Principles and Practices of Management PDF

PRINCIPLES AND PRACTICES OF MANAGEMENT UNIT 1 BASICS OF MANAGEMENT Objectives After going through this unit, you will be able to: Define the basic concepts of management and organization. State nature and scope and management. Explain various types of ind...

PRINCIPLES AND PRACTICES OF MANAGEMENT UNIT 1 BASICS OF MANAGEMENT Objectives After going through this unit, you will be able to: Define the basic concepts of management and organization. State nature and scope and management. Explain various types of industries and business houses. Structure 1.1 Introduction 1.2 Definitions of Management 1.3 Business Organization and Management 1.4 Nature of Business 1.5 Functions of Business Organization. 1.6 Business Industries 1.7 Factors affecting establishment of Business Organization 1.8 Objectives of Management 1.9 Principles of Management 1.10 Nature of Management 1.11 Levels of Management 1.12 Summary 1.13 Keywords 1.1 INTRODUCTION An organization is a place where people come together, organize and co-ordinate activity to achieve some specific goal. All organizations whether profit making or non-profit making need to manage their business and direct the various efforts, towards a definite purpose. The globalization process opens doors to multi-nationals which increases competitiveness in the market. To manage the business for customer’s satisfaction is the challenge of this 21 st century. This emerging economic environment forces for quick and effective changes in the business organization. To visualize these changes, right people are needed to be appointed in the organization. Right strategically decisions at right time will help to achieve success. Management is a process where resources are put at its proper direction to achieve decided goal. Management is a mechanism that constitutes basic functions for accomplishment of objectives. Management is a science that is based on certain principles and functions. Management is integrating function of organizing human resources, with physical resources for 1|P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT better performance and maximizing productivity with available economic resources. Management is a group activity, where numbers of people come together and their efforts are directed towards common objective. Therefore management is a process where 4 basic factors i.e. men, machines, materials and money, are involved. If these factors are managed strategically, the decided objectives could be achieved successfully. Manager operates himself to get things done with the other people those who are working along with him. Manager is a leader, who motivates people working with formal as well as informal communications, interprets the instructions and supervises and co- ordinates their work. Therefore men are treated as most important factor in the organization. As the Herald Koontz and Cyril O’Donnell say, “Management is the art of getting things done through and with people in formally organized groups.” Here Manager needs to control and co- ordinate the activities in a formal way. For this managers use management principles, tools and techniques which are derived by various management thinkers which are universally accepted. Thus, Management has interdisciplinary approaching terms of economical, sociological, mathematical, psychological aspects. 1.2 DEFINITION OF MANAGEMENT Some Definitions of the term Management are given below – Harold Koontz and Cyril O’Donnell- “Management is the art of getting things done through and with people in formally organized groups. It is the art of creating an environment in which people can perform as individuals and yet co-operate towards the attainment of group goals. It is the art of removing blocks to such performance, a way of optimizing efficiency in reaching goals.” William Spriegel :- “Management is that function of an enterprise which concerns itself with the direction and control of the various activities to attain the business objectives.” George R. Terry :- “Management is a distinct process consisting of planning, organizing, actuating and controlling performance to determine and accomplish the objectives by the use of people and resources.” Dalton Macfarland :- “Management is the process by which managers create, direct, control, maintain and operate their organizations through coordinated, systematic and cooperative human efforts.” 2|P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT Thus, these definitions state that management is a collective activity of a group of people, to reach a specific decided goal or objective. To manage the people is an art. Human mind is a complex element. We need to handle it tactfully, to manage it and direct it for good efforts. So management is the process of getting things done through and with the people. A good leader will coordinate and control activities with cooperative human efforts. It is an art to remove gaps between performances. Various management thinkers have provided tools and principles to solve the problem that arise within the operation and execution level. A good manager will take appropriate decision that would be necessary for the respective situation to carry on the work. Proper and timely decision will prove to be beneficial. Activity 1 Meet one manager or a person who is working as a Team Leader and discuss with him how he manages people working with him? Which tools does he apply to solve their problems? ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ 1.3 BUSINESS ORGANIZATION AND MANAGEMENT Business is an organization where group of people undertake a particular activity to produce goods and services, may be in the form of finished products or services to its customers. Business organized may be profit making business or services providing i.e. non-profit making organization. Profit making organizations could be identified as manufacturing companies, large scale companies, small scale companies, shopping malls, retail stores etc. There are various NGOs working in our community for the upliftment of poor and needy people, with the government support or some large scale companies’ support. Any formal organization established needs to manage its business for accomplishment of its goal. Business organization activities include production and distribution of goods and services. Now a day, government is encouraging students to undertake courses those are providing self- employment. Numbers of vocational courses are started for this purpose. In the self- employment, to start own business, a person should be well equipped with skills and knowledge to conduct business, as well as should be able to manage people to execute the operations of business effectively and efficiently. Therefore along with technical skills, management skills are also needed to be acquired. Right from starting a business to its establishment, one has to co- ordinate human resources with material resources. Forms of Business Houses:- 3|P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT 1. Sole proprietorship: A sole proprietorship is a profit-making business owned by one person. The owner may operate on his or her own or may employ others. The owner of the business has unlimited liability for the debts incurred by the business. 2. Partnership: A partnership is a for-profit business owned by two or more people. In most forms of partnerships, each partner has unlimited liability for the debts incurred by the business. The three typical classifications of partnerships are general partnerships, limited partnerships, and limited liability partnerships. 3. Corporation: A corporation is a limited liability business that has a separate legal personality from its members. Corporations can be either government-owned or privately-owned. Corporations can organize either profit-making or not-profit making institutions. A profit making corporation is owned by shareholders who elect a board of directors to direct the corporation and hire its managerial staff. A profit making corporation can be either privately held or publicly held. 4. Cooperative: Often referred to as a "co-op", a cooperative is a limited liability business that can organize for-profit or not-for-profit. A cooperative differs from a for-profit corporation, in the sense, it has members, as opposed to shareholders, who share decision-making authority. Activity 2 Divide following business houses as per their type of ownership – Tata Motors, Big Bazar, Shaukat Panwala, Srushti co-operative society, Bhagwan and sons Pvt. Ltd., National Kirana Bazar, Reliance Energy, SBI staff consumer cooperative store, Adidas, Microsoft, Gyanba Vegetable store, Ranka Jewelers & Gems, Pantaloon, Shaadi Mubarak from movie Band Baja Barat. Sole proprietorship: __________________________________________________________ Partnership: ________________________________________________________________ Corporation: ________________________________________________________________ Cooperative: ________________________________________________________________ 1.4 NATURE OF BUSINESS 1. Producing goods and services: - Production of goods like cars, scooters, machines, hardware products, cloths etc. or service products like financial products, goods offered by banking or insurance sectors, software products, would be basic activity of respective business organizations. 4|P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT 2. Distribution and exchange of finished products: - Distribution and exchange of goods produced by manufacturing company for profit making activity. 3. Rendering services to needy people as a social responsibility: - In our country, though it is a developing country, there are number of citizens who need support from the society for their upliftment. Various government and private organizations are working for these people. They provide services for the welfare of the community. There are basically three components of a business : 1. Owner: - Owner is a person or a group of persons, who invests capital and takes risk in profit or loss and dividend. He is liable for unlimited debts in the business. He is responsible to prepare objectives, missions to carry over business. Strategically decisions will be taken by the owner. In sole proprietorship a single person or along with his family is treated as owner. Whereas corporate level stakeholders are also owners of a company. They are decision-makers. 2. Employees: - Employee provides his/her services for a particular business and in return he will receive adequate compensation in the form of salary, bonus, allowances, recreational facilities, etc. Employees are treated as executors. Employee, may be in the capacity of a manager, a supervisor, a worker etc., is responsible for execution and implementation of strategies decided by owners. 3. Customers: - Customers are patrons of business enterprise. Customer satisfaction is the sole and prime objective of any enterprise. Customer satisfaction lies with the quality products at reasonable price with adequate and regular supply along with good timely services. 