Management science

(13A52601) MANAGEMENT SCIENCE

UNIT I INTRODUCTION TO MANAGEMENT

Definition of Management- Function of Management- Management as a

Science and Art-Management as a Profession- Universality of

Management- Henri Faylo‘s Administrative Theory –Elton Mayo‘s

Human Relations Movement- Systems theory – Contingency theory-

Monetary andnon-monetary incentives to motivate work teams-

Leadership –Definition- Qualities of successfulleaders- Different

leadership styles.

UNIT II ORGANIZATION DESIGN AND STRUCTURE

Organization design and structure- Principles—Types of organization

structure-Mechanic andOrganic Structures- Line organization- Line &

Staff organization- Functional Organization – Matrixorganization

structures- merits and demerits- Departmentation and Decentralization-

Power andAuthority- Delegation of authority-Principles for effective

delegation of authority.

UNIT III HUMAN RESOURCE AND MATERIALS

MANAGEMENT

Concept of HRM-functions – Human Resource Planning-Job Analysis-

Recruitment and Selection-Training and Development- Performance

appraisal –methods- Wage and Salary Administration-Grievances

handling Procedure-Material Management- Need for Inventory control-

Economic orderquantity- ABC analysis- Management of purchase, stores

and stores records.-Marketing Management– Concept- Channels of

distribution- Marketing mix and product mix.

UNIT IV MANAGEMENT OF OPERATIONS & PROJECT

MANAGEMENT

Nature of organizational control- Marketing control- HR control-

effective control systems-Operations Management- Essentials of

operations management- Trends in operational management-Designing

operation system for effective management of an organization-Project

Management –Network Analysis-PERT and CPM-Project crashing

(Simple problems)

UNIT VCONTEMPORARY MANAGEMENT ISSUES

Strategic Management-Concept- Mission-Vision-Core values-Setting

objectives-Corporate planning – Environmental scanning-SWOT

analysis- Steps in strategy formulation & implementation- Management

Information System (MIS)- Enterprise Resource Planning (ERP)-Just-in-

Time (JIT)- Total Quality Management (TQM) – Supply Chain

Management-Six Sigma-Business Process

Outsourcing (BPO).

13A52601

JAYALAKASHMI. M All Engg Branches

13A52601

(13A52601) MANAGEMENT SCIENCE unit-I

M JAYALAKSHMI MBA, Asst.prof, SIETK [email protected] Page 1

Unit-1

Introduction to management

Definition:

Henri.Fayoll (1916) "To manage is to forecast and plan, to organize, to command, to

coordinate and control·

(peter F Drucker': (i 955).. "Management is concerned with the systematic organization of

economic resources and its task is .to make these resources productive .

(E F L Brech3 (1957) "Management is a social process ... the process consists of ... planning,

control,cordination,and motivation.

W F Glueck4 (1977) "Management is effective utilisation.of human and material resources to

achieve the enterprise objectives.".

Koontz and O'Donneli (1984) "Management is an operational process that can be dissected

into five essential managerial functions. They are: planning, organizing, staffing, directing

and leading, and controlling."

Koontz and Weilzrich6(1988) "Management is the process of designing and maintaining an

environment in which individuals, working together in groups, accomplish efficiently

selected aims."

Peters. T7 (1988) He feels that management holds a solution to the day-to-day problems in

our chaotic.

Management and Administration

According to Theo Haimann, ―Administration means overall determination of policies,

setting of major objectives, the identification of general purposes and laying down of broad

programmes and projects‖. It refers to the activities of higher level. It lays down basic

principles of the enterprise. According to Newman, ―Administration means guidance,

leadership & control of the efforts of the groups towards some common goals‖.

Whereas, management involves conceiving, initiating and bringing together the various

elements; coordinating, actuating, integrating the diverse organizational components while

sustaining the viability of the organization towards some pre-determined goals. In other

words, it is an art of getting things done through & with the people in formally organized

groups.

The difference between Management and Administration can be summarized under 2

categories: -



1. Functions

2. Usage / Applicability

On the Basis of Functions: -

Basis Management Administration

Meaning Management is an art of

getting things done through

others by directing their

efforts towards

achievement of pre-

determined goals.

It is concerned with

formulation of broad

objectives, plans &

policies.

Nature Management is an

executing function.

Administration is a

decision-making function.

Process Management decides who

should as it & how should

he dot it.

Administration decides

what is to be done & when

it is to be done.

Function Management is a doing

function because managers

get work done under their

supervision.

Administration is a

thinking function because

plans & policies are

determined under it.

Skills Technical and Human

skills

Conceptual and Human

skills

Level Middle & lower level

function

Top level function

On the Basis of Usage: -

Basis Management Administration

Applicability It is applicable to business

concerns i.e. profit-making

organization.

It is applicable to non-

business concerns i.e.

clubs, schools, hospitals

etc.

Influence The management decisions

are influenced by the

values, opinions, beliefs &

decisions of the managers.

The administration is

influenced by public

opinion, govt. policies,

religious organizations,

customs etc.

Status Management constitutes

the employees of the

organization who are paid

remuneration (in the form

of salaries & wages).

Administration represents

owners of the enterprise

who earn return on their

capital invested & profits

in the form of dividend.



Practically, there is no difference between management & administration. Every manager is

concerned with both - administrative management function and operative management

function as shown in the figure. However, the managers who are higher up in the hierarchy

denote more time on administrative function & the lower level denote more time on directing

and controlling worker‘s performance i.e. management.

Management is an Art

Art implies application of knowledge & skill to trying about desired results. An art may be

defined as personalized application of general theoretical principles for achieving best

possible results. Art has the following characters -

1. Practical Knowledge: Every art requires practical knowledge therefore learning of

theory is not sufficient. It is very important to know practical application of

theoretical principles. E.g. to become a good painter, the person may not only be

knowing different colour and brushes but different designs, dimensions, situations etc

to use them appropriately. A manager can never be successful just by obtaining

degree or diploma in management; he must have also know how to apply various

principles in real situations by functioning in capacity of manager.

2. Personal Skill: Although theoretical base may be same for every artist, but each one

has his own style and approach towards his job. That is why the level of success and

quality of performance differs from one person to another. E.g. there are several

qualified painters but M.F. Hussain is recognized for his style. Similarly management

as an art is also personalized. Every manager has his own way of managing things

based on his knowledge, experience and personality, that is why some managers are

known as good managers (like Aditya Birla, Rahul Bajaj) whereas others as bad.

3. Creativity: Every artist has an element of creativity in line. That is why he aims at

producing something that has never existed before which requires combination of

intelligence & imagination. Management is also creative in nature like any other art. It



combines human and non-human resources in useful way so as to achieve desired

results. It tries to produce sweet music by combining chords in an efficient manner.

4. Perfection through practice: Practice makes a man perfect. Every artist becomes

more and more proficient through constant practice. Similarly managers learn through

an art of trial and error initially but application of management principles over the

years makes them perfect in the job of managing.

5. Goal-Oriented: Every art is result oriented as it seeks to achieve concrete results. In

the same manner, management is also directed towards accomplishment of pre-

determined goals. Managers use various resources like men, money, material,

machinery & methods to promote growth of an organization.

Thus, we can say that management is an art therefore it requires application of certain

principles rather it is an art of highest order because it deals with moulding the attitude and

behavior of people at work towards desired goals.

Management as a Science

Science is a systematic body of knowledge pertaining to a specific field of study that contains

general facts which explains a phenomenon. It establishes cause and effect relationship

between two or more variables and underlines the principles governing their relationship.

These principles are developed through scientific method of observation and verification

through testing.

Science is characterized by following main features:

1. Universally acceptance principles - Scientific principles represents basic truth about

a particular field of enquiry. These principles may be applied in all situations, at all

time & at all places. E.g. - law of gravitation which can be applied in all countries

irrespective of the time.

Management also contains some fundamental principles which can be applied

universally like the Principle of Unity of Command i.e. one man, one boss. This

principle is applicable to all type of organization - business or non business.

