Principles of Management

Model Question-Answer Bank

School of Business Management

IFTM UNIVERSITY

BBA-101: Principles of Management

UNIT I

Q.1. What is Management? Explain the nature of management with suitable illustrations.

Ans. It is very difficult to give a precise definition of the term ‘management’. Different scholars from different disciplines view and interpret management from their own angles. The economists consider management as a resource like land, labour, capital and organisation. The bureaucrats look upon it as a system of authority to achieve business goals. The sociologists consider managers as a part of the class elite in the society.

The definitions by some of the leading management thinkers and practitioners are given below:

(i) Management consists in guiding human and physical resources into dynamic, hard-hitting organisation unit that attains its objectives to the satisfaction of those served and with a high degree of morale and sense of attainment on the part of those rendering the service. —Lawrence A. Appley

(ii) Management is the coordination of all resources through the process of planning, organising, directing and controlling in order to attain stated objectives. —Henry L. Sisk.

(iii) Management is principally the task of planning, coordinating, motivating and controlling the efforts of others towards a specific objective. —James L. Lundy

(iv) Management is the art and science of organising and directing human efforts applied to control the forces and utilise the materials of nature for the benefit of man. —American Society of Mechanical Engineers

(v) Management is the creation and maintenance of an internal environment in an enterprise where individuals, working in groups, can perform efficiently and effectively towards the attainment of group goals. —Harold Koontz and Cyrill O’Donnell

(vi) Management is the art of knowing what you want to do and then seeing that it is done in the best and cheapest way. —F.W. Taylor

(vii) To manage is to forecast and to plan, to organise to command, to coordinate and to control. —Henry Fayol

(viii) Management is the function of executive leadership anywhere. —Ralph C. Davis

(ix) Management is concerned with seeing that the job gets done; its tasks all centre on planning and guiding the operations that are going on in the enterprise. —E.F.L. Breach

(x) Management is a distinct process consisting of planning, organising, actuating and controlling performed to determine and accomplish the objectives by the use of people and resources. —George R. Terry

(xi) Management is guiding human and physical resources into dynamic organisational units which attain their objectives to the satisfaction of those served and with a high degree of morale and sense of attainment on the part of those rendering service. —American Management Association

(xii) Management is a multipurpose organ that manage a business and manages Managers and manages Workers and work. —Peter Drucker

NATURE OF MANAGEMENT

To understand the basic nature of management, it must be analysed in terms of art and science, in relation to administration, and as a profession, in terms of managerial skills and style of managers.

Management is Combination of Art and Science

Management knowledge exhibits characteristics of both art and science, the two not mutually exclusive but supplementary. Every discipline of art is always backed by science which is basic knowledge of that art. Similarly, every discipline of science is complete only when it is used in practice for solving various kinds of problems faced by human beings in an organisation or in other fields of social life which is more related to an art. Art basically deals with an application of knowledge personal skill and know-how in a specific situation for efficiently achieving a given objective. It is concerned with the best way of doing things and is consequently, personalised in nature.

During the primitive stages of development of management knowledge, it was considered as an art. There was a jungle of managerial knowledge. It was not codified and systemised. People used it to get things done by others, in their own way giving an impression that whosoever uses it, knows the art of using it. This kind of loose and inadequate understanding of management supported the view that it was an art.

Management as a Science

Science means a systematic body of knowledge pertaining to a specific field of study. It contains general principles and facts which explains a phenomenon. These principles establish cause-and-effect relationship between two or more factors. These principles and theories help to explain past events and may be used to predict the outcome of actions. Scientific methods of observations, and experiments are used to develop principles of science. The principles of science have universal application and validity.

Thus, the essential features of science are as follows:

(i) Basic facts or general principles capable of universal application

(ii) Developed through scientific enquiry or experiments

(iii) Establish cause and effect relationships between various factors

(iv) Their Validity can be verified and they serve as reliable guide for predicting future events.

Let us now examine as to what extent management satisfies the above conditions:

(i) Systematic body of knowledge: Management has a systematic body of knowledge consisting of general principles and techniques. These help to explain events and serve as guidelines for managers in different types of organisations.

(ii) Universal principles: Scientific principles represent basic facts about a particular field enquiry. These are objective and represent best thinking on the subject. These principles may be applied in all situations and at all times. Exceptions, if any, can be logically explained. For example, the Law of Gravitation states that if you throw an object in the air it will fall on the ground due to the gravitational force of the earth. This law can be applied in all countries and at all points of time. It is as applicable to a football as it is to an apple falling from tree. Management contains sound fundamental principles which can be universally applied. For instance, the principle of unity of command states that at a time one employee should be answerable to only one boss. This principle can be applied in all types of organisation-business or non business. However, principles of management are not exactly like those of physics or chemistry. They are flexible and need to be modified in different situations.