1.5 FUNCTIONS OF BUSINESS ORGANIZATIONS To achieve the objectives of the organization various functions need to be carried out. Those could be grouped as Production, Marketing, Personnel, Finance etc. These functions are inter- related and interdependent. In large organization this activity is generally decentralized whereas in small organization it is a centralized activity. Effective planning, co-ordination, control and execution will ensure smooth functioning of these departments. 1. Production Function: - This is a process where raw material and other resources are put to use. After a process, final product i.e. output will be in the hands. This process is called as production process. Type of product differ as per the type of industry, it may be a manufactured goods or service products. 2. Marketing Function: - Sale of goods produced by production department is undertaken by marketing department. Marketing department is responsible for deciding price of a product. Advertisement, sales promotion through holding any contest or distributing sample copies, market research and taking feedback from consumers for customer 5|P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT satisfaction; are prime activities of marketing department. Marketing person needs to co-ordinate production department as per the feedback received for improvement in the product designed. 3. Personnel Function :- Any organization, though it, is fully equipped with other resources like material, technology, finance etc. without human beings involvement co-ordination among them is not possible. It is a job of management to see whether human needs in terms of work are satisfied. Proper necessary facilities in the working place for men and women have to provide so as to create comfortable working environment. Above mentioned functions are highly dependent on each other. Without production, marketing of products is not possible, whereas marketing department keeps contact with customers through after sales service public relation centers or through market research. Suggestions received from the customers and laymen are forwarded to production department for further improvement. Without human beings no organization could be run efficiently though it is highly technically equipped. Production Department Marketing Department Personnel Fig 1.1 1.6 BUSINESS INDUSTRY 1.6.1 Basic concept A business industry is a comprehensive collection of businesses of different scales, engaged in varied commercial activities for earning a profit. Particular business industries may be classified by the main activity that the businesses are involved in. The size of a business is typically defined by the number of employees and the volume of annual sales. There are two types of industry- Small scale and Large scale industry. A small business is one that is independently owned and managed. In the US, a business is classified as “small” if it 6|P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT employs less than 50 people and “large” if the number of employees is more than 100. In the European Union, the defining numbers stand at 100 and 250, respectively. According to Indian economy, industry is also broadly separated into public sector and private sector, of which major industrial section is generally categorized as private sector. Industries can be classified on the basis of raw materials, size and ownership. 1.6.2 Types of Industries A.) Primary Industries – Primary industries are those which use natural resources as raw material. This involves the extraction of resources directly from the earth or the universe. A.1. Extraction Industry: - In this, it extracts out products from natural resources like earth, sun, water etc. Finished goods of these industries are generally used by other industries as raw material. Industries like agricultural industry, mining industry, fish breeding, animal raring power and electricity generation are treated as primary extraction industries. A.2 Genetic industries: - In this business, industry is carried forward by one generation to next generation. It could be animal breeding and animal husbandry, agriculture industry, milk and milk product, food production and preservation etc. B.) Secondary Industry – B.1 Manufacturing Industry: - They carry our production process with raw material or semi-finished goods to transform into finished products. Most of these industries rely on raw material supplied by primary industry or other small scale industries. Factory production is the outcome of any industry. Basically there are types of manufacturing industry. B.1.1 Analytical Industry – In this basic material is analyzed and separated from raw material to process into finished products. Extracted crude oil from the earth and process it for acquiring finished products like petrol, diesel, gas, kerosene, separating iron from iron ores etc. B.1.2 Synthetic Industry –When two or more materials are mixed together some finished product is formed. Fertilizer producing, cosmetics, soap making, cement creation etc. are some of the examples of synthetic industry. B.1.3 Process Industry – Here raw material is processed by considering analytical or synthetic methods. Sugar factories, Textile industry, Iron and Steel industry are some these examples. B.1.4 Assembly line Industry – Here raw material received from small scale industry or primary industry is assembled in this, for example Automobile industry, making watches, electronic goods like TV, Washing Machines etc. B.2 Construction Industry – Construction of roads, dams, buildings, cannels etc. are included under this type of industries. They need cement, steel and iron, sand, 7|P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT wood etc. as a raw material for construction. Even glass, marble, other decorative stone industries are supportive to the construction industry. C) Tertiary:- Services providing industries are included in this section. C.1 Financial Services –This sector provides services to other manufacturing industries and to the society. Financial products in the form of insurance, deposits, mutual funds, systematic investment plan, etc. are offered to industrial units, as well patrons of the society. Here government and private institutions are established to provide these services. Insurance Companies, Banking sector, Private Financial Institutions comes under this sector. C.2 Educational Services – Basically educational services are treated as noble services, which are imparted for not profit motive. But educational institutes need to be managed properly for qualitative education. Efficient and knowledgeable teachers can only pass on knowledge to next generation. C.3 Information services – This 21st century is called as Information era. There is vast amount of information available in the society. This is most important and tedious task to manage information in a systematic way, so it could be handled effectively. Adequate, relevant and prompt information helps to carry out research. Print and Non-Print medias, Publishing Houses, and now a days internet related institutions are helping to manage these services. C.4 Information and Technology Industry–This is also service rendering industry. This helps, to acquire, process, store and manage data and information with the help of technology like computer software, hardware, programming languages. This processed data is delivered through communication technologies for free of cost sometimes. Database along with hyperlink are providing vast of information across the internet. Information technology along with communication technology is used to develop these services. D. Quaternary Industry – This is an intellectual services providing industry. Research and development work is carried out under this. Research is carried out for the development of human beings. Various research institutes like NCL (National Chemical Laboratory), NEERI (National Environmental Engineering and Research Institute), IARI (Indian Agricultural Research Institute) etc. are some of the research institutes established by the government. Even research and development centers of pharmaceutical companies, automobile industries work throughout on developing new products. 8|P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT Primary Extraction industry Industry Genetic Industry Secondary Manufacturing Industry Industry Construction Industry Financial Services Educational Services Tertiary Industry Information Services Information and Technology Services Quaternary Industry Fig 1.2 1.7 FACTORS AFFECTING ESTABLISHMENT OF BUSINESS ORGANIZATION Following are the factors need to consider while establishing any business organization. 1. Nature of business: - First owner should decide about which business he can undertake. A person will choose a nature of business as per his skills or knowledge acquired. The business activity taken may be trading activity, manufacturing activity or service activity. Trading activity may be sole proprietorship because it is conducted at small scale. Manufacturing business, partnership firm or large scale companies need to establish by offering shares and debentures. 2. Ease of Formation: - The difficulty level to bring a business into existence needs to be analyzed first. Here problems like finding suitable partner or associate for business, business promotion activity, funds rising, liability of business, legal formality, those needs to be consider for establishing business. 3. Sources of Finance – This is an important function to establish any business. Nature of business is always decided on the basis of capacity to raise adequate finance. For small scale a proprietor or partners contribute in the capital, any profit or liability will be their responsibility. But in Large scale companies shares and debentures are issued to a society for capital contribution. Shareholders will be liable for dividend as per the profit earned. 4. Expected Competition – Business is always related with competition which is there in the market. The target consumers are always divided among various traders. 9|P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT Qualitative products and effective after sales service helps to survive in the competitive world. Webster dictionary defines competition in business as "the effort of two or more parties acting independently to secure the business of a third party by offering the most favorable terms". 5. Government Regulations – To establish any firm one need to study and analyze government rules and regulations. Some clauses of a law may differ as per the size of a firm and the type of a ownership. A Company form of organization is subjected to a more regulations by government than other type of firms. 