2. Experimentation & Observation - Scientific principles are derived through

scientific investigation & researching i.e. they are based on logic. E.g. the principle

that earth goes round the sun has been scientifically proved.



Management principles are also based on scientific enquiry & observation and not

only on the opinion of Henry Fayol. They have been developed through experiments

& practical experiences of large no. of managers. E.g. it is observed that fair

remuneration to personal helps in creating a satisfied work force.

3. Cause & Effect Relationship - Principles of science lay down cause and effect

relationship between various variables. E.g. when metals are heated, they are

expanded. The cause is heating & result is expansion.

The same is true for management, therefore it also establishes cause and effect

relationship. E.g. lack of parity (balance) between authority & responsibility will lead

to ineffectiveness. If you know the cause i.e. lack of balance, the effect can be

ascertained easily i.e. in effectiveness. Similarly if workers are given bonuses, fair

wages they will work hard but when not treated in fair and just manner, reduces

productivity of organization.

4. Test of Validity & Predictability - Validity of scientific principles can be tested at

any time or any number of times i.e. they stand the test of time. Each time these tests

will give same result. Moreover future events can be predicted with reasonable

accuracy by using scientific principles. E.g. H2 & O2 will always give H2O.

Principles of management can also be tested for validity. E.g. principle of unity of

command can be tested by comparing two persons - one having single boss and one

having 2 bosses. The performance of 1st person will be better than 2nd.

It cannot be denied that management has a systematic body of knowledge but it is not as

exact as that of other physical sciences like biology, physics, and chemistry etc. The main

reason for the inexactness of science of management is that it deals with human beings and it

is very difficult to predict their behavior accurately. Since it is a social process, therefore it

falls in the area of social sciences. It is a flexible science & that is why its theories and

principles may produce different results at different times and therefore it is a behavior

science. Ernest Dale has called it as a Soft Science.

Conclusion: ―Management is the art and the science of preparing, organizing and directing

human efforts to control the forces and utilize the material of nature for the benefit of men.‖



Management has got two faces like a coin; on one side it is art and on the other side it is

science. ―Management is a mixture of an art and science – the present ratio is about 80% art

and 20% science.‖

Management is a Profession

Over a large few decades, factors such as growing size of business unit, separation of

ownership from management, growing competition etc have led to an increased demand for

professionally qualified managers. The task of manager has been quite specialized. As a

result of these developments the management has reached a stage where everything is to be

managed professionally.

A profession may be defined as an occupation that requires specialized knowledge and

intensive academic preparations to which entry is regulated by a representative body. The

essentials of a profession are:

1. Specialized Knowledge - A profession must have a systematic body of knowledge

that can be used for development of professionals. Every professional must make

deliberate efforts to acquire expertise in the principles and techniques. Similarly a

manager must have devotion and involvement to acquire expertise in the science of

management.

2. Formal Education & Training - There are no. of institutes and universities to impart

education & training for a profession. No one can practice a profession without going

through a prescribed course. Many institutes of management have been set up for

imparting education and training. For example, a CA cannot audit the A/C‘s unless he

has acquired a degree or diploma for the same but no minimum qualifications and a

course of study has been prescribed for managers by law. For example, MBA may be

preferred but not necessary.

3. Social Obligations - Profession is a source of livelihood but professionals are

primarily motivated by the desire to serve the society. Their actions are influenced by

social norms and values. Similarly a manager is responsible not only to its owners but

also to the society and therefore he is expected to provide quality goods at reasonable

prices to the society.

4. Code of Conduct - Members of a profession have to abide by a code of conduct

which contains certain rules and regulations, norms of honesty, integrity and special



ethics. A code of conduct is enforced by a representative association to ensure self

discipline among its members. Any member violating the code of conduct can be

punished and his membership can be withdrawn. The AIMA has prescribed a code of

conduct for managers but it has no right to take legal action against any manager who

violates it.

5. Representative Association - For the regulation of profession, existance of a

representative body is a must. For example, an institute of Charted Accountants of

India establishes and administers standards of competence for the auditors but the

AIMA however does not have any statuary powers to regulate the activities of

managers.

Universality of Management

One more important controversy related to the nature of management is the universality of

management. The basic concept is: Is management universal? Universality of management

indicates that managerial knowledge and skills can be applied and/ or transferred equally

from one company to another, from one person to another, from one country to another.

In regards F.W Taylor writes: ―The fundamental principles of scientific management are

applicable to all kinds of human activities from our simplest individual act to work of great

cooperation‖. Similarly,Henry Feyol: all undertaking require planning, organization,

command, coordination and control, and, in order to function properly, all must observer the

same principle.

P.F.Drucker notes: ―the skill, the competence, and the experience of management can not, as

such, be transferred and applied to the organizations running of institutions. A carrier in

management is ,by itself, not a preparation for major political office…. Or for leadership in

the armed forces, the church or a university‖

Conclusion management is applicable for all types of human activities. If management is

considered a process or knowledge (concepts ,principles,theories,functions etc…),it is

universal as management fundamentals are universal.



FUNCTIONS OF MANAGEMENT

To achieve the organizational objectives managers at all levels of organization should

perform different functions. A function is a group of similar activities.

The list of management functions varies from author to author with the number of functions

varying from three to eight.

Writers Management Functions

Henry Fayol

Luther Gullick

R. Davis

E.F.L. Breech

Koontz

Planning, Organizing, Commanding, Coordinating,

Controlling

POSDCORD- Planning, Organising, Staffing, Directing,

Coordinating, Reporting, Directing

Planning , Organising, Controlling

Planning, Organising, Motivating, Coordinating,

Controlling

Planning, Organising, Staffing, Leading, Controlling

Different authors presented different variations. By combining some of functions, these are

broadly grouped into Planning, Organising, Staffing, Directing, and Controlling.

PLANNING : “Choose Goals”

Deciding in advance :

planning

Organising

Staffing Directing

Controlling



What to do

How to do

When to do

Who is going to do it

Bridges a gap between where we are today and where we want to reach.

Sets the goal of an organization.

It is the basic function of management. It deals with chalking out a future course of

action & deciding in advance the most appropriate course of actions for achievement

of pre-determined goals.

It is an exercise in problem solving & decision making. Planning is determination of

courses of action to achieve desired goals.

Thus, planning is a systematic thinking about ways & means for accomplishment of

pre-determined goals. Planning is necessary to ensure proper utilization of human &

non-human resources. It is all pervasive, it is an intellectual activity and it also helps

in avoiding confusion, uncertainties.

ORGANISING: “Working together‖

It is the process of bringing together physical, financial and human resources and

developing productive relationship amongst them for achievement of organizational

goals.

According to Henry Fayol, ―To organize a business is to provide it with everything

useful or its functioning i.e. raw material, tools, capital and personnel‘s‖. To organize

a business involves determining & providing human and non-human resources to the

organizational structure.

Establishing the framework of working:

How many units or sub-units or departments are needed.

How many posts or designations are needed in each department.

How to distribute authority and responsibility among employees

Once these decisions are taken, organizational structure gets set up.

Organizing as a process involves:



Identification of activities.

Classification of grouping of activities.

Assignment of duties.

Delegation of authority and creation of responsibility.

Coordinating authority and responsibility relationships.

STAFFING:

Recruiting, selecting, appointing the employees, assigning duties, maintaining cordial

relationship and taking care of grievances of employees.

Training and Development of employees, deciding their remuneration, promotion and

increments.

Evaluating their performance.

It is the function of manning the organization structure and keeping it manned.

Staffing has assumed greater importance in the recent years due to advancement of

technology, increase in size of business, complexity of human behavior etc. The main

purpose o staffing is to put right man on right job i.e. square pegs in square holes and

round pegs in round holes.

Staffing involves:

Manpower Planning (estimating man power in terms of searching, choose the

person and giving the right place).

Recruitment, selection & placement.

Training & development.

Remuneration.

Performance appraisal.