(iii) Scientific enquiry and experiments: Scientific principles are derived through scientific investigation and reasoning. It means that there is an objective or unbiased assessment of the problem situation and the action chosen to solve it can be explained logically. Scientific principles do not reflect the opinion of an individual or of a religious guru. Rather these can be scientifically proved at any time. They are critically tested. For example, the principle that the earth revolves around the sun has been scientifically proved.

(iv) Management principles are also based on scientific enquiry and investigation. These have been developed through experiments and practical experience of a large number of managers. For example, it has been observed that wherever one employee has two or more bosses simultaneously, confusion and indiscipline are likely to arise, with regard to following the instructions.

(v) Cause and effect relationship: Principles of science lay down a cause and effect relationship between related factors. For example, when water is heated up to 100ºC, it starts boiling and turns into vapour. Similarly, the principles of management establish cause and effect relationship between different variables. For instance lack of balance between authority and responsibility will cause management to become ineffective.

(vi) Tests of validity and predictability: Validity of scientific principles can be tested at any time and any number of times. Every time the test will give the same result. Moreover, the future events can be predicted with reasonable accuracy by using scientific principles. For example, the Law of Gravitation can be tested by throwing various things in the air and every time the object will fall on the ground. Principles of management can also be tested for their validity. For example, the principle of unity of command can be tested by comparing two persons, one having a single boss and other having two bosses. The performance of the first person will be higher than that of the second.

Thus, management is undoubtedly a science. It contains a systematic body of knowledge in the form of general principles which enjoy universal applicability. However, management is not as exact a science—Physics, Chemistry, Biology and other Physical sciences. This is because management deals with people and it is very difficult to predict accurately the behaviour of living human beings. Management principles are universal but they cannot be expected to give exactly the same results in every situation. That is why management is known as a soft science. Management is a social science. It is still growing, with the growing needs of human organisations.

Management as an Art

Art implies the application of knowledge and skills to bring about the desired results. The essential elements of arts are:

(i) Practical knowledge

(ii) Personal skill

(iii) Result oriented approach

(iv) Creativity

(v) Improvement through continuous practice

Let us judge how far management fulfils these requirements:

(i) Practical knowledge: Every art signifies practical knowledge. An artist not only learn the theory but also its application in practice. For example, a person may have adequate technical knowledge of painting but he cannot become a good painter unless he knows how to make use of the brush and colours. Similarly, a person cannot become a successful manager simply by reading the theory and getting a degree or diploma in management. He must also learn to apply his knowledge in solving managerial problems in practical life. A manager is judged not just by his technical knowledge but by his efficiency in applying this knowledge.

(ii) Personal skill: Every artist has his own style and approach to his job. The success of different artists differ even when all of them possess the same technical knowledge or qualifications. This is due to the level of their personal skills. For example, there are several qualified singers but Lata Mangeshkar has achieved the highest degree of success. Similarly, management is personalised. Every manager has his individual approach and style in solving managerial problems. The success of a manager depends on his personality in addition to his technical knowledge.

(iii) Result-oriented approach: Arts seeks to achieve concrete results. The process of management is also directed towards the accomplishment of desirable goals. Every manager applies certain knowledge and skills to achieve the desired results. He uses men, money, materials and machinery to promote the growth of the organisation.

(iv) Creativity: Art is basically creative and an artist aims at producing something that had not existed before. Therefore, every piece of art requires imagination and intelligence to create. Like any other art, management is creative. A manager effectively combines and coordinates the factors of production to create goods and services. Moulding the attitudes and behaviour of people at work, towards the achievement of the desired goals is an art of the highest order.

(v) Improvement through people: Practice makes one perfect. Every artist become more and more efficient through constant practice. A dancer, for example, learns to perform better by continuously practicing a dance. Similarly, manager gains experience through regular practice and becomes more effective.

Thus, “management is both a science as well as an art”. It is a science because it has an organised body of knowledge consisting of certain universal facts. It is known as an art because it involves creating results through practical application of knowledge and skills. However, art and science are complementary to each other. They are not mutually exclusive. Science teaches one to know and art to do. Art without science has no guide and science without art is knowledge wasted.

For example, a person cannot be a good surgeon unless he has scientific knowledge of human anatomy and the practical skill of applying that knowledge in conducting an operation.