6. Stability and continuity – An owner will first see for stability in the business. With stability good returns on investment, and helps to achieve the objectives. With the stability in the business assures its employees for long term commitment. Employees will prove productive only when they will feel secure about their employment. Even the society is interested in regular and timely supply of goods and services along with satisfaction of customers. Activity 3 Find out at least two business organizations of each type of industry working in our country. Primary Secondary Tertiary Quaternary Extraction Ind. Manufacturing Ind. Financial services related Genetic Ind. Construction Ind. Educational services Information Services Information Technology services 1.8 OBJECTIVES OF MANAGEMENT Goals or objective is a desired future condition that the organization seeks to achieve. Achieving complex and difficult goals requires focus, long-term diligence and effort. Objective is a purpose or the anticipated result that has intrinsic value. Objectives are organizational objectives, social objectives or personal objectives. It can be described as – 1. Organizational Objectives – a. Customer Satisfaction b. Stability and growth of organization. c. Improving goodwill of the organisation. 2. Social Objectives – a. Supply qualitative products and services b. Follow business ethics in business process. c. Upliftment of underdeveloped people through social responsibilities. d. To increase employment opportunities. e. Conservation of environment and natural resources. 10 | P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT 3. Personal Objectives – a. Fair returns for work performed. b. Reasonable working conditions. c. Continuity in employment Activity 4 Frame the objective of your life within next 5 years. Write down steps how you will achieve the decided objective? ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ 1.9 PRINCIPLES OF MANAGEMENT The basic principles of management are profound by Henry Fayol, a French industrialist and the father of modern management. These principles are used for decision making when any manager faces dilemmatic situation. These principles aim at smooth administration of any industry. 1. Division of Work – this principle emphasis on work assignment. Work assigned to every individual will be according to his specialization, skills and knowledge acquired by him. This is applied to all industries irrespective of its scale of business. 2. Authority and Responsibility – Authority and responsibility are the two terms that go hand in hand. Authority without responsibility will increase inefficiency among individuals. To achieve the organizational objective is a basic responsibility of every person working within. To handle this responsibility, authority limits are allotted as per the position. 3. Discipline - It is an essential activity of any efficient organization. Discipline means to instruct a person to follow a particular code of conduct or order. Discipline means an activity, exercise or a regimen that develops or improves a skill through training. Therefore if everyone observes this principle, it would affect productivity of employees. 4. Unity of Command –This principle deals with only one boss for each employee. There should be one supervisor or manager for each employee. If a person’s receives two or more instructions to follow, he would get confused. Thus may results in conflicts and therefore may reduce his efficiency. 5. Unity of Directions – A one common plan should be followed for all to achieve the objectives. Alternative plans, if implemented, may lead to confusions. Therefore there should be one instruction at a time to employees. 11 | P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT 6. Centralization - Centralization and decentralization of activities is depending upon the scale and nature of organization. 7. Subordination of individual interest to general interest – When a person joins any enterprise he gets bound by its environment. For this, every individual’s interest would depend on organizational goals. A manager is responsible to encourage everyone to perform his duties towards implementation of plans. 8. Remuneration – Remuneration is the cost paid to every individual working for the enterprise, for the services he is rendering towards an organization. Without fair wages or salary nobody would prove production. 9. Scalar chain – This refers to the a hierarchy of authority and command that need to maintain for smooth communication. Proper hierarchy provides proper direction to give instructions from higher authority to lower level. 10. Order – This principle states that every individual working with organization should be placed at its proper place and every place in the organization should be filled with proper employee. 11. Equity – It deals with justice and humanistic approach to every employee. If this principle is applied properly by the manager, any enterprise can enjoy success. If this problem is handled properly,, relations between workers as well with management can be maintained. For this, manager who possess emotional intelligence and experience, can handle it successfully. 12. Stability of tenure of personnel – This principle deals with stability and continuity. If employee knows that his services will be appreciated in the future with good returns, then that person will prove to be productive. He will take more interest in his work and perform better up to his maximum capacity. But if there is no assures of security he loses his interest of work. This may result in searching other job opportunity. This situation increase attrition in the organization. 13. Initiative – The principle of initiative refers to the ability and quality of manager to think and execute a plan. A manager is responsible for encouraging others for better performance. Leonardo Da Vinci said “Knowing is not enough; we must apply. Being willing is not enough; we must do." As per this quote a good manager will apply his knowledge and encourage others to apply and be innovative in their work. 14. Esprit de Corps – Here the sense of belongingness, unity and team spirit among employees of the organization has to be encouraged to receive maximum output. All successful organizations survive only when there is spirit of unity and team work. For this, managers must create a culture and environment with the help of above mentioned other principles, like equality, stability, specific industrial goals, putting right person at a right place, etc. 12 | P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT 1.10 NATURE OF MANAGEMENT A. Management as an art Art is nothing but the application of principles. Art refers to creative skills and talents to achieve the goal. As Harold Koontz and other management thinkers say “Management is the art of getting things done through people.” The human psychology is complicated; need to divert it for qualitative productivity, one needs to manage it properly. As Webster’s Dictionary say “Art is skill in conducting human activity.” Henry Mintzberg is probably the most well-known and prominent advocate of the school of thought, that management is an art. He is an academic researcher, whose work capturing the actual daily tasks of real managers was ground breaking research for its time. Mintzberg, through his observation of actual managers in their daily work, determined that managers did not sit at their desks, thinking, evaluating, and deciding all day long, working for long, uninterrupted time periods. He also determined that mangers are engaged in very fragmented work, with constant interruptions and rare opportunities to quietly consider managerial issues. Peter Drucker, a well-known management scholar, is best known for developing ideas related to total quality management. He terms management "a liberal art," claiming that it is so because it deals with the fundamentals of knowledge, wisdom, and leadership, but because it is also concerned with practice and application. Drucker argues that the management attempts to create a paradigm for managers, in which facts are established, and exceptions to these facts could be ignored just because of irregularities. He criticized assumptions that make up the management paradigm, because these assumptions change over time as the society and the business environment change. Thus, management is more of an art, because scientific "facts" do not remain stable over the time. Frederick W. Taylor's, a father of Scientific Management described management an art as - 1. Managers must study the way their workers perform their tasks and understand the job knowledge (formal and informal) workers have, and then find ways to improve how tasks are performed. 2. Managers must codify new methods of performing tasks into written work rules and standard operating procedures. 3. Managers should hire workers who have skills and abilities needed for the tasks to be completed, and should train them to perform the tasks according to the established procedures. 4. Managers must establish a level of performance for the task that is acceptable and fair and should link it to a pay system that rewards the workers who perform above the acceptable level. B. Management as a Science 13 | P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT Webster’s College Dictionary defines science as "any skill or technique that reflects a precise application of facts or a principle." Therefore science is a systematic body of knowledge which could be applied derives facts and based on certain principles which are capable of verification that is universally accepted. Science faculty is divided into two criteria’s – 1. Basic & Pure Science 2. Social Science. Physics, Chemistry, Biology, Electronics, Mathematics, and Information Technology are some of the branches of Pure Science. These subjects are based on accurate principles. If it is applied the output will be the same universally everywhere. Where as in Social Science it is based on certain principles but output may very according to situation, as it is mostly related with human psychology. Management is a branch of Social Science faculty. F. W. Taylor is known as father of scientific management. He emphasis, his studies in “efficiency in work for better productivity”. For this he laid down certain fundamentals such as accuracy in work, trained person at right place etc. He told decentralization of task is more important. Henry Fayol contributed to management studies with basic principles of management and the “Functional Approach”. He divided all industrial activities into six groups. These activities are important though the organization is small or large scale. Peter Drucker introduced a concept MBO, Management by Objectives which is further modified by Schleh as ‘Management by results.’ W. Edward Deming derived a statistical approach to management with the concept Kaizen. It deals with standardization of operations and activities through Deming cycle, Shewhart cycle, PDCA techniques to meet requirements and increase productivity. TQM technique is a management approach for quality improvement. This approach came from the teachings of such quality leaders as Philip B. Crosby, W. Edwards Deming, Armand V. Feigenbaum, Kaoru Ishikawa and Joseph M. Juran. This is based on approach “the customer is always right.”To satisfy this approach, Taguchi Technique has been built by Japanese engineer Genichi Taguchi which is built on basic idea to remove the effects of adverse conditions instead of removing causes. In 1986 Motorola, USA, has developed business strategy ‘Six Sigma’ that seeks to improve the quality of output by identifying and removing the causes of defects and minimizing variability in manufacturing and business processes. Motivational Theories i.e. Maslow’s Need Hierarchy Theory, Herzberg’s Two-Factor Theory McGregor’s Theory X and Theory Y, Victor Vroom’s Expectancy theory are some techniques pioneer in management faculty. 14 | P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT All such techniques developed by management practitioner and thinkers supports that management can be regarded as a science faculty. Management is a process of systematic collection and processing of information for decision making. The processed data is then analyzed and then managers by using their judgment, experience and techniques takes a decision. C. Management as a Profession Webster’s Dictionary of English Language defines profession as, “that occupation requiring specialized knowledge and academic training”. Therefore profession involves some branch of advanced learning or skills. This knowledge is applied as a solution to many problems, takes decisions and executes the plans to achieve decided goal. Thus knowledge of management and a manager, as a working profile, is treated as a high class profession. Characteristics of Profession 1. Systematic body of knowledge – When any occupation is based on the expert knowledge is treated as profession. Expert knowledge possesses principles or techniques, methods of knowledge. This knowledge can be applied to process, execute, and carry the operation of any enterprise. 2. Universal Acceptance –In profession universally accepted theories, principles and techniques are applied for practical working. Methods and principles evolved by management thinkers are universally accepted and are used to base as solution to dilemma. 3. Formal Education – A systematic body of knowledge when acquired through formal education, it can be treated as a profession. Theoretical knowledge supported by short term practical training of management is imparted from recognized institutes in India as well throughout the world. 4. Specialization – Professionals may specialize in a particular field like engineers. As engineers possess specialized knowledge in the field of electronics, information technology, mechanics etc, as even managers can choose their specialization as per the interest area like finance, marketing, personnel etc. 5. Code of conduct – Any good profession is always guided by a code of conduct. A manager has to follow professional business ethics, while executing his responsibilities. 6. Independent Office – Many professionals work from their independent office. Some management professionals work as a consultant and practice independently. Their services are hired by other organizations. 7. Fees – Professionals charge fees in the form of consultancy fees or remuneration for the services offered by them, as this management consultant charge fees as against consultancy provided to their clients. 15 | P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT 8. Social Responsibility – Professionals are liable to the society. Their work is regarded as vital to society. 9. Work Autonomy - Professionals are autonomous as they can make independent judgments about their work. A professional enjoys freedom to exercise their professional judgment. Even managers enjoys freedom in practicing their knowledge and can make new experiments. 10. Status – Professionals enjoy high prestige and good rewards. Specialized technical knowledge always gains status in the society. As Managers are treated as skilled workers they receive prestige and status for their profession. According to some management thinkers managers are treated as professionals and management is a high class profession. Activity 4 List out various occupations those are accepted as profession. Select any professional person other than manager. Check how his/her work profile could be treated as profession with the help of above characteristics. ___________________________________________________________________________ ___________________________________________________________________________ 1.11 LEVELS OF MANAGEMENT According to the principles of division of work, job is divided among employees as per individual’s caliber. Therefore there will be many managerial positions irrespective of the scale of an organization. Positions in the organization are marked by authority, responsibility, functions and roles etc. Job profile varies as per the position varies in the organization. Thus managerial positions are classified as per the work profile and responsibilities allotted. A demarcation is drawn to decide the level of these positions. Levels of management consist of various managerial positions in the structure of an organization. It may differ from one organization to another, size of organization or as per the span of control. The level of management decides the role play, contribution and authority and responsibility of that position. Therefore in the levels authority along with responsibility increases as the person moves upward. Levels of management are broadly classified as- 1. Top Level Management 2. Middle level Management 3. Lower-Level Management 16 | P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT Owners Shareholders Top Level Directors Professionals SKilled and Intellectual Employees Middle Level Operational level Employees Lower Level Semi-skilled or Unskilled Labours Fig 1.3 1. Top Level Management – Individuals those are involved in decision making process are regarded as Top Level Managers. They are mainly responsible for drafting strategic decisions and framing objectives and goals of an organization. Generally owners are incorporated in top level. Owners along with their family members or in case of corporate companies’ representatives of shareholders, CEO’s, directors and chief executives are also treated as decision makers. These groups are responsible for entire management of the organization and responsible for the activities carried out within the enterprise. They are answerable to the owners about the current position. Activities carried out by top level Managers – 1. Frame Mission, Vision and Objective statements of an organization. 2. Plan out the strategies to achieve the objectives decided. 3. Prepare long term, short term, departmental planning to support the strategies. 4. Financial matters will be controlled by these managers. 5. Managers are involved in innovating new products and encourage others for the same. 6. They are responsible for controlling and co-coordinating activities within various departments. 7. They appoint right executives at right place. 8. They will keep a watch on organizational structure and can suggest modifications if required. 9. They take decision for the alternate plans for any dilemma. 10. They calculate share of profit or dividend to distribute among owners of the enterprise. 11. They are completely responsible for stability, growth and expansion of an organization. 17 | P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT 12. They are leaders of an organization. 2. Middle Level Manager Employees who are responsible for execution of policies are Middle Level Managers, therefore they are also called as Executives. Project planning is mainly done by these employees. They collect information, process it and forward it to top level executives for final decision. Their suggestions and participation could be welcome by top managers. Generally Departmental Managers, Deputy managers, Foreman, Administrative managers etc. are middle level managers. They need to follow following functions as an executive – 1. To decide departmental goals to support organizational goals. 2. Work out plans and strategies to carry out those goals. 3. They are responsible for suggestions and recommendations to their managers for constant improvement in the enterprise. 4. They guide and direct the work of their subordinates. 5. They are responsible to carry out functions like performance appraisal, arranging training and development activity, for their subordinates. 6. They act as a spokesperson between top level managers and lower level managers and bridge the gap in communication. Instructions received by top level are communicated to the subordinates while any suggestions received by junior managers are passed on to directors. 7. They motivate and encourage lower level managers for better performance. 8. Their responsibilities and authorities are limited as compared to director level managers. 9. They will directly report to the top managers. 3. Lower Level Manager – Lower level managers are also known as First line or Supervisory managers. They help workers to carry out day to day functioning of workers. Though these managers does not set goals, they have strong influence on the organization. If a manager performs poorly, workers may lack to prove productive. 1. They are responsible to manage and carry out day to day activity i.e. basic enterprises functioning. 2. To encourage and motivate flower workers and other employees. 3. Prepare plans to carry out the operation of enterprise. 4. To look into day to day problems of workers and helps to solve those as per their capacity. 5. They are responsible for quality and quantity of production. 6. They are responsible to provide on the job training to workers. 7. They receive various grievances and they communicate those to top management. 8. Make an arrangement and provide all required resources for production. 9. Ensure discipline and safety of workers within the premises. 10. They supervise and guide workers. 11. They report day to day activity to higher level managers. 18 | P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT 1.12 SUMMARY Management is an activity of organizing and coordinating people with resources, process and technology. Management is often included as a factor of production along with machines, materials, and money. While managing one, need they keep the end result in mind i.e. decided the goal or objectives decided. To achieve the objectives, manager directs controls and coordinates the activities. To process functions like production, marketing and controlling financial aspect and personnel in the organization is main task of any organization. According to management guru, Peter Drucker basic tasks of management are marketing and innovation. These functions are divided among personnel available according to their capacity and skill they acquire. Accordingly they serve for certain designation. Though the nature and type of industry may vary, the basic managerial activities will be same, though the organization is formal or informal. Principles and other management theories support this discipline to adopt as a profession but still some experts say that to manage is an art while according to other contributors it is science also. 1.13 KEYWORDS 1. NGO – Non-government-organization, those who work for the community or society on no profit- no loss basis. 