Promotions & transfer.

DIRECTING:

Giving direction or instruction to employees to get the job done.

Leadership qualities are required.

Motivating employees by providing monatory and non-monetory incentives.

Comunicating with them at regular intervals.



It is that part of managerial function which actuates the organizational methods to

work efficiently for achievement of organizational purposes. It is considered life-

spark of the enterprise which sets it in motion the action of people because planning,

organizing and staffing are the mere preparations for doing the work. Direction is that

inert-personnel aspect of management which deals directly with influencing, guiding,

supervising, motivating sub-ordinate for the achievement of organizational goals.

Supervision- implies overseeing the work of subordinates by their superiors. It is the act of

watching & directing work & workers.

Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work.

Positive, negative, monetary, non-monetary incentives may be used for this purpose.

Leadership- may be defined as a process by which manager guides and influences the work

of subordinates in desired direction.

Communications- is the process of passing information, experience, opinion etc from one

person to another. It is a bridge of understanding

CONTROLLING: ―Monitor & measure‖

Matching actual performance with the planned goal.

If problem, tries to find out the reasons of deviation.

Suggesting corrective measures come on the path of plan

It implies measurement of accomplishment against the standards and correction of

deviation if any to ensure achievement of organizational goals. The purpose of

controlling is to ensure that everything occurs in conformities with the standards. An

efficient system of control helps to predict deviations before they actually occur.

According to Theo Haimann, ―Controlling is the process of checking whether or not

proper progress is being made towards the objectives and goals and acting if

necessary, to correct any deviation‖.

Therefore controlling has following steps:

Establishment of standard performance.

Measurement of actual performance.



Comparison of actual performance with the standards and finding out

deviation if any.

Corrective action.

FAYOL’S ADMNISTRATIVE MANAGEMENT

Henry Fayol is a French Industrialist and the father of modern operational management

theory. Fayol recognized the following organizational activities.

Organizational Activities: Fayol divided the activities of organization into six groups---

Technical (related to production)

Commercial ( buying, selling and exchange)

Financial ( search for capital and its optimum use)

Security ( protection of property and person )

Accounting

Managerial ( planning, organizing, commanding, coordinating and controlling)

Among the above activities Fayol considered managerial activities are the most important for

the success of business and he concentrated more on that. His contributions are divided the

following categories.

Qualities of a manager

General principles of management

Elements of management

Managerial Qualities and Training: According to Fayol the following are the list of

qualities required in a manager.

Physical ( Health, Vigor and Health )

Mental ( Ability to understand and learn, judgment , mental vigor and capability)

Moral ( energy, firmness, initiative, loyalty, tact etc.,)

Educational

Technical ( peculiar to the function being performed )

Experience



GENERAL PRINCIPLES OF MANAGEMENT:

Fayol has given 14 principles of management. He has made distinction between management

principles and management elements. While management principles is a fundamental truth

and establishes cause effect relationship, elements of management denotes the function

performed by a manager.

While giving the management principles, Fayol has emphasized two things.

1. The list of management principles is not exhaustive but suggestive and has discussed

only those principles which he followed on most occasions.

2. principles of management are not rigid but flexible

Principles:-

1. Division of work: It is helpful to take the advantage of specialization. Here, the work is

divided among the members of the group based on the employees skills and talents. It can

be applied at all levels of the organization.

2. Authority and Responsibility: Fayol finds authority as a continuation of official and

personal factors. Official authority is derived from the manager‘s position and personal

authority is derived from personal qualities such as intelligence, experience, moral worth,

past services, etc., Responsibility arises out of assignment of activity. In order to

discharge the responsibility properly, there should be parity between authority and

responsibility.

3. Discipline: All the personal serving in an organization should be disciplined. Discipline is

obedience, application, behavior and outward mark of respect shown by employees.

4. Unity of Command: Unity of command means that a person should get orders from only

one superior. Fayol‘s has considered unity of command as an important aspect in

managing an organization. He says that ―should it be violated, authority is undermined,

discipline is in jeopardy, order disturbed, and stability threatened.‖

5. Unity of Direction: According to this principle, each group of activities with the same

objective must have one head and one plan. It is concerned with functioning of the

organization I respect of grouping of activities or planning. Unity of direction provides

better coordination among various activities to be undertaken by an organization.

6. Subordination of individual interest to general interest: Individual interest must be

subordinate to general interest when there is conflict between the two. However factors



like ambition, laziness, weakness, etc., tend to reduce the importance of general interest.

Therefore, superiors should set an example in fairness and goodness.

7. Remuneration to Personnel: Remuneration to employees should be fair and provide

maximum possible satisfaction to employees and employers. Fayol did not favor profit

sharing plan for workers but advocated it for managers. He was also in favor of non-

financial benefits.

8. Centralization: Everything which goes to increase the importance of subordinate‘s role

is decentralization; everything which goes to reduce it is centralization. The degree of

centralization or decentralization is determined by the needs of the company.

9. Scalar Chain: There should be a scalar chain of authority and of communication ranging

from the highest to the lowest. It suggests that each communication going up or coming

down must flow through each position in the line of authority. It can be short-circuited

only in special circumstances. For this purpose, Fayol has suggested ‗gang plank‘

Scalar chain and gang plank can be presented as follows.

10. Order: This is a principle relating to the arrangement of things and people. In material

order, there should be a place for everything and everything should be in its place.

Similarly, in social order, there should be the right man in the right place.

11. Equity: Equity is the combination of justice and kindness. Equity in treatment and

behavior is liked by everyone and it brings loyalty in the organization. The application of

equity requires good sense, experience and good nature.

12. Stability of tenure: No employee should be removed within short time. There should be

reasonable security of jobs. Stability of tenure is essential to get an employee accustomed

to new work and succeeding in doing it well.

13. Initiative: Within the limits of authority and discipline, managers should encourage their

employees for taking initiative. Initiative is concerned with thinking out and execution of

a plan. Initiative increases zeal and energy on the part of human beings.



14. Esprit de corps: It is the principle of ‗union is strength‘ and extension of unity of

command for establishing team work. The manager should encourage esprit de corps

among his employees.

Hawthorne experiments and human relations:

The human relations approach was born out of a reaction to classical approach. A lot

of literature on human relations has been developed. For the first time, an intensive and

systematic analysis of human factor in organisations was made in the form of Hawthorne

experiments.

To investigate the relationship between productivity and physical working conditions,

a team of four members Elton mayo, White head, Roethlisberger and William Dickson was

introduced by the company in Hawthorne plant. They conducted various researches in four

phases with each phase attempting to answer the question raised at the previous phase. The

phases are ---

1. Experiments to determine the effects of changes in illuminations on productivity.

Illumination experiments (1924-27)

2. Experiments to determine the effects of changes in hours and other working

conditions on productivity. (Relay assembly test room experiments 1927-28)

3. mass interviewing programme (1928-1930)

4. determination and analysis of social organization at work (Bank wiring observation

room experiments 1931-32)

Conclusions:

Individual workers must be seen as members of a group

The sense of belongingness and effective management were the two secrets

unfolded by the Hawthorne experiments.

Informal or personal groups influenced the behaviour of workers on the job.

Need for status and belongingness to a group were viewed as more important

than monetary incentives or good physical working conditions

To seek workers cooperation, the management should be aware of their social

needs and cater to them. Otherwise, there is every danger that the workers

ignore and turn against the interests of the organisation.



System Approach to management: Theory and Concept

System approach was developed inlate1960s. Herbert A. Simon is the father of system

theory.

System: A system is a set of interrelated but separate parts working towards a common

purpose.

The arrangement must be orderly and there must be proper communication facilitating

interaction between the elements and finally this interaction should lead to achieve a

common goal.

According to Cleland and King; ― A system is composed of related and dependent elements

which when in interaction from a unity whole‖.

Subsystems: Subsystem is a system created as part of the process of the overall management

system. A planning subsystem increases the effectiveness of the overall management system.