Similarly, a successful manager must know the principles of management and also acquire the skill of applying those principles for solving managerial problems in different situations. Knowledge of principles and theory is essential, but practical application is required to make this knowledge fruitful. One cannot become an effective manager simply by learning management principles by heart. Science (theory) and art (practice) are both essential for the success of management.

Management as a Profession

A profession is calling that requires specialised knowledge and often, long intensive academic preparation. The essential features of profession are as follows:

(i) Well defined body of knowledge

(ii) Restricted entry

(iii) Service motive

(iv) Code of Conduct

(v) Representative professional association

Let us examine to what extent management fulfils the above requirements:

(i) Specialised body of knowledge: Every profession has a well defined body of knowledge relevant to the area of specialisation. In order to practice a profession, a person requires specialised knowledge of its principles and techniques. Moreover, he must make deliberate efforts to gain proficiency unit. There exists a substantial and rapidly expanding body of knowledge in management. A manager must have intensive devotion and involvement to acquire expertise in the science of management. In addition, there should be competent application or judicious utilisation of this knowledge in solving complex problems. Today, management is a separate discipline having a specialised and organised body of knowledge.

(ii) Restricted entry: There exists institutions and universities to impart education and training for a profession. No one can enter a profession without going through the prescribed course of learning. For example one must pass the Chartered Accountancy examination to practice accountancy profession. Many institutes of management have been set up in India and abroad which offer courses for specialised training in management. Several management consultancy firms have also come into existence to offer advise for solving managerial problems. Formal education and training has become very helpful in getting jobs as managers. But no minimum qualification or course of study has been prescribed for managers by law.

(iii) Service motive: A profession is a source of livelihood but professionals are primarily motivated by the desire to serve the community. For example, a doctor earns his living from his medical practice. But he does not treat his patients only for the sake of money. He has a concern for the suffering of others and a desire to help the community. Therefore, a profession enjoys high community sanction or respect. Similar is the case with managers. A manager of a factory is responsible not only to its owners, but he is also expected to produce quality goods at a reasonable cost and to contribute to the well-being of the community.

(iv) Representative association: In every profession there is a statutory association or institution which regulates that profession. For example, the Institute of the Chartered Accountants of India establishes and administers standards of competence for the auditors. In management also associations have been established both in India and abroad. Managers have formed associations for the regular exchange of knowledge and experience. In India, there is the All India Management Association. However, this association does not have the statutory power to regulate the activities of managers. No university accepted criteria or standard exists for their evaluation. Membership of this association is not compulsory in order to become a manager.

(v) Code of conduct: Members of one profession have to abide by a code of conduct which contains rules and regulations providing the norms of honesty, integrity and professional ethics. For example a chartered accountant is not expected to commercially advertise his firm. The code of conduct is by the representative association to ensure self-discipline among its members. Any member violating the code can be punished and his membership can be cancelled. The All India Management Association has framed code of conduct for managers. The code requires the managers to fulfil their social and moral obligations. Members of the association are expected not to disclose the trade secrets of their employers and to make personal gain from the knowledge of internal working of the organisation. But this code does not have legal sanctions. However, observing business ethics is always helpful in becoming a more effective manager.

The above discussion reveals that management fulfils several essentials of profession. But like other professions, management does not restrict the entry into managerial jobs to people with a special academic degree. No minimum qualifications have been prescribed for managerial personnel. No management association has the authority to grant certificates of practice or to regulate entry into management careers. Few managers have uniform background in terms of education and experience. The management associations have no legal right to enforce their code of conduct. There is no single group to which the majority of the managers belong and whose authority is recognised by law as a sanction. Moreover, there is no single client group to which managers owe complete loyalty. Doctors owe their loyalty to patients. But managers are responsible to the owners as well as to other social groups.

Thus, management is, not strictly speaking, a full-fledged profession like medicine, law or chartered accountancy. Some experts believe that there should be no control over entry into management careers. According to Peter F. Drucker, “Management is a practice rather than a science or profession through containing elements of both. No greater damage could be done to economy and society than to attempt to professionalise management by licensing managers or by limiting access to management to people with special academic degree”.

Q.2. Elaborate upon the purpose & importance of management.

Ans. Management is indispensable for the successful functioning of every organisation. It is all the more important in business enterprises. No business runs in itself, even on momentum. Every business needs repeated stimulus which can only be provided by management. According to Peter Drucker,“ management is a dynamic lifegiving element in an organisation, without it the resources of production remain mere resources and never become production”.