2. Strategically – something important in plan of action 3. Globalization – Growth to global or worldwide scale 4. Anticipate – To fee or realize beforehand 5. Conserve – To use carefully by avoiding waste 19 | P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT UNIT 2 MANAGING ORGANIZATION Objectives After going through this unit, you will be able to: Describe different activities that are processed with control mechanism. Enumerate different managerial skills and roles that require managing the organization. Elaborate how it is necessary to manage business in changing environment. Explain responses to social gratitude. Structure 2.1 Introduction 2.2 Management as a process 2.3 Management as an activity 2.4 Management as a discipline 2.5 Managerial skills 2.6 Managerial roles 2.7 Categories of Managerial roles 2.8 Social Responsibility 2.9 Managing Change 2.10 Factors affecting Change 2.11 Process to overcome the loopholes for change 2.12 Tools used to cope up with change process 2.13 Keywords 2.14 Summary 1|Page  PRINCIPLES AND PRACTICES OF MANAGEMENT 2.1 INTRODUCTION T. N. Suening and John M. Ivancevich described productivity as “The relationship between real inputs and real outputs, a measure of how well resources are combined and utilized to produce a result desired by management”. An organization is a formal system. According to them productivity and efficiency works in inverse proportion. Improvement in efficiency does not necessarily mean greater productivity. Organization of all activities must be concerned about the productivity. In these circumstances, manager needs to perform, manage, and coordinate all management functions at his best. To manage any organization, proper division and decentralization of activities helps for smooth coordination and control. To adopt a particular system is depend on size and complexity of an organization. Increase in size leads to specialization of the management process. For this specialized process and activities are categorized among different managers. For this, different management levels are created like top level, middle level and front line managers. Top level managers will built up team for overall set up of an organization and formulate organizational mission statements. First line or an operational level manager, who actually operates the execution of plans, will direct and get guidance from middle level managers. Middle level manager controls and coordinates his subordinates for execution of plans. The amount of time and effort given for planning and organizing the activities are usually equal at all levels of management. This horizontal specialization makes management process specialized. A functional manager, who is responsible for short term planning, works under horizontal specialized organization system. Managers are organizational members who are responsible for the work performance of other organizational members. Managers have formal authority to use organizational resources and to make decisions. 2.2 MANAGEMENT AS A PROCESS Managing the process involves determining what work is needed to accomplish the goal, assigning the tasks to individuals, and placing individuals in a decision-making framework. The end result of the managing process is an organization. As George R. Terry said “Management is 2|Page  PRINCIPLES AND PRACTICES OF MANAGEMENT a distinct process consisting of planning, organizing, actuating and controlling, performed to determine and accomplish stated objective by the use of human beings and other resources”. Management is an integrating process. It is an activity to bring together human physical and financial resources to achieve organizational goals. It helps to bring harmony between various functions for smooth working. Management is a continuous process. It is concerned with constantly identifying a problem and solving them by undertaking suitable plans and alternatives. As Theo Haimann said “Management is the sum total of all processes including planning, direction, control and organization”. It is the process of decision-making and control over the actions of human beings for the express purpose. It is a process of directing men to perform better. Process management is the application of knowledge, skills, tools, techniques and systems to define, visualize, measure, control, report and improve processes with the goal to meet customer requirements profitably. Management is treated as social activity also it is completely depends upon the human factor. Management is concerned with developing human relations with certain goals and objectives. It is a process of human interaction, make them productive and useful. 2.3 MANAGEMENT AS AN ACTIVITY Management is a process of organized activity. As Joseph Massie said, Management is the process by which actions are directed by a cooperative group for achieving common goals. It is a process of coordinating its resources like finance, people and raw material effectively for production. Managing people, money, material and machinery is the base of organizing any industry. It consists of achieving the business objective, putting the resources into operation and periodical checking of their performance to ensure productivity. Management is a purposeful activity. It is mainly concerned with setting up of objectives and achieving those through its functions like planning, organizing, staffing, directing, controlling. Management is a team activity. It is concerned with the efforts of a group. Lawrence Apply, a management expert, said that management is concerned management of people and not the things. It is a process of motivating people to work hard. Directing men to perform work, authority to extract work from others is implied in the process of management. Any enterprise can progress when management accepts social change and introduces innovative methodology. 3|Page  PRINCIPLES AND PRACTICES OF MANAGEMENT Management is a abstract concept. The quality of the organization and management could be seen with increased productivity and knowledge and skills of the subordinates. A management guru Peter Drucker defines management as “an economic organ of industrial society, this is an activity to make the desired result”. 2.4 MANAGEMENT AS A DISCIPLINE Managers organize the enterprise and they are responsible for success or failure. They need to control, direct and coordinate the activities. Management is now recognized and universally accepted as a discipline, a branch of knowledge. It has code of conduct, methods and techniques to solve the problems. A person appointed as a manager completes his education by obtaining degree in the subject management. Various management thinkers or gurus evaluated theories and principles, their contributions are universally accepted. An innovation took place with new concepts and methods specifically after World War II. Japan’s progress after world war has set an example with new concepts like Kaizen, Six Sigma etc. Activity 1– Find out how textile organization is being managed. What are its activities, how does it process, what are its inputs and outputs. 2.5 MANAGERIAL SKILLS Skill is an inborn or developed ability by learning or practicing. According to Oxford Dictionary the definition is “Skill is expertness, practiced ability, facility in an action”. Skill is an ability or proficiency that a person possesses that permits him or her to perform a particular task. Basic skills like reading, writing, logical and critical thinking are used for efficient learning strategies. Skill helps to distinguish between essential and non-essential information and improves the decision making skill to take necessary actions. Listening and communication skill removes the misconduct and error in process. Managers of any level must possess and develops many critical skills. Different skills have been suggested in performing managerial roles. 4|Page  PRINCIPLES AND PRACTICES OF MANAGEMENT Table 2.1 Type of skill Ability Technical Skill Acquires subject related knowledge and information Digital Skill Can operate digital know-how, communication systems etc. Analytical skill Able to handle problems with technical and scientific methods Conceptual skill Understanding organization as a whole Decisional Skill Ability to take quick and effective decisions Interpersonal Skill Treat organization as a family and try to keep everyone together Communication skill Precise speaking, good listening, proper understanding Political skill Negotiate for betterment of an organization 1. Technical skill – When a person possesses / acquired information and knowledge that will would be considered proficiency at workplace. Technical skill required at each level would be different. First-level managers may engage in the actual operations of the organization; they need to have an understanding of how production and service occur in the organization in order to direct and evaluate line employees. Additionally, first-line managers need skill in scheduling workers and preparing budgets. Middle managers use more technical skills related to planning and organizing, and top managers need to have skill to understand the complex financial workings of the organization. 2. Digital Skills – At least conceptual understanding of computers, telecommunication systems, and technical know-how has to be there. Now a day to use digital technology is the basic aspect of any job. Digital technology helps to collect relevant information, prepare plans, financial analysis, analyses resource requirements, analysis of data collected through research, for production control, etc. Computer is especially helpful tool for decision making. Various communication technologies, computer applications and software packages help to carry out day to day transactions. Software enables managers to manipulate data and perform as per the individual requirement. Some managers use technology for self-improvement and there upon improving managerial performance. 5|Page  PRINCIPLES AND PRACTICES OF MANAGEMENT 3. Analytical skills – This is the ability to identify key factors and understand how they can be interrelating and roles they play in a particular situation. Analytical skill involves using scientific approaches or techniques to solve the problems. Managers will identify the base of problem and develop plans of action to solve those. Analytical skill involves managers to think multiple alternatives in a complexity. Analytical skill means that you are able to solve complex problems using visualization and logical thinking. To develop the analytical thinking one has to develop his observation capacity, able to judge through relevant criteria, should be able to apply techniques and methods to judge properly. If a manager can frame a problem statement properly it helps to handle critical situation. Analytical skill encourages creative thinking. To think out of the box is a need today. Productivity increases with analytical and creative thinking. 