System Approach

• System approach to management views the organization as a unified, purposeful

system composed of interrelated parts.

• This approach also gives the manager to see the organization as a whole and as a part

of the larger external environment.

• System oriented manager would make decisions only after they have identified impact

of these decisions on all other departments and the entire organization.

• They must intertwine their department with the total organization and communicate

with all other departments, employees and with each other.

Example

Finance Department

Production Department

Humanresource

Department

Marketing Department



Characteristics: Systems have structure, defined by parts and their composition;

• Systems have behavior, which involves inputs, processing and outputs of material,

energy or information;

• Systems have interconnectivity: the various parts of a system have functional as well

as structural relationships between each other.

• System(s) have by itself function(s) or group of functions.

Advantages: It aims at meaningful analysis of organizations and their management.

• It facilitates the interaction between organization and its environment.

• It guide manager to avoid analyzing problems in isolation and to develop an

integrated approach.

Disadvantages: The approach does not recognize the differences in systems.

• Over-conceptual

• Systems philosophy does not specify the nature of interactions and interdependencies.

• Unpractical: It cannot be easily and directly applied to practical problems.

• Lack of Universality

• Complex System

Contingency Theory

Contingency approach, also known as situational approach, is a concept in management

stating that there is no one universally applicable set of management principles (rules) by

which to manage organizations. Organizations are individually different, face different

situations (contingency variables), and require different ways of managing. Contingency

approaches remain less common than change management approaches.

The management has to use the measures/techniques as per the situation from time to time.

Management should match its approach as per the requirements of the situation. The policies

and practices used should be suitable to environmental changes. The success of management

depends on its ability to cope up with its environment

https://en.wikipedia.org/wiki/Management

https://en.wikipedia.org/wiki/Organization



If a problem is faced by the business, the management sector is required to adapt and change

business operations to counteract the possible effect a circumstance may have. They believe

that management must adopt a wide range of management approaches

Adapting to changing circumstances – No two situations are absolutely identical, therefore

each situation requires its own unique solution. - For example, you may have chosen to

construct a building a certain way with certain strategies, but that same approach may not

work for different buildings because they require a completely different approach. -

Advocates of the contingency approach believe that managers need to be adaptable and

flexible in their technique to solving problems. - No one wants a manager who is dogmatic

and inflexible.

Example: Real life business examples Steve Jobs ―there is no one right way of leading and

that a leader must adjust their style depending on the context―

Activity Question: You are the owner of medium sized marketing company with 50

employees, 10 of your employees spend their entire 8hr shift putting data into a computer and

only leave their desk to have a 30min lunch break, leaving a total of 7.5hrs on a computer per

day. The Government has introduced a new health & safety legislation, which states that data

entry employees can only spend a total of 5hrs on the computer per day, entering data. Being

a manager using contingency management, how would you work with this new legislation?

Characteristics:

The contingency approach is based on three characteristics they are...

An open system perspective

A research orientation

A multivariable approach

Merits: Contingency approach is pragmatic and open minded. It discounts preconceived

notions and universal validity of principles .It provides freedom/choice to manage to judge

the external environment and use the most suitable management techniques. Here,

importance is given to the judgment of the situation and not the use of specific principles.

The contingency approach has a wide-ranging applicability and practical utility in,



organization and management. It advocates comparative analysis of organizations to bring

suitable adjustment between organization structure and situational peculiarities.

Limitations: It is argued that the contingency approach lacks a theoretical base. Under

contingency approach, a manager is supposed to think through all possible alternatives as he

has no dried principles to act upon. The responsibility of a manager increases as he has to

analyze the situation, examine the validity of different principles and techniques to the

situation at hand, make right choice by matching the technique to the situation and finally

execute his choice

Conclusion: The basic theme of contingency approach is that organizations have to deal with

different situations in different ways. There is no single best way of managing applicable to

all situations.

Monetary and Non-Monetary Incentive to Motivate Work Teams

Motivation:

Motivation is the word derived from the word ‘motive‘ which means needs, desires, wants or

drives within the individuals. It is the process of stimulating people to actions to accomplish

the goals. In the work goal context the psychological factors stimulating the people‘s

behavior can be -

desire for money

success

recognition

job-satisfaction

Team work, etc.

One of the most important functions of management is to create willingness amongst the

employees to perform in the best of their abilities. Therefore the role of a leader is to arouse

interest in performance of employees in their jobs. The process of motivation consists of

three stages:-

1. A felt need or drive

2. A stimulus in which needs have to be aroused

http://www.managementstudyguide.com/role_of_a_leader.htm



3. When needs are satisfied, the satisfaction or accomplishment of goals.

Therefore, we can say that motivation is a psychological phenomenon which means needs

and wants of the individuals have to be tackled by framing an incentive plan.

Motivation Incentives - Incentives to motivate employees

Incentive is an act or promise for greater action. It is also called as a stimulus to greater

action. Incentives are something which are given in addition to wagers. It means additional

remuneration or benefit to an employee in recognition of achievement or better work.

Incentives provide a spur or zeal in the employees for better performance. It is a natural thing

that nobody acts without a purpose behind. Therefore, a hope for a reward is a powerful

incentive to motivate employees. Besides monetary incentive, there are some other stimuli

which can drive a person to better. This will include job satisfaction, job security, job

promotion, and pride for accomplishment. Therefore, incentives really can sometimes work

to accomplish the goals of a concern. The need of incentives can be many:-

1. To increase productivity,

2. To drive or arouse a stimulus work,

3. To enhance commitment in work performance,

4. To psychologically satisfy a person which leads to job satisfaction,

5. To shape the behavior or outlook of subordinate towards work,

6. To inculcate zeal and enthusiasm towards work,

7. To get the maximum of their capabilities so that they are exploited and utilized

maximally.

Therefore, management has to offer the following two categories of incentives to motivate

employees:

1. Monetary incentives- Those incentives which satisfy the subordinates by providing

them rewards in terms of rupees. Money has been recognized as a chief source of

satisfying the needs of people. Money is also helpful to satisfy the social needs by

possessing various material items. Therefore, money not only satisfies psychological

needs but also the security and social needs. Therefore, in many factories, various



wage plans and bonus schemes are introduced to motivate and stimulate the people to

work.

2. Non-monetary incentives- Besides the monetary incentives, there are certain non-

financial incentives which can satisfy the ego and self- actualization needs of

employees. The incentives which cannot be measured in terms of money are under the

category of ―Non- monetary incentives‖. Whenever a manager has to satisfy the

psychological needs of the subordinates, he makes use of non-financial incentives.

Non- financial incentives can be of the following types:-

a. Security of service- Job security is an incentive which provides great

motivation to employees. If his job is secured, he will put maximum efforts to

achieve the objectives of the enterprise. This also helps since he is very far off

from mental tension and he can give his best to the enterprise.

b. Praise or recognition- The praise or recognition is another non- financial

incentive which satisfies the ego needs of the employees. Sometimes praise

becomes more effective than any other incentive. The employees will respond

more to praise and try to give the best of their abilities to a concern.

c. Suggestion scheme- The organization should look forward to taking

suggestions and inviting suggestion schemes from the subordinates. This

inculcates a spirit of participation in the employees. This also is helpful to

motivate the employees to feel important and they can also be in search for

innovative methods which can be applied for better work methods. This

ultimately helps in growing a concern and adapting new methods of

operations.

d. Job enrichment- Job enrichment is another non- monetary incentive in which

the job of a worker can be enriched. This can be done by increasing his

responsibilities, giving him an important designation, increasing the content

and nature of the work. This way efficient worker can get challenging jobs in

which they can prove their worth. This also helps in the greatest motivation of

the efficient employees.

e. Promotion opportunities- Promotion is an effective tool to increase the spirit

to work in a concern. If the employees are provided opportunities for the

advancement and growth, they feel satisfied and contented and they become

more committed to the organization.



The above non-financial tools can be framed effectively by giving due concentration

to the role of employees. A combination of financial and non- financial incentives

help together in bringing motivation and zeal to work in a concern.