The importance of management has been highlighted clearly in the following points:

(i) Achievement of group goals: A human group consists of several persons, each specialising in doing a part of the total task. Each person may be working efficiently, but the group as a whole cannot realise its objectives unless there is mutual cooperation and coordination among the members of the group. Management creates team-work and coordination in the group. He reconciles the objectives of the group with those of its members so that each one of them is motivated to make his best contribution towards the accomplishment of group goals. Managers provide inspiring leadership to keep the members of the group working hard.

(ii) Optimum utilisation of resources: Managers forecast the need for materials, machinery, money and manpower. They ensure that the organisation has adequate resources and at the sametime does not have idle resources. They create and maintain an environment conducive to highest productivity. Managers make sure that workers know their jobs well and use the most efficient methods of work. They provide training and guidance to employeers so that they can make the best use of the available resources.

(iii) Minimisation of cost: In the modern era of cut-throat competition no business can succeed unless it is able to supply the required goods and services at the lowest possible cost per unit. Management directs day-to-day operations in such a manner that all wastage and extravagance are avoided. By reducing costs and improving efficiency, managers enable an enterprise to be competent to face competitors and earn profits.

(iv) Survival and growth: Modern business operates in a rapidly changing environment. An enterprise has to adapt itself to the changing demands of the market and society. Management keeps in touch with the existing business environment and draws its predictions about the trends in future. It takes steps in advance to meet the challenges of changing environment. Changes in business environment create risks as well as opportunities. Managers enable the enterprise to minimise the risks and maximise the benefits of opportunities. In this way, managers facilitate the continuity and prosperity of business.

(v) Generation of employment: By setting up and expanding business enterprises, managers create jobs for the people. People earn their livelihood by working in these organisations. Managers also create such an environment that people working in enterprise can get job satisfaction and happiness. In this way managers help to satisfy the economic and social needs of the employees.

(vi) Development of the nation: Efficient management is equally important at the national level. Management is the most crucial factor in economic and social development. The development of a country largely depends on the quality of the management of its resources. Capital investment and import of technical knowhow cannot lead to economic growth unless wealth producing resources are managed efficiently. By producing wealth, management increases the national income and the living standards of people. That is why management is regarded as a key to the economic growth of a country.

Q.3. Discuss basic principles of Management along with their significance.

Ans. A body of principles of management has been developed by Henri Fayol, the father of modern management. Fayol wrote perceptibly on the basis of his practical experience as a manager. Although, he did not develop an integrated theory of management, his principles are surprisingly in tune with contemporary thinking in management theory.

Fayol held that there is a single "administrative science", whose principles can be used in all management situations no matter what kind of organization was being managed. This earned him the title of "Universality". He, however, emphasized that his principles were not immutable laws but rules of thumb to be used as occasion demanded.

Fayol held that activities of an industrial enterprise can be grouped in six categories : (i) technical (production), (ii) commercial (buying, selling and exchange), (iii) financial (search for and optimum use of capital), (iv) security (protection of property and persons), (v) accounting (including statistics); and (vi) managerial. However, he devoted most of his attention to managerial activity. He developed the following principles underlying management of all kinds of organizations :

1. Authority and Responsibility are Related : Fayol held that authority flows from responsibility. Managers who exercise authority over others should assume responsibility for decisions as well as for results. He regarded authority as a corollary to responsibility. Authority is official as well as personal. Official authority is derived from the manager's position in organizational hierarchy and personal authority is compounded of intelligence, experience, moral worth, past services, etc. A corollary of the principle that no manager should be given authority unless he assumes responsibility is that those who have responsibility should also have commensurate authority in order to enable them to initiate action on others and command resources required for the performance of their functions. This aspect of relationship between responsibility and authority is particularly relevant in India where authority tends to be concentrated in higher echelons of management.

2. Unity of Command : This principle holds that one employee should have only one boss and receive instructions from him only. Fayol observed that if this principle is violated authority will be undermined, discipline will be jeopardy, order will be disturbed and stability will be threatened. Dual command is a permanent source of conflict. Therefore, in every organization, each subordinate should have one superior whose command he has to obey.

3. Unity of Direction : This means that all managerial and operational activities which relate a distinct group with the same objective should be directed by "one head and one plan. According to Fayol, there should be, "one head and one plan for a group of activities having the same objective". It, however, does not mean that all decisions should be made at the top. It only means that all related activities should be directed by one person. For example, all marketing activities like product strategy and policy, advertising and sales promotion, distribution channel policy, product pricing policy, marketing research, etc., should be under the control of one manager and directed by an integrated plan. This is essential for the "unity of action, coordination of strength and focusing of effort". Violation of this principle will cause fragmentation of action and effort, and wastage of resources.

