communicated to concerned employees. It brings peace and harmony in organization. Activity : What is the meaning of "Right Person at the Right Job" ? Discuss with your Teacher. 2.2.4 Directing Meaning: Directing is the soul of management function. It is the process of instructing, guiding, com- municating, inspiring, motivating and supervising the employees to achieve predetermined goals of an organization. Direction is a continuous function initiated at top level and flows to the lower level through organizational hierarchy. It is a continuous managerial process that goes on throughout the tenure of the organization. Director is the person who shows the correct path as well as guides the employees in solving the problems wherever necessary. A few philosophers called direction as "Life Spark of an Enterprise". Definitions: Following are some of the important definitions of directing: 1) Theo Haimann: "Direction consists of the process and techniques utilizing in issuing instructions and making certain that operations are carried out as planned." 2) Earnest Dale: "Directing is what has to be done and in what manner through dictating the procedures and policies for accomplishing performance standards". 23 3) Urwick and Brech: "Directing is the guidance, the inspiration, the leadership of those men and women that constitute the real case of responsibilities of management." Importance of Directing: Directing refers to a process or technique of instructing, guiding, inspiring, counselling, overseeing and leading people towards the accomplishment of organizational goals. Supervision is an integral part of direction function. The directer supervises employees by observations, examining the reports and behaviour of employees. On the basis of the above definitions, the importance of directing can be stated as follows: 1) Initiates Action: Direction is the function which supports to activate the plans with the help of employees. Every action is initiated through timely direction. Proper instructions are given to subordinates while completing their assigned task. The managers direct the subordinates about what to do, how to do, when to do and also to see that their instructions are properly followed. 2) Integrates Efforts: Communication is one of the elements of direction. It helps in integrating the efforts of all the employees and departments which results in achievement of organizational goal. Integration of efforts is possible through persuasive leadership and effective communication towards the accomplishment of organizational goals. 3) Means of Motivation: While directing the subordinates, their opinions are also considered. A manager identifies the potential and abilities of its subordinates and helps them to give their best. He also motivates them by offering them financial and non-financial incentives to improve their performance. It boosts the morale of subordinates. 4) Provides Stability: Stability plays significant role in the growth and survival of the organization. Effective leadership, communication, supervision and motivation develop co-operation and commitment among the employees. It provides stability and creates balance among various departments and groups. 5) Coping up with the Changes: Factors of business environment are always changing. Adapting to the environmental changes is necessary for the growth of the organization. With the help of motivation, proper communication and leadership, the employees can clearly understand the nature of change and also the positive outcome of adopting to the change. For example, e-filing, use of Robots at workplace etc. 6) Effective Utilization of Resources: Direction involves assigning duties and responsibilities to everyone. Proper instructions and systems are developed to avoid wastages, duplication of efforts etc. Subordinates are guided to utilize the resources i.e. men, machine, materials, and money in the maximum possible way. It helps in reducing costs and increasing profits. 7) Creates Team Spirit: Direction focuses on motivating the subordinates for group efforts. Group efforts or team spirit plays vital role in success of an organization than individual efforts. Therefore, the role of 24  manager as a director plays very important role in guiding and motivating the employees to achieve the predetermined goals. 8) Explores Capabilities of Individuals: Every individual has various capabilities or potentials in addition to their formal qualifications. Direction helps to identify and utilize their abilities for best performance by encouraging and motivating them just like a leader. 9) Increases Efficiency Level: Guidance and motivation is given to subordinates to perform at their best level. Being a leader, team spirit is created by the manager as well as proper techniques of supervision are used. It works positively and results into enhancing the efficiency level of the whole organization. 10) Co-operation: Co-operation is necessary for smooth flow of organizational activities. It should be created by manager i.e. director from top level to the bottom level of management. Healthy cooperation, team work and higher efficiency level lead to attainment of goals. Thus, Directing to subordinates is a basic management function that includes building an effective work climate through motivation. 2.2.5 Co-ordinating: Meaning: Co-ordination between different functions and all levels of employee is the essence of organization success. It is an integration of different activities· which is essential for their smooth flow. It establishes harmony among all the activities of an organization in achieving desired goal. In an organization, a number of persons are working together to achieve a common goal. Their work is closely linked with each other. Therefore, it becomes necessary to bring together the group efforts and harmonise them carefully. Co-ordination will not exist unless efforts are taken to achieve it. Co-ordination is the integration and synchronization of the efforts of a group so as to pro- vide unity of action for organizational goals. It is a hidden force which binds all other functions of management. Definitions: Following are some of the important definitions of co-ordination: 1) McFarland: "Co-ordination is the process whereby an executive develops an orderly pattern of group efforts among his subordinates and secures unity of actions in the pursuit of a common purpose." 