Positive Incentives: Positive incentives are those incentives which provide a positive

assurance for fulfilling the needs and wants. Positive incentives generally have an optimistic

attitude behind and they are generally given to satisfy the psychological requirements of

employees. For example-promotion, praise, recognition, perks and allowances, etc. It is

positive by nature.

Negative Incentives: Negative incentives are those whose purpose is to correct the mistakes

or defaults of employees. The purpose is to rectify mistakes in order to get effective results.

Negative incentive is generally resorted to when positive incentive does not works and a

psychological set back has to be given to employees. It is negative by nature. For example-

demotion, transfer, fines, penalties.

LEADERSHIP

DEFINITION: ―Leadership is interpersonal influence exercised in a situation and directed

through communication process, towards the attainment of a specified goal or goals‖.

– Tennenbaum.

―Leadership is the process of influencing and supporting others to work enthusiastically

toward achieving objectives‖. – Barnard Key.

Leadership- the process of influencing others

Leaders inspire thru personal trustworthiness & self-confidence

Leaders communicate a vision that turns self-interest into commitment to the job

Differences b/w leadership & management



Leadership

based on influence

an informal designation

an achieved position

part of every nurse‘s role

independent of management

Management

based on authority

a formally designated position

an assigned position

improved by use of effective

leadership skills

LEADERSHIP STYLES:

Leadership styles are the patterns of behaviour which a leader adopts in influencing

the behaviour of his subordinates. Based on the degree of authority used by the supervisors,

there are three leadership styles.

LEADERSHIP STYLES: - Leadership styles refer to a leader‘s behaviour. Behavioral

pattern which the leader reflects in his role as a leader is often described as the style of

leadership. It is the result of the philosophy, personality and experience of the leader. The

important leadership styles are as follows:-

1. Autocratic (or) Authoritarian leaders

2. Participative (or) Democratic leaders

3. Free rein (or) Laiser faire leaders

Autocratic Leadership Style: - This is also known as authoritarian, directive style. In this

style manager centralizes decision-making power in him. He structures the complete work

situation for his employees. He does not entertain and suggestions or initiative from

subordinates. He gives orders and assigns tasks without taking subordinates opinion. There

are three categories of autocratic leaders.

Strict Autocrat: - He follows autocratic styles in a very strict sense. His method of

influencing subordinates behaviour is through negative motivation that is by criticizing

subordinates, imposing penalty etc…



Benevolent Autocrat: - He also centralizes decision making power in him, but his

motivation style is positive. He can be effective in getting efficiency in man situations. Some

like to work under strong authority structure and they drive satisfaction by this leadership.

Incompetent autocrat: - Sometimes, superiors adopt autocratic leadership style just to hide

their in competency, because in other styles they may exposed before their subordinates.

However, this cannot be used for a long time.

Advantages:-

1. It provides strong motivation and reward to manager.

2. It permits very quick decisions.

3. Less competent subordinates also have scope to work in the organisation.

Disadvantages:-

1. People in the organization dislike it especially when it is strict and the motivational style is

negative.

2. Employees lack motivation frustration, low morale and conflict develops in the

organisation.

3. There is more dependence and less individuality in the organisation.

Participative Leadership Style:- It is also called as democratic, consultative or idiographic

leadership style. In this style the manager decentralizes his decision-making process. Instead

of taking unilateral decision he emphasizes consultation and participation of his subordinates.

He can win the cooperation of his group and can motivate them effectively and positively.

Advantages:-

A B C

M



1. Employees are highly motivated.

2. The productivity of employees is very high.

3. Subordinates share the responsibility with the superior and try to safeguard them also.

Disadvantages:- 1. Complex nature of organisation requires as through understanding of its

Problems which lower-level employees may not be able to do.

2. Some people in the organisation want minimum interaction with their

superior.

3. Some leaders may use this style as a way of avoiding responsibility.

Free-rein Leadership:- A free-rein leader does not lead, but leaves the group entirely to

itself as shown in the following figure.

In this style, manager once determines policy,

programmes, and limitations for action and the entire process is left to subordinates group

A

M D

C

B

A B

D

A

C

A

M



members perform everything and the manager usually maintains contacts with outside

persons to bring the information and materials which the group needs.

QUALITIES OF SUCCESSFUL LEADERS

―Great leaders are born, not made.‖ To some extent, the capacity for great leadership is

innate. However, learning how to be a more effective leader is within everyone‘s grasp –

whether you lead multiple teams, an entire company or just one staff member.

Many qualities have been identified that are important to great leaders… But there are ten

leadership qualities that seem to stand out as being more important than the others.

Here are the ten most identified attributes of leaders and executives.

• Integrity is the integration of outward actions and inner values. A person of integrity

is the same on the outside and on the inside. Such an individual can be trusted because

he or she never veers from inner values, even when it might be expeditious to do so.

A leader must have the trust of followers and therefore must display integrity.

• Dedication means spending whatever time or energy is necessary to accomplish the

task at hand. A leader inspires dedication by example, doing whatever it takes to

complete the next step toward the vision. By setting an excellent example, leaders can

show followers that there are no nine-to-five jobs on the team, only opportunities to

achieve something great.

• Honest dealings, predictable reactions, well-controlled emotions, and an absence of

tantrums and harsh outbursts are all signs of integrity. A leader who is centered in

integrity will be more approachable by followers.

• Magnanimity means giving credit where it is due. A magnanimous leader ensures

that credit for successes is spread as widely as possible throughout the company.

Conversely, a good leader takes personal responsibility for failures. This sort of

reverse magnanimity helps other people feel good about themselves and draws the

team closer together. To spread the fame and take the blame is a hallmark of effective

leadership.

• Leaders with humility recognize that they are no better or worse than other members

of the team. A humble leader is not self-effacing but rather tries to elevate everyone.

Leaders with humility also understand that their status does not make them a god.



Mahatma Gandhi is a role model for Indian leaders, and he pursued a ―follower-

centric‖ leadership role.

• Openness means being able to listen to new ideas, even if they do not conform to the

usual way of thinking. Good leaders are able to suspend judgment while listening to

others‘ ideas, as well as accept new ways of doing things that someone else thought

of. Openness builds mutual respect and trust between leaders and followers, and it

also keeps the team well supplied with new ideas that can further its vision.

• Creativity is the ability to think differently, to get outside of the box that constrains

solutions. Creativity gives leaders the ability to see things that others have not seen

and thus lead followers in new directions. The most important question that a leader

can ask is, ―What if …?‖ Possibly the worst thing a leader can say is, ―I know this is a

dumb question

• Fairness means dealing with others consistently and justly. A leader must check all

the facts and hear everyone out before passing judgment. He or she must avoid

leaping to

Conclusions based on incomplete evidence. When people feel they that are being treated

fairly, they reward a leader with loyalty and dedication.

• Assertiveness is not the same as aggressiveness. Rather, it is the ability to clearly

state what one expects so that there will be no misunderstandings. A leader must be

assertive to get the desired results. Along with assertiveness comes the responsibility

to clearly understand what followers expect from their leader.

• A sense of humor is vital to relieve tension and boredom, as well as to defuse

positivity. Effective leaders know how to use humor to energize followers. Humor is a

form of power that provides some control over the work environment. And simply

put, humor fosters good camaraderie.

Conclusion: What makes a good leader depends on the organizational context. Developing

leadership potential involves matching individual talents with organizational need, and

building skills that both enhance performance and play to individual strengths.



Unit-II

Organization Design and Structure

An organization is a social arrangement which pursues collective goals, controls its own

performance, and has a boundary separating it from its environment. In the social sciences,

organizations are studied by researchers from several disciplines, the most common of which

are sociology, economics, political science, psychology, management, and organizational

communication. The broad area is commonly referred to as organizational studies,

organizational behavior or organization analysis. Therefore, a number of different theories

and perspectives exist, some of which are compatible,

Organization – process-related: an entity is being (re-)organized (organization as task or

action).