4. Conceptual Skill – Conceptual skill is a manager's ability to see the organization as a whole, as a complete entity. It involves understanding how organizational units work together and how the organization fits into its competitive environment. Conceptual skill is crucial for top managers, whose ability to visualize future can have major effects on the success of the business. They stress on how each department of the organization gets interrelated with organizational goals. The success of business depends upon leadership. Any organization can achieve success with the visionary leadership. Successful company can visualize immediate customers demand and market conditions. However, conceptual skill is still necessary for middle and supervisory managers, who must use this skill to envision, for example, how work units and teams are best organized. 5. Decision making skill – Proper decision will affect the condition of the organization. Manager’s ability to make decisions will reflect the quality of effectiveness in working. An individual’s decision making skill is influenced by his/her analytical and conceptual skill. If one can make timely, well considered decisions, then he/she can lead his/her team to well-deserved success. Poor decisions will prove an individual’s leadership brutally short. Improper decisions will lead the failure. For proper decision making an individual needs to direct him/her and others towards objectives of the organization. 6. Interpersonal skill – Managers accomplish work through and with the people. Their ability to interact with 6|Page  PRINCIPLES AND PRACTICES OF MANAGEMENT his/her subordinates, understand others, to communicate with subordinates as well immediate or top management people is important. Interpersonal skill is important at every level of management. Managers who have excellent technical skill, but poor interpersonal skill are unlikely to succeed in their jobs. This skill is critical at all levels of management. Their ability to encourage subordinates motivates them to work at their best and to make to be innovative will prove their effectiveness. Here formal as well as informal interaction is also necessary. 7. Communication skills – Communication may be formal or informal, written or oral, is an important element for effective managerial performance. Communications skills involve the ability to communicate in ways that people understand and receive feedback that they understood, what is communicated. Good manager need to possess excellent reading, writing, speaking and listening capacity for good communication. Communication is necessary for team work as well as working with diverse population. A person having analytical skills with good communication skills can clutch change in the environment and could adapt it with positive attitude. 8. Political Skills – This is an ability to influence all those are associated with the person, immediate managers or subordinates. Political skill exists in just about every organization—and the people most successful at utilizing this skill often have the best reputations among their colleagues. Political skill involves obtaining power and preventing other employees from taking away one's power. Managers use power to achieve organizational objectives, and this skill can often reach goals with less effort than others who lack political skill.. Managers at all levels require political skill; managers must avoid others taking control that they should have in their work positions. Activity 2 Approach nearest Shopping Centre (may be small scale or large scale, but consist of staff more than 5 persons). Meet the chief manager of it and discuss how he manages his skills to organize the people working with him in different situations. 7|Page  PRINCIPLES AND PRACTICES OF MANAGEMENT Activity 3 In your day to day life, if you come across some problem, how different skills will help you to handle that situation. 2.6 MANAGERIAL ROLES Managers of all levels need to perform different managerial roles for smooth functioning of work as per the plans and objectives. Managerial roles are sets of behavior that belong to the manager’s job. Managers are typically responsible for: Establishing, prioritizing and making sure that objectives are met. Establishing a framework for communications, and patterns of work within their area of responsibility. Communicating targets, goals and results to people that work for them. Motivating employees. Setting out the administrative arrangements for their area of responsibility. Creating, monitoring, and making sure that budgets are achieved. 8|Page  PRINCIPLES AND PRACTICES OF MANAGEMENT 2.7 CATEGORIES OF MANAGERIAL ROLES A researcher Henry Mintzberg has studied different managerial traits and he determined ten different managerial roles. These are classified in three broad categories i.e. interpersonal roles, informational roles and decisional roles. INTERPERSONAL INFORMATIONAL ROLES ROLE *Monitor Role *figurehead Role *Disseminator role * Leader Role *Spokesperson *Liaison Role Rolle DECISIONAL ROLES *Entreprenuer Role *Disturbance Handler Role *Resource Allocator Role *Negotiator Role Fig 2.1 1. Interpersonal roles – A manager needs to perform above roles due to formal authorities. These roles expect to provide leadership, to be a figurehead, being a liaison within the company. A. Figurehead Role - When a manager is responsible for social, inspirational, legal and ceremonial obligations he is said to perform as Figurehead role. Here manager performs his role as a symbol of status and authority. The figurehead role is routine, with sometime informal communication and interact people due to important title he holds. But its importance should not be overlooked. A principal attending peon’s daughter’s marriage, Managing director visiting his subordinate who has met with an accident, A section officer welcome his new team, a chief chef take feedback from customer about a new dish 9|Page  PRINCIPLES AND PRACTICES OF MANAGEMENT that he has introduced; these are some examples of how a manager manages his figurehead role. This informal relation is necessary for smooth functioning of formal organization. B. Leadership roles – This role involves directing, coordinating, and controlling subordinates. This includes activities like staffing, motivating, training etc. of his/her subordinates. He encourages people working along with him for better results as well for inventions. He is responsible for deciding targets for each person. He prepares the job profile for each table and he evaluates employee’s performance accordingly. He controls / directs the activities and keeps eye on whether activities are directed and executed according to plan. A good leader brings success to an organization. C. Liaison role - Liaising interaction is a means of communication between different groups or units of an organization. A manager performs a role as a liaising person to collect the information with formal as well as informal contacts from inside or outside the organization. He needs to keep a contact with all those who are related with, from whom he is receiving work, other resources as inputs and forwarding output for next process. Production manager has a talk with inventory officer for inventory records or placing an order for next week at the same time discusses with marketing manager about feedback from customers. Committee head, for conducting Academic Programs of a management institute collects the information about guest to whom he/she can invite as a speaker in the seminars. The liaison role enables a manager to develop a network for obtaining external information which can be useful for completing current and future work activities. 2. Informational roles – Informational roles are those in which managers obtain and transmit information. These roles have changed dramatically as technology has improved. Monitor, disseminator, and spokesperson are the three informational roles that a manager performs. Monitor Role – Manager keeps a watch and constantly scans the global environment for change situation. He identifies opportunities and threats in the changing environment. If a manager proactively prepares for problems that may in future is able to be a successor 10 | P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT in the competitive world. Network of contacts that has been established through the interpersonal roles helps in this. Information gathered through informal meeting or attending any party, business related newspapers or periodicals reading help manager to collect external information. A. Disseminator role – Manager evaluates information collected through monitor role. Evaluated information then disseminated to the concerned employee for further process. This information may be disseminated to subordinates, peers, or superiors in the organization. Any finance manager comes to know about new technology that speeds up the production process, this concept he discusses with production manager. A neurologist will discuss with orthopedic surgeon about a surgery of a particular patient who is met with an accident after examining him through various tests and blood checkups. B. Spokesperson role – This role serves in a Public Relation capacity by informing and lobbying others to keep key stakeholders updated about the operations of the organization. He speaks on behalf of the work unit to people inside or outside the organization. A manager discusses about the scheme with in open meeting with shareholders. Guest Lecture is arranged by a Management institute under Industry-Institute Relation where marketing manager informs students about career development planning in marketing. When a manager discuss about company related legal issues with government official, or a Bank Manager attending court hearing for which they have filled a suit against their client for non-payment of loan. 3. Decisional roles – After gathering information through interpersonal relationships it is time to take decisions for the process. Decisional roles require managers to plan strategy and 11 | P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT utilize resources. Decisional roles are of four types – i.e. entrepreneurial role, disturbance handler role, resource allocator role and negotiator role. A. Entrepreneurial Role – Here manager assigns resources to develop innovative goods and services, or to expand a business. Most of these roles are held by top-level managers, although middle managers may be given some ability to make such