2) Henry Fayol: "To co-ordinate is to harmonise all the activities of a concern to facilitate its working and its success." 3) Mooney and Reeley: "Co-ordination is orderly arrangement of group efforts to provide unity of action in the pursuit of common goals." Importance of Co-ordinating: Need for co-ordination arises out of the fact that different elements and efforts of an organization are to be harmonized and unified to achieve the common objectives. Importance of coordination can be discussed as follows: 25 1) Encourages Team Spirit: In organizations, group of individuals work together. There may be existence of conflicts, disputes between individuals, departments and employer and employees regarding organizational policies, roles and responsibilities etc. Coordination arranges the work in such a way that minimum conflicts are raised. It increases the team spirit at work place. 2) Gives Proper Direction: Coordination integrates departmental activities for achieving common goal of the organization. The work is arranged in a very systematic way. The interdependence of departments gives proper direction to the employees. 3) Facilitates Motivation: Coordination motivates the employees to take initiative while completing their assigned task. An effective co-ordination increases efficiency and results into growth and prosperity of the organisation. A prosperous organisation ensures job security, higher income, promotion and incentives. Such monetary and non- monetary incentives provide job security and motivate the employees for hard work. 4) Optimum Utilization of Resources: Managers try to integrate all the resources systematically. It helps in utilizing all available resources at its optimum level. Co-ordination also helps to minimize the wastage of resources and control the cost of work. 5) Achieve Organizational Objectives: Co-ordination leads to minimize the wastages of materials, idle time of employees, delay in completion of targets, departmental disputes etc.to a great extent. It ensures smooth working of the organization in the process of achieving the objectives of the organization. 6) Improves Relation: Co-ordination develops cordial relations between all the levels of management of an organization. Every department depends on functioning of other department. For example, sales department works according to production department, Production department depends on Purchase department and so on. Coordination helps the employees to build strong relations among them and achieve the given targets. 7) Leads to Higher Efficiency: With the help of optimum utilization of resources and effective integration of resources, the organization can achieve high returns in terms of high productivity, high profitability as well as can reduce the cost. Thus, co-ordination leads to higher efficiency. 8) Improves Goodwill: Higher sales and higher profitability can be achieved due to synchronized efforts of organizational people, strong human relations and lower costs. It directly results into creating goodwill for organization in the market. It reflects on market value of shares as well as it helps in building good image in society. 9) Unity of Direction: Different activities are performed by different departments. Coordination harmornizes these activities for achieving common goal of organization. Thus, coordination gives proper direc- tion to all departments of the organization. 26 10) Specialization: All departments of the organization are headed by experts in their respective fields. The specialized knowledge of these departmental heads helps in managerial decisions. It leads organization to march towards growth and success in the competitive world of business. Management cannot bring together the different elements into one harmonious whole without proper coordination among all the members of the group. According to Mary Parker Follett, Co-ordination is the '~Plus-value of the group". 2.2.6 Controlling: Meaning: Controlling function is required in all types of organizations whether profit making or non- profit making. Similarly, it is performed at all levels i.e. top, middle and lower levels of management Controlling is indispensable function of management. The effectiveness of planning function can be determined with the function of controlling. Planning and controlling are major parts of the management cycle. Controlling is a function of comparing the actual performance with the predetermined stand- ard performance. It measures deviation, if any, identifies the causes of deviation and suggests cor- rective measures. The process of controlling helps in formulation of future plans also. Process of controlling : Comparison Measurement and Finding Standards of performace deviations Antainment of Corrective Analysing causes action of deviation Definitions: Following are some of the important definitions of controlling: 1) Koontz and O'Donnell: "Managerial control implies the measurement of accomplishment against the standard and the correction of deviations to assure attainment of objectives according to plans". 2) Dale Henning: "Control is the process of bringing about conformity of performance with planned action." 3) Philip Kotler: "Control is the process of taking steps to bring actual results and desired re- sults closer together." 27 Importance of Controlling: Controlling is important in maintaining standards and to achieve desired goals effectively and efficiently. It is a function of checking the performances of employees at every stage of their work in process. The importance of controlling function in an organization is as follows: 1) Fulfilling Goals of Organization: Controlling is the function of measuring the performances at every possible stage, finding out the deviations, if any; and taking corrective actions according to planned activities for the organization. Thus, it helps in fulfilling the organizational goals. 2) Making Efficient Utilization of Resources: Various techniques are used by managers to reduce wastage of material and spoilage of other resources. Standards are set for every performance. Employees have to follow these standards. As the effect of this, the resources are used by employees in the most efficient and effective manner so as to achieve organizational objectives. 3) Accuracy of Standards: An efficient control system helps management in judging the accuracy of standards whether they are accurate or not. Controlling measures are flexible to some extent. So after reviewing them according to changing circumstances, they are revised from time to time which is bene- ficial for checking performances accurately. 