Organization – functional: organization as a function of how entities like businesses or state

authorities are used (organization as a permanent structure).

Organization – institutional: an entity is an organization (organization as an actual

purposeful structure within a social context)

Organization is form of organizing which is a part of management process

Organization defied as collectivity of people for achieving common objectives

“Organization means the determination and assignment of duties to people, and also the

establishment and the maintenance of authority relationships among these grouped activities it is

the structural frame work with in which the various efforts are coordinated and related to each

other”.

Definitions: “Organization are collectivities of people that have been established for the pursuit of

relatively specific objectives on a more or less continuous basis”.

----William Scott

“Organization is the form of every human association for the attainment of a common purpose”.

----Mooney and Reilly

“Organization involves the grouping of activities necessary to accomplish goals and plans assignment

and these activities to appropriate departments and positions to appropriate departments and



positions for authority delegation and coordination”.

------Koontz and O’Donnell

Organization is used in the following ways with or without prefix or suffix

1. as entity

2. as group of people

3. as structure

4. as process

PRINCIPLES OF ORGANIZATION

1. Principle of unity of objectives: Organizational goals, departmental goals, and individual goals

must be clearly defined. All goals and objectives must have uniformity. When there is contradiction

among different level of goals desired goals can’t be achieved. Therefore, unity of objectives is

necessary

2. Principle of specialization: Sound and effective organization believes on organization. The term

specialization is related to work and employees. When an employee takes special type of knowledge

and skill in any area, it is known as specialization. Modern business organization needs the

specialization, skill and knowledge by this desired sector of economy and thus, efficiency would be

established.

3. Principle of coordination: In an organization many equipment, tools are used. Coordination can

be obtained by group effort that emphasize on unity of action. Therefore, coordination facilitates in

several management concepts.

4. Principle of authority: Authority is the kind of right and power through which it guides and directs

the actions of others so that the organizational goals can be achieved. It is also related with decision

making. It is vested in particular position, not to the person because authority is given by an

institution and therefore it is legal. It generally flows from higher level to lowest level of

management. There should be unbroken line of authority.



5. Principle of responsibility: Authentic body of an organization is top level management, top level

management direct the subordinates. Departmental managers and other personnel take the

direction from top level management to perform the task. Authority is necessary to perform the

work .only authority is not provided to the people but obligation is also provided. So the obligation

to perform the duties and task is known as responsibility. Responsibility can’t be delegated. It can’t

be avoided.

6. Principle of delegation: Process of transferring authority and creation of responsibility between

superior and subordinates to accomplish a certain task is called delegation of authority. Authority is

only delegated, not responsibilities in all levels of management. The authority delegated should be

equal to responsibility

7. Principle of efficiency: In enterprise different resources are used. Therese resources must be used

in effective manner. When the organization fulfill the objectives with minimum cost, it is effective.

Organization must always concentrate on efficiency.

8. Principle of unity of command: subordinates should receive orders from single superior at a time

and all subordinates should be accountable to that superior. More superior leads to confusion, delay

and so on.

9. Principle of span of control: unlimited subordinates cant be supervised by manager, this principle

thus helps to determine numerical limit if subordinates to be supervised by a manager. This

improves efficiency.

10. Principle of balance: the functional activities their establishment and other performances should

be balanced properly. Authority, centralization, decentralization must be balance equally. This is

very challenging job but efficient management must keep it.

11. Principle of communication: Communication is the process of transformation of information

from one person to another of different levels. It involves the systematic and continuous process of

telling, listening and understanding opinions ideas, feelings, information, views etc, in flow of

information. Effective communication is important

12. Principle of personal ability: for sound organization, human resources is important. Employees

must be capable. Able employees can perform higher. Mainly training and development programs

must be encouraged to develop the skill in the employees.



13. Principle of flexibility: organizational structure must be flexible considering the environmental

dynamism. Sometimes, dramatically change may occur in the organization and in that condition,

organization should be ready to accept the change

14. Principle of simplicity: this principles emphasizes the simplicity of organizational structure, the

structure if organization should be simple with minimum number of levels do that its member an

understand duties and authorities.

DESIGN OF ORGANIZATION STRUCTURE

The main objective of an organization structure is to ensure that efforts of all the people working

in various sections are co-ordinate and integrated for achieving the task in the most efficient

effective way with minimum consumption of resources i.e. economical ways

1) Formal organization structure 2) Informal organization structure

Formal organization structure: According to classical theorists the formal organization is built four

pillars

1) Division of labour

2) Scalar functional processes

3) Structure

4) Span of control

Definition: An organization is formal when the activities of two or more persons are consciously

coordinated towards common objectives.

Informal organization: Informal organization arises spontaneously based on friendship or some

common interest and not based on rules, regulation and procedures. It is developed by the

employees themselves and not by the formal authority.

Definition: Informal organization brings cohesiveness to a formal organization, it brings to the

members of formal organization a feeling of belonging of status, of self-respect and of gregarious

satisfaction.



Comparison between formal and informal organization

TYPE OF ORGANIZATION: An organization can be classified on the basis of authority relationship or

on the basis of its departments. The types of organization based on authority relationships are:

On the basis of authority relationships organization classified as follows

1. Line organization or Military organization or Scalar organization

2. Line and Staff organization

3. Functional organization

4. Matrix organization

LINE ORGANISATION STRUCTURE

Line organization is also called military or scalar organization.

It is traditional type and which is widely used even today

The managers in this line organization have direct responsibility for the results

Based on authority relationship, a line organization structure can be drawn



1. PURE LINE ORGANISATION:

Under this form, similar activities are performed at a particular level. Each group of activities is self –

contained unit and is able to perform the assigned activities without the assistance of others

Production Manager

|

______________________________ |____________________________

| | |

Foreman-A Foreman-B Foreman-C

| | |

Worker Worker Worker

2. DEPARTMENTAL LINE ORGANISATION:

Under this form, entire activities are divided into different departments on the basis of similarity of

activities. The basic objective of this form is to have uniform control, authority and responsibility.

Engineer

Draughts man I

(Design and drawing)

Draughts man II

(plans)

Draughts man II

(specification)



Production Manager

______________________________ |____________________________

| | |

Foreman-A Foreman-B Foreman-C

(Body Molding) (Seating) (Finishing)

| | |

Worker Worker Worker

Features:

It is the simplest form of organization.

Line of authority flows from top to bottom.

Specialized and supportive services do not take place in these organization.

Unified control by the line officers can be maintained since they can independently take

decisions in their areas and spheres.

This kind of organization always helps in bringing efficiency in communication and

bringing stability to a concern.

Merits Demerits

1) It is simple to understand

2) Easy supervision & control

3) Quick decisions

4) It sets clearly the direct lines of

authority and responsibility of a

line manager

1) Lack of specialization

2) Low – Morale

3) Autocratic approach

4) Overburden to manager



Suitability:- It is suitable to small – scale organizations where the number of subordinates is quite

small.

Line and Staff Organization

Line and Staff organization is the in which the line heads are assisted by specialist staff. If

the firm is of large size, manager cannot give careful attention to every aspect of management. They

are busy with ordinary task of production and selling. Hence staff is deputed to do the work of

investigation, research, recording, and advising to managers. Thus the staff brings advising to

managers. Thus the staff brings specialization by assisting the line officers.

“Line” means - Operating

“Staff” means – Service

FEATURES:-

This origin structure clearly distinguishes between two aspects of administration viz.,

planning and execution.

Staff officers provide advice only to the line officers; they do not have any power of

command over them.

The staff supplements the line members.

Line and Staff Organization is a compromise of line organization. It is more complex than line

concern.

Division of work and specialization takes place in line and staff organization.

The whole organization is divided into different functional areas to which staff specialists are

attached.

Efficiency can be achieved through the features of specialization.



MERITS DEMERITS

1. It enhances the quality of

decision

2. Greater scope for advancement

3. It relieves the line managers.

4. Reduction of burden.

1. It may create more friction or

Conflict between line and staff

2. It is expensive

3. It creates confusion

SUITABILITY: - It can be followed in large organizations where specialization of activities is required,

because it offers ample opportunities for specialization.