decisions. Entrepreneurial role is considered to be an initiator role. A businessman, who establishes his business with new concept in the market like managing an event, manufacturing a machine that would help food industry to produce food products with speed, hygiene and low cost. Even managers encourage their workers to come up with new ideas that could be implemented for better productivity. B. Disturbance handler role – On the basis of information gathered about changing environment he is a person who initiates respond that change. In this, manager handles crises situation that may disturb the day to day functioning. Here decisional role plays very important role as priority over other roles. Due to the flood in the region, supplier may not be able to supply wood logs, which may affect production to slow down within a few days, here a manager takes decision to contact other supplier or close down one shift of production, two guest lecturers are invited as guest speaker in the conference and one person got stuck up due to flight has been cancelled due to bad weather. C. Resource Allocator Role – Manager is performed to be resource allocator role when he decides to whom and quantity of resources to be distributed. Resources could be input material, money, manpower, information or technology. Even regular time schedule along with overtime schedule, will be decided by a manager. Proper distribution and maximum utilization of resources, though there is scarcity of resources is important. Human resource manager and Marketing manager decide in a meeting how many sales managers are necessary to launch a new product. A supervisor sees whether particular production could be finished in part time schedule or need to take overtime shifts or in a regular shift. 12 | P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT D. Negotiator Role - Manager negotiates with other units and individuals for the departments’s benefits.. The process of negotiation is possible only when an individual has the authority to commit organizational resources. A librarian can ask for maximum facility Library software package for daily transactions and other utilities instead of integrated menu in overall Administration package. A Head clerk will demand networking system within office. Activity 4 Write down, as a family member which roles you are performing (besides just to be a good daughter or a son) in different situations. 2.8 SOCIAL RESPONSIBILITY Kathryn Anastos, described social responsibility as “Our responsibility as privileged human beings is to pay back for the opportunities we've received”. Business as an economic agent of the society, it must use its economic power to protect and promote social values, divert at part of financial benefit for the public interest. Even they should ensure effective use of available resources of our country. Fair transaction and transparency increase the goodwill of an organization. Society allows and supports business existence, in return business is obliged to repay by sharing the profit i.e. various large size business houses established own NGO like organization to serve community with education, health program, clean environment etc. There are basically four components of business customers, employees, legal and governmental sectors and community. It is managers of an organization who are responsible to fulfill the interest of all those who are related with above components. 13 | P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT Owners Competitors Customers Business Organisation Supplier Employees Society Government Fig 2.2 A. Customers – Satisfaction of customer requirements is the broadest meaning of social responsibility. Production by anticipation, pro-activeness and as per the market expectations reflects the firm’s social nature. 1 Quality product with reasonable price and in sufficient quantity is the basic responsibility towards customers. 2 Management is expected to provide prompt and adequate service as well ensures cordial relations. 3 Keep open space for any suggestions and feedback, reply to feedback received from the customer is expected. B. Employees/ Workers – Employees are the backbones of the any organization. Productivity of enterprise depends upon ability and production of workers employed. Proper give and take process leads to the higher productivity. 2 1 Appoint suitable persons for each job. 3 Provide training, education, conducting workshops to develop knowledge and skills. 4 Provide security and proper working environment within the organization. 14 | P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT 5 Fair wages and other fringe benefits. 6 Right to held Trade Union. 7 Accept any suggestions or innovations any. 8 Proper rewarding and promotional system. 9 Provide all required resources along with moral support for smooth functioning. C. Competitors – Competitors are the businessman those are dealing in the same business. Innovations, profit rise, increase in research and development activities would be the outcome of healthy competition. Healthy competition is possible with the sense of social obligations. 1. Reasonable prices and reasonable discounts should be offered in compare with competitors. 2. Do not use competitor’s Strategies. 3. False or ambiguous advertisement should not be framed. D. Suppliers - Any business organization needs to deal with number of suppliers from whom they receive raw material or other resources. Large scale business depends upon small scale businesses. Small scale produces small machine tools those are used as raw material for large scale businesses. 1. Placing an order with appropriate duration. 2. Payment of dues in time. 3. Dealing with fair terms and conditions. E. Legal Aspect of Social Responsibility – government through its legal functioning, rules and regulations allows an industry to establish and survives for a longer period. Government directs as well as controls the functioning of any organization. 1. It is necessary to follow all the rules and regulations laid down by the government. 2. Pay all taxes in time. 3. Maintain transparency in the transactions. 4. Discourage corruption or any malpractices within or outside of the organization. F. Towards Society- When it is accepted that any business organization is a part of society, it involves social obligation behavior. To create and maintain social values within the locality it operates. With the increase in global warming, many corporate houses, built up their ecofriendly premises. 15 | P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT 1. Support community with education to children and illiterate people, encourage and support workers to provide education to their children. 2. Undertake health related training programs for that particular locality. 3. Some corporate houses adopted a village. They support for their complete growth. 4. Any business is accountable to society for ecological or environmental problems. 5. Prevent from air, water, noise or land pollution. 2.9 MANAGING CHANGE IN GLOBAL ENVIRONMENT Due to Increase in the international competition forces organizations to relook at their strategies and abilities for success. The international trade business takes place between two or more countries for number of products, goods and services. When a country buys goods and services from other country is said as importing products, when it sells produced in our country to other nation is said as exporting products. Our country is importing products like electronic products like digital phones, cameras, televisions etc.; steel, various automobiles, food grains etc. And exporting goods such as clothing, information technology packages, iron ore, food grains etc. Change is a law of nature. Due to the law of change the ape man has been changed, developed him to cope up with this era of information technology. Change is a significant feature of modern environment. Business organization also needs to undergo change to improve quality, performance and stand with others organization in the competition. Organizational change goes through several phases. Everyone working with the organization, and internal and external elements contribute to the phases of change. Change has become a significant feature of modern environment. Organizational change is described as “one which ultimately affects the pattern of work and/or relationships within the organization. 16 | P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT 2.10 FACTORS AFFECTING CHANGE Any organization which may be engineering, manufacturing, service provider, academic or social organization, has faced dynamic and changing environment. The managers need to handle this situation. Stephen Robbins explained six specific forces, which stimulate for change. Every organization needs to adjust to a multicultural and multinational environment. Policies and practices related to human resources need to change for attracting and at the time reducing employee turnover by introducing Diverse Workforce. Therefore many companies spend large amount on training, knowledge up gradation, keeping employees updated with computer skills and developing other skills. Changing Technology which affects the job profile of employees and workflow of an organization. Rapid changes in the Information Technology, computer and communication technology resulted into engineering, electronic and other changes. Due to this, many job profiles and span of control need to reshape. Therefore an individual doing narrow, specialized and routine jobs is being replaced by a teamwork which needs to perform multi tasks and actively participate in team decisions. During 1070’s various Economic Changes affected business strategies. The interest rates have become more volatile and the economy of individual country has become more interdependent. Global economy forces the change in the level of Competition. Established enterprises also need to defend themselves against the traditional competitors. Therefore even successful organizations may need to change in response to the competition. Social trend also affects the organization. Change in the employees’ life style do affects thinking and strategically changes within organization. Attitude for more and more earning to cope up with life style has become essential. Politics at the world level, terrorist attack, and foreign relations affected the globalization, competitive strategies in the organization. 2.11 PROCESS TO OVERCOME THE LOOPHOLES FOR CHANGE Clarify the mission and vision for the change. Assess the situation. Establish roles and responsibilities of each person within the organization. Develop the required leadership. Determine the key strategies for change. 