4) Motivates Employee: After setting standards of checking performance, they are communicated to employees in advance. Due to this, employees get an idea about what to do and how to do. Performances are evaluated and on that basis employees are rewarded in the form of increment, bonus, promotion etc. It motivates the employees to perform at their best level. 5) Ensures Order and Discipline: Controlling is the function of order and maintaining discipline. It works for reducing unprofessional behavior of the employees. Discipline is maintened by continuous checking of performances by the superiors and preventive actions are taken to minimize the gap between actual and standards. 6) Facilitates Co-ordination: Control is a function in which the roles and responsibilities of all departmental managers and the subordinates are designed clearly. Coordination between them helps to find out the deviations in their respective departments and to use remedial measure for desired results of the organization. 7) Psychological Pressure: The performances are evaluated with the standard targets. The employees are very well aware that their performance will be evaluated and they will be rewarded accordingly. This psychological pressure works as a motivational factor for empolyees to give their best performance. 8) Ensures Organizational Efficiency and Effectiveness: Factors of control include making managers responsible, motivating them for higher performance and achieving departmental coordination. It ensures about organizational efficiency and effectiveness. 28 9) Builds Good Corporate Image: Controlling function helps to improve the overall performance of the organization. Minimum deviation in predetermined standards and actual performance results into the progress of business. It can be achieved with the help of proper control. This builds good corporate image and brings goodwill for the business. 10) Acts as a Guide: Controlling function provides set of standard performance. Managers as well as subordinates- work according to it. Wherever necessary, they can take the help of these standards and can achieve desired results. Thus, controlling function acts as a guide for everyone. The steps taken for controlling an activity guide the management while planning the future activities. Comparative Study / Dstinguish between. Planning Organizing Staffing Directing Coordinating Controlling 1 Meaning Planning Organising The staffing Directing is Coordination Controlling is the is deciding is the process function the guidance is orderly process of taking in advance of defining pertains inspiration, arrangement steps to bring what to do and grouping to the the leadership of group actual results and how to do it, the activities recruitment, of those men efforts to desired results when to do of the selection, and women provide unity closer together. it and who is enterprise and development, constitute of action in to do it. establishing training and the real case the pursuit of the authority compensation responsibilities common goal. relationships of of among them. subordinate management. managers. 2 Objective To set goals To identify To appoint To direct the To ensure To ensure that and choosing and bring right type of subordinates to harmony of the objectives the means to together all people at the get the things efforts of the are achieved achieve these required right posi- done in the right employees for according to goals. resources. tions and the manner. smooth the plan. right time. functioning of organization. 29  Planning Organizing Staffing Directing Coordinating Controlling 3. Area of function It includes It includes It includes It includes It includes It includes setting identification recruitment, instructing, integration of setting up of objectives by and grouping selection, guiding, efforts of top standards, identifying of activities, training, inspiring, level, middle measurement, the ways of assigning the development communicating level and and attaining the work and and com- and lower level. comparison goal and establishing pensation motivating with actual selecting the the authority of human the human performance best plan. relationship. resources. resources. and taking corrective steps whenever necessary. 4. Factors Internal and Internal and Staffing Directing It is Internal and external external is mostly is concerned harmonization external factors are factors are concerned directly with of human factors are considered in considered in with internal internal factors resources. taken into planning arrangement factors. i.e. human account process. of resources. resources. for taking corrective action. 5. Order It is the It is based on It follows It follows It is an It is an end basic first planning. organizing organising and important function of function of function. staffing for element of management management execution of organizing process. process. planning. which follows planning. 6. Resources Planning is All available It is the It gives direction It is related It is related done as per the resources i.e. process to the employees to human to all requirement men, money, relating to regarding use of resources. organizational and material, organization other resources. resources availability of machine and of human which help resources. method are resources. to achieve arranged in goal of a systematic organization. manner. 30  7. Nature It is continuous It takes It is a This continuous This is a It is the in nature. It place till the continuous process is continuous process which exists in the time all the process as it necessary in process starts once the whole life of resources are deals with the process of related to all actual plan is orgazation. collected and employees achievement of managerial executed. arranged. i.e. human the goals. levels. resources. 8. Level of Management Top Top and Middle level Middle level It is related Top and management is middle level management management to all the middle level concerned with management is related is involved in levels of management planning the s related with with directing the management are activities. organizing recruitment, employees. to achieve responsible the required training and the goal of for controlling resources. selection organization. the activities. Top level is concerned with promotion and