Functional organization

Functional organization as suggested by Taylor, is based on the concept of division of labor

Here the planning function is separated from the control function.

Taylor observed that one single foreman was overburdened with all the operations such as

task setting, time recording, quality inspection, disciplinary jobs and so on.

He divided this job into eight functional foremen-four dealing with planning task and four

dealing with implementation task. Planning and implementation task are divided into ensure

the division of labour. He suggested the functional type of organization structure as outlined

in figure:

Works manager

Planning function Control function

RC GB RB TCC



The foremen involved in the planning task were:

Route clerk (identifies the route for the material pass on)

Instruction clerk(the workers about what to do and what not)

Time and cost clerk(time and cost for each job)

Shop disciplinarian(maintain discipline on the shop floor)

Those involved in implementation were:

Gang boss( assembles the machinery needed for the workers)

Speed boss( standardizes and sets the speed of the machines)

Repair boss( repairs the machinery case of break down)

Quality inspector( responsible for the matters relating to quality).

FEATURES:

1) The whole activities of an organisation are divided into various functions

2) Each functional area is put under the charge of one executive

3) For any decision, one has to consult the functional specialist

MERITS DEMERITS

1) Planned specialization

2) Facilitates large scale production

3) Disciplinary controls are well defined

4) Offers clear career paths

1) calls for more coordination

2) no clear line of authority

3) slow decision making

4) lack of responsibility

WORKERS

Insp. SB SD IC



Matrix Organization

This is also called as project organization, it is a combination of all relationships in the

organization in vertical, horizontal and diagonal. It is mostly used in complex projects. It provides a

high degree of operational freedom, flexibility and adoptability for both the line and staff managers

in performing their respective roles. The main objective of matrix organization is to secure a higher

degree of coordination than what is possible from the conventional organizational structure as the

line and staff.

Merits:

1. It offers operational freedom and flexibility

2. It seeks to optimize the utilization of resources

3. It focuses on results

4. It maintains professional identity

5. It holds employees responsible for management of resources

Demerits:

1. It calls for greater degree of coordination

2. It violates unity of command principle

3. It may be difficult to define authority and responsibility precisely

General Manager

Production Personnel Finance Marketing

W W

Project B

Manager

W W

W W W

W W

W

W W Project B

Manager



4. Employees may find it frustrating to work with two bosses

Suitability: It can be applicable where there is a pressure for dual focus, pressure for high in

formation processing, and pressure for shred resources.

Ex:- Aerospace, chemicals, Banking, Brokerage, Advertising etc..,

Mechanistic (or) modern trends in organizational structure designs

Organizations in the recent times have been gearing themselves to suit to the growing

demands from their stakeholders in terms of responsiveness, flexibility, agility, adaptability etc. In

this process, they are following organic structure, which are more agile, flexible and adaptable to the

changing circumstances. Virtual organizations, cellular organizations, team structure, boundary less

organization and inverted pyramid and different forms of organic structure that are widely seen

among most of the sun-rise sectors such as financial services, Information Technology (IT) and IT

enabled services. These structures have been contributing to the organic growth of the organization.

The focus of organic structures is to do away with those activities which do not directly

contribute to the growth of the organization and focus only on those activities which directly lead

the organization for the achievement of the given goals. These are discussed below:

Virtual Organization: Virtual organizations facilitate competitiveness particularly when these

organizations are part of the global economy. Here, there can be alliances and partnerships with

other organizations almost all over world. It is a flexible organization structure that removes the

traditional boundaries. It allows easy reassignment and reallocation of resources to take quick

advantage of shifting opportunities in global markets. To avoid disintegration and to attain the

effective needed focus, the lead virtual organizations must have a shared vision, strong brand and

high trust culture.

The virtual organization is a temporary network of companies that come together quickly to

exploit fast changing opportunities. Virtual organizations appear to be bigger than traditional

organizations. As virtual organizing required a strong information technology

(IT) platform, The boundaries that traditionally separate a firm form its suppliers, customers

and even competitors are largely eliminated, temporarily and in respect to a given transaction or

business purpose. Virtual organizations come into being ‘as needed’ when alliances are called into

action to meet specific operating needs and objectives. When the task is complete, the alliance rests



until next called into action. Each partner in the alliance contributes to the virtual organization what

it is best as-its core competence.

Cellular Organization: Organizations structured around the units/cells that complete the entire

assembly process are called cellular organizations. In the modern organizations, cellular

organizations have been replacing the continuous line or linear production process system. In

cellular organizations, workers manufacture total product or sub-assemblies in teams (cells). Every

team (cell) of workers has the responsibility to improve or maintain the quality and quantity of its

products. Each team is free to recognize itself to improve performance and product quality. These

cells comprise self-managed teams. They monitor themselves and also correct where necessary on

their own. Cellular organizations are characterized by much smaller staff all over the organization

with middle management positions reduced and lean management members at the top. It is both a

lean and flat structure.

Team Structure: A structure in which the entire organization is made up of work groups or teams is

known as team structure. Team structures are both permanent and temporary in nature as situation

demands. Traditional organizations are characterized by vertical structures and modern

organizations are identified by the horizontal i.e., team structures. ‘We report to each other’ is the

main feature of team structure. It leads to boundary less organsiation in a borderless world. In team

structures, we find cross-functional teams meant for improving lateral relations, solving problem,

completing special projects and accomplishing routine tasks. A cross-functional team comprises

members from different functional departments such as marketing, finance, HR, production etc.

Project teams are convened for a particular task or project and these get dissolved once task is

completed. The intention here is to quickly bring together the people with the needed talents and

focus their efforts intensely to solve a problem or take advantage of a special opportunity. Here

employees are more involved and empowered because of reduced barriers among functional areas.

Sometimes, when there is pressure on teams to perform and there is no clear chain of command,

team structure fails to deliver results.

Boundary less Organization: At the name indicates, a boundary less organization eliminates internal

boundaries among subsystems and external boundaries with external environment. It is a

combination of team and network structures with the addition of temporariness. Such type of

organization structure is characterized by spontaneous teamwork and communication. This replaces

formal chain of command. It is a dynamic organization structure wherein organizational needs are



met through a judicious mix of outsourcing contracts and alliances as and when needed. The key

features of boundary less organization include knowledge-sharing, absence of hierarchy and

bureaucracy, empowerment voluntary participation of expert members, technology utilization and

temporariness. The focus is on mustering necessary talent and competencies required for the

achievement of a task without any bureaucratic restrictions. Creativity, quality, timeliness, increase

in speed and flexibility are the benefits the boundary less organization yields. It also reduces

inefficiencies. The boundary less organization is highly flexible and responsive. These draw on talent

wherever it is found. Sometimes, they are ineffective due to problems in communication.

Inverted Pyramid: This is an alternative to the traditional chain of command. This is a structure,

which is narrow at the top and wide at the base. It includes a few levels of management. For

instance, sales people and sales support staff sit on the top as the key decision makers for all the

issues related to sales and dealing with the customers. Since the sales staffs are in touch with the

customer and aware of the requirements of the customers, they are given all the freedom to follow

their own best judgment at all levels.

DEPARTMETATION AND DECENTRALISATION

Departmentation

The process of classifying the organization on the basis of departments or similar activities in

it is called departmentaion.This facilities planning and control at the department level. It is possible

to fix the responsibility in the departmental head for targets. It offers scope to introduce division of

labor and ensure specialization. It created a necessity of large-scale industries to meet the increased

demand. In large scale, industries there are large number of employees. For the sake of efficient

supervision and control, the factory/enterprise is divided into different departments. Each

department is entrusted with a particular function for carrying out particular activity each

departmental head is expected to control and supervise the work in his department.

Definition: The process of dividing the work and then grouping them into units and submits or

departments for the purpose of administration.