17 | P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT Develop implementation plans Develop support systems like communication flow, training and development, evaluation systems. Implement plan and constantly supervise the progress. Analyze the causes for over or under progress. Celebrate the progress Proper documentation of changed process is also necessary. Here managers need to ensure that all the employees will agree on the destination and the journey in between. Training is given to the leaders to take up roles and responsibilities and to prepare plans and strategies, support the change process. A leader will develop his team and work out to upgrade their skills required to support the process. The performance is analyzed with evaluation system. Once the assessment has been completed and the findings are accepted, it is easy to agree on priorities for action. Here all necessary support mechanisms are used to gather information for progress. Work out for any modification required and prepares plan accordingly. 2.12 TOOLS USED TO COPE UP THE CHANGE PROCESS Communication- The first step in managing change is building awareness about the need for change and creating a desire among employees. The flow of communication should be as proper that right message is to be provided to right person at the right time. The change management team or project leaders must design a communication plan that addresses the needs of front-line employees, supervisors and executives. Every audience has particular needs for information based on their role in the implementation of the change. Training – Every employee play a vital role in the change process. Knowledge and skills up gradation accepts the changing environment quickly. Therefore every leader, supervisor as well workers need a proper training to get acquainted with latest technologies. Motivation - Active and visible participation by senior business leaders throughout the process is necessary. A change in agent's or project leader's role includes helping senior executives do the right things to support the project. Leader’s active participation motivates subordinates for better performance. 18 | P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT Data Collection – The information gathered interpret about the changing environment. It makes possible to start the process for change.. Feedback from employees is a key element of the change management process. Analysis and corrective action based on this feedback provides a robust cycle for implementing change. Awarding and Celebration –Every success must be recognized and awarded. Individual appreciations as well as group are necessary. Awards through monetary appreciation, in kind, oral or through other benefits encourages employees. 2.13 KEYWORDS 1. Universally – Relating to, extending to or affecting the entire world or all within the world 2. Misconduct – Behaviour not conforming to prevailing standards or laws, dishonest or bad management 3. Brutally – Extremely ruthless or cruel 4. Globalization – Growth to a global or worldwide scale 5. To be a Figurehead – a person nominally having a prominent position but with less authority 2.14 SUMMARY Proper coordination among different activities makes the organization process simple. Various activities of an organization are always directed towards its common goal. All the resources man, machinery, material and money are put to use for process in the enterprise. To manage any organization, human being is the most important resource that contributes at the maximum percentage. Managers of any level who coordinate and control the activities posses different skills and abilities. The success of any organization depends upon its intellectual capital. Employees’ updated knowledge improves the organization performance. High ranking provides status quo to the organization. Manager needs to take quick decisions on the basis of information gathered as per the situation. While performing his duties he needs to act upon various managerial roles such as initiator to spokesperson. He gathers information as well disseminates it to proper person. Any manager must be good communicator to carry out, coordinate and control the situation. 19 | P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT An organization is a part of society. While managing an organization he needs to consider the different aspects of it. Society helps and allows establishing business therefore it is our responsibility to give something in return. Due to globalization and changing technologies it is forced to change the strategies for managing organization. Sometimes external factors affect the business strategies. It becomes difficult to survive, if he does not respond to the changing environment. Instead of rigid, flexible strategies help to manage organization. 20 | P a g e  PRINCIPLES AND PRACTICES OF MANAGEMENT UNIT 3 ORGANISATIONAL STRUCTURE AND DESIGN Objectives After going through this unit, you will be able to: Define the basic concept of organizational structure Explain different forms of structure. Analyze how a structure is suitable for business organizations. Structure 3.1 Introduction 3.2 Organizational Chart 3.3 Elements of organizational structure 3.4 Line structure of Organization 3.5 Line and staff structure 3.6 Functional structure 3.7 Matrix structure 3.8 Departmentalization 3.9 Departmentalization for individual development 3.10 Centralized system 3.11 Keywords 3.12 Summary 1|Page  PRINCIPLES AND PRACTICES OF MANAGEMENT 3.1 INTRODUCTION To organize any enterprise is a team effort with decentralization of its activities. A group is formed as a team work to achieve a goal or an objective. When a group is divided into subgroups as per their specialization and an individual heads, directs and controls, that group while ensuring smooth functioning. This division or departmentalization is an Organizational Structure. Mullins, Mabey and others describes the organization structure as the pattern of relationships between roles in an organization and its different parts. In organizational structure allied jobs are grouped to gather for the most effective, efficient use of organizational resources. Phil Alexander, president of Martello Holdings co., believes that “Organizational structure must be simple, with as few management levels as possible”. The simple structure ensures transparency in work and easy to handle. It is basically considered with relationship between time, money, human and other resources. In this competitive world, organizational structure helps to make SWOT analysis. Organizations’ strength, loopholes, opportunities and threats could be better analyzed with simple organizational structure. In this competitive world, proper planning to increase turnover by reducing overheads becomes essential. Manpower is the most important resource of any organization. Organizational structure ensures every person to understand his role. Pre-determined division with grouping of related jobs ensures everyone to contribute in achieving success. Individual ensures freedom and good interaction. Interaction with colleagues or other co-workers increases efficiency. Various departments have to be coordinated for smooth functioning. For coordination common vision and mission, objectives, authority relations, proper communication flow, appropriate resource utilization, systems and procedures are required. In this globalization any organization needs to accept changes for its longitivity. A good organizational structure can often experience difference between a smooth operating organization and one in chaos. Hierarchical structure with clear chain of command, communication flow, level of authority and responsibility assigned, able to streamline their operations smoothly. Any organizational structure has to be enough flexible to accommodate the new technologies or for reduction or modification any. The rigid structure may be easy for any manager in normal times. Environmental external factors force for change and flexible structures enable to accommodate this change. 2|Page  PRINCIPLES AND PRACTICES OF MANAGEMENT 3.2 ORGANIZATIONAL CHART Chart is a graphical presentation of data with different symbols. Charts could be diagram or in the graph format. Charts make it easy to understand the large data and its relationship between its various elements. Data presented with charts and graphs could be understood quickly, probably at a glance. There are different types of charts like, bar chart, pie chart, line chart etc. Organizational chart is a graphical presentation of relationships between relative designations or positions of jobs within the organization. It is a diagram showing the grouping of different elements of a similar field of knowledge. The relationship between managers and subordinates could be observed at a glance. In large organizations sometimes organizational charts can be large and complicated, therefore small charts for each individual department are created. These charts cannot be updated frequently in large organizations with the large turnover. Therefore quickly it becomes out dated. Also it shows only formal relationships but no social relations or horizontal relations could be displayed. Activity 1 Visit nearest departmental store or any shopping mall, discuss with the head, collect information about hierarchy of that organization. Prepare an organizational chart for that organization. 3|Page  PRINCIPLES AND PRACTICES OF MANAGEMENT 3.3 ELEMENTS OF ORGANIZATIONAL STRUCTURE Authority Empow Span of erment Control Organisational structure Chain of Delegation command Hierarchy Fig 3.1 While preparing an organizational structure of any organization one needs to observe above mentioned features to create simple and flexible structure. Authority has the right to make decisions to process the work. Authority ensures team motivation, timely decisions, avoids losses, respect for team leader as well members, and enforces to upgrade skills. The degree of authority and responsibilities assigned to each individual possible within the organization helps to take right decisions for smooth functioning. The Span of control refers to how many subordinates will work under a manager. Through span of control, one can exercise control over activities performed by subordinates, flow of communication, nature of work, information overload. The number of subordinates to be guided and directed differs as per the type of industry and its work load. Chain of command is the relationship between different levels of authority. It is a command of hierarchy from top to bottom. In the chain every employee will receive orders from only one person and will command only a defined group. If a manager of one group wants to get work done, from an employee who is subordinate of another manager, then he needs to communicate officially with that manager. 4|Page  PRINCIPLES AND PRACTICES OF MANAGEMENT Hierarchy shows the specific position of each employee with his duties and responsibilities in the business. It is a system that ranks persons or positions one above another. It form subgroups of all allied skills and abilities, defines job profile for each position, makes possible proper division of labour. Delegation is the authority to carry out actions passed from superio