4. Scalar Chain of Command : According to Fayol scalar chain is the chain of superiors ranging from the ultimate authority to the lowest ranks. The line of authority is the route followed via every link in the chain by all communication which start from or go to the ultimate authority.

5. Division of Work : This is the principle of specialization which, according to Fayol, applies to all kinds of work, managerial as well as technical. It helps a person to acquire an ability and accuracy with which he can do more and better work with the same effort. Therefore, the work of every person in the organization should be limited as far as possible to the performance of a single leading function.

6. Discipline : Discipline is a sine qua non for the proper functioning of an organization. Members of an organization are required to perform their functions and conduct themselves in relation to others according to rules, norms and customs. According to Fayol, discipline can best be maintained by : (i) having good superiors at all levels; (ii) agreements (made either with the individual employees or with a union as the case may be) that are as clear and fair as possible; and (iii) penalties judiciously imposed.

7. Subordination of Individual Interest to General Interest : The interest of the organization is above the interests of the individual and the group. It can be achieved only when managers in high positions in the organization set an example of honesty, integrity, fairness and justice. It will involve an attitude and a spirit of sacrificing their own personal interests whenever it becomes apparent that such personal interests are in conflict with organizational interests. It may, however, be emphasized that social and national interests should have precedence over organizational interests whenever the two run counter to each other.

8. Remuneration : Employees should be paid fairly and equitably. Differentials in remuneration should be based on job differentials, in terms of qualities of the employee, application, responsibility, working conditions and difficulty of the job. It should also take into account factors like cost of living, general economic conditions, demand for labour and economic state of the business.

9. Centralisation : Fayol believed in centralisation. He, however, did not contemplate concentration of all decision making authority in the top management. He, however, held that centralisation and decentralisation is a question of proportion. In a small firm with a limited number of employees, the owner-manager can give orders directly to everyone. In large organizations, however, where the worker is separated from the chief executive through a long scalar chain, the decision making authority has to be distributed among various managers in varying degrees. Here one generally comes across a situation of decentralisation with centralised control. The degree of centralisation and decentralisation also depends on the quality of managers.

10. Order : Order, in the conception of Fayol, means right person on the right job and everything in its proper place. This kind of order, depends on precise knowledge of human requirements and resources of the concern and a constant balance between these requirements and resources.

11. Equity : It means that subordinates should be treated with justice and kindliness. This is essential for eliciting their devotion and loyalty to the enterprise. It is, therefore the duty of the chief executive to instill a sense of equity throughout all levels of scalar chain.

12. Stability of Tenure of Personnel : The managerial policies should provide a sense of reasonable job security. The hiring and firing of personnel should depend not on the whims of the superiors but on the well-conceived personnel policies. He points out that it takes time for an employee to learn his job; if they quit or are discharged within a short time, the learning time has been wasted. At the same time those found unsuitable should be removed and those who are found to be competent should be promoted. However, "a mediorce manager who stays is infinitely preferable to outstanding managers who come and go".

13. Initiative : It focuses on the ability, attitude and resourcefulness to act without prompting from others. Managers must create an environment which encourages their subordinates to take initiative and responsibility. Since it provides a sense of great satisfaction to intelligent employees, managers should sacrifice their personal vanity in order to encourage their subordinates to show initiative. It should, however, be limited, according to Fayol, by respect for authority and discipline.

14. Esprit de Corps : Cohesiveness and team spirit should be encouraged among employees. It is one of the chief characteristics of organized activity that a number of people work together in close coopearation for the achievement of common goals. An environment should be created in the organization which will induce people to contribute to each other's efforts in such a way that the combined effort of all together promotes the achievement of the overall objectives of enterprise. Fayol warns against two enemies of esprit de corps, viz. (i) divide and rule, and (ii) abuse of written communication. It may work to the benefit of the enterprise to divide its enemy but it will surely be dangerous to divide one's own workers. They should rather be welded in cohesive and highly interacting work-groups. Overreliance on written communication also tends to disrupt team spirit. Written communication, where necessary, should always be supplemented by oral communication because face-to-face contacts tend to promote speed, clarity and harmony.

The other important principles of management as developed by pioneer thinkers on the subject are :

(a) Separation of planning and execution of business operations

(b) Scientific approach to business problems

(d) Economizing production costs and avoiding the wastage of resources

(e) Fuller utilization of the operational capacity and emphasis on higher productivity

(f) Standardisation of tools, machines, materials, methods, timings and products