Method of Departmentation:

1. By function: It is divided into primary function to be performed such as, finance, marketing,

production, personnel etc. each function separate departments



2. By product: All activities related to a particular product line may be grouped together. This

basis of departmentation has become increasingly important, especially for complex

organizations producing different types of products.

3. By process: In this method, the manufacturing activity are sub divided on the basis of their

process of production, similar machines such as all laths, milling machines, grinding

machines, milling machine etc. are grouped into separate section, such as lathe department,

milling department, drilling department.

4. By geographical region: This method may be adopted when the enterprise produces and

sells in the wide market, often in international markets.

5. A manager alone cannot perform all the tasks assigned to him. In order to meet the targets,

the manager should delegate authority. Delegation of Authority means division of authority

and powers downwards to the subordinate. Delegation is about entrusting someone else to

do parts of your job. Delegation of authority can be defined as subdivision and sub-

allocation of powers to the subordinates in order to achieve effective results.

DECENTRALIZATION

Decentralization is a systematic delegation of authority at all levels of management and in all of the

organization. In a decentralization concern, authority in retained by the top management for taking

major decisions and framing policies concerning the whole concern. Rest of the authority may be

delegated to the middle level and lower level of management.

Decentralization is not the same as delegation. In fact, decentralization is all extension of

delegation. Decentralization pattern is wider is scope and the authorities are diffused to the

lowest most level of management. Delegation of authority is a complete process and takes

place from one person to another. While decentralization is complete only when fullest

possible delegation has taken place. For example, the general manager of a company is

responsible for receiving the leave application for the whole of the concern. The general

manager delegates this work to the personnel manager who is now responsible for receiving

the leave applicants. In this situation delegation of authority has taken place. On the other

hand, on the request of the personnel manager, if the general manager delegates this power to

all the departmental heads at all level, in this situation decentralization has taken place. There

is a saying that “Everything that increasing the role of subordinates is decentralization and

that decreases the role is centralization”. Decentralization is wider in scope and the

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subordinate‘s responsibility increase in this case. On the other hand, in delegation the

managers remain answerable even for the acts of subordinates to their superiors.

Example: Concepts of decentralization have been applied to group dynamics and

management science in private businesses and organizations, political science, law and public

administration, economics and technology.

Benefits of decentralization: Benefits of decentralization are, to some extent, similar to that

of delegation as decentralization is the result of systematic delegation on the lowest level in

the organizational hierarchy. Here, the some main benefits have been listed:

Reduced workloads for top executives

Technique of management development

Effective supervision and control

Facility for growth and diversification

Source of motivation

Employee satisfaction and high morale

Improved communication

Reduced complexity

Speedy decisions and actions

Disadvantages of decentralization: Decentralization is not always useful. In certain cases, it

may be source of problems, and hence, may lead to ineffectively.to management should be

aware of the possible disadvantage listed below.

Problem related to staff services(or loss of staff sevices)

Difficulties in coordination

Problem of overall control

Increased administrative costs

Problem during emergency

Lack of uniformity

Uncertain outcomes

Possibility of conflict

Power and Authority

https://en.wikipedia.org/wiki/Group_dynamics

https://en.wikipedia.org/wiki/Management_science

https://en.wikipedia.org/wiki/Political_science

https://en.wikipedia.org/wiki/Law

https://en.wikipedia.org/wiki/Public_administration

https://en.wikipedia.org/wiki/Public_administration

https://en.wikipedia.org/wiki/Economics

https://en.wikipedia.org/wiki/Technology



Power is a broader concept than authority. Power is the ability of a person or a group to influence

the beliefs and actions of other people. It is the ability to influence events. Power can be personal

power. A person gets his personal power from his personality or from his expert knowledge.

Doctors, Lawyers, Engineers, Programmers, etc. get their power from their expertise and

professional knowledge. Power can also be legitimate or official power. This power comes from a

higher authority.

Authority is the right given to a manager to achieve the objectives of the organisation. It is a

right to get the things done through others. It is a right to take decisions. It is a right to give

orders to the subordinates and to get obedience from them. A manager cannot do his work

without authority.

A manager gets his authority from his position or post. He gets his authority from the higher

authorities. The lower and middle-level managers get their authority from the top-level

managers. The top-level managers get their authority from the shareholders.

Authority always flows downwards. It is delegated from the top to the bottom.

According to Henri Fayol, :"Authority is the right to give orders and power to exact (get)

obedience."

Difference between power and authority

Power Authority

Power comes from knowledge and expertise.

Authority comes from position and office.

Power is the personal ability of a person to Authority is the formal right to take



control or influence others. decisions or making commands.

Power does not come with rank or designation; a person is either powerful or not.

Authority comes with rank and designation.

The scope of power cannot be written down or explained because it is too broad a concept.

The scope of authority can be written down and explained in explicit terms.

Power is not dependant on levels as it is broader in context and has a more extensive approach.

Authority is dependent on levels or positions and can be used in a limited manner as awarded.

DELEGATION OF AUTHORITY

Delegation of authority is one vital organizational process. It is inevitable along with the

expansion and growth of a business enterprise. Delegation means assigning of certain

responsibilities along with the necessary authority by a superior to his subordinate

managers. Delegation does not mean surrender of authority by the higher level manager. It

only means transfer of certain responsibilities to subordinates and giving them the necessary

authority, which is necessary to discharge the responsibility properly. Delegation is quite

common in all aspects of life including business. Even in the college, the principal delegates

some of his authority to the vice-principal. All activities are not performed by one person.

Authority should be provided to the subordinates too. Process of transferring authority and

creation of responsibility between superior and subordinates to accomplish a certain task is

called delegation of authority.

Principles for effective delegation of authority

1. Principle of parity of authority and responsibility– parity of authority and

responsibility is one of the important principles of delegation of authority. There is

equality in assigned task and power to do the work. Authority to the subordinates is

given by the superior on the basis of assigned task. So Authority to the subordinates is

given nether more or less than the task otherwise their can be improper utilization of

authority and mismanagement of task.

2. Principle of absoluteness of responsibility– according to it, responsibility can‘t be

delegated. Only authority can be delegated. The person who delegates authority is

himself responsible for his seniors.



3. Principle of unity of command– according to it, subordinates must be commanded

by one superior; they should take their task from one superior and should be

accountable from their responsibility toward the superior level of operation.

4. Principle of functional definition of authority and responsibility– as per this

principle. Duties and task assigned by the superior and the authority given to fulfill

the task should be clearly explained and decided. But this subordinates can know

about the limit of one‘s right, duties and responsibility.

5. The scalar chain– according to it, authority flows from top to bottom. So that scalar

chain is the basis of relationship between the superior and subordinates. It emphasizes

the relation between superior and subordinates by which delegation will be easier.

Relationship between Authority and Responsibility

Authority Responsibility

It is the legal right of a person or

a superior to command his

subordinates.

It is the obligation of subordinate to perform the

work assigned to him.

Authority is attached to the

position of a superior in concern.

Responsibility arises out of superior-subordinate

relationship in which subordinate agrees to carry

out duty given to him.

Authority can be delegated by a

superior to a subordinate

Responsibility cannot be shifted and is absolute

It flows from top to bottom. It flows from bottom to top.



DIFFERENCE BETWEEN DELEGATION AND DECENTRALIZATION

BASIS DELEGATION DECENTRALIZATION

MEANING It is the entrustment of

responsibility and authority from

one individual to another.

It is a systematic delegation of

authority in the organization.

NATURE It is individualistic It is totalistic under an

organizational set up.

SCOPE Limited as it is individualistic. Wide as it is organizational.

RESPONSIBILITY Only duty and authority are

delegated but overall results

remains with superior.

Executive relived from his

responsibility and subordinates

become liable.

EFFECTIVENESS It is possible and effective in all

organizations.

It is possible and effective in big

organization.

RELATIONSHIP Delegation establish superior-

subordinates relationship.

Decentralization is a step towards

creation of semi autonomous units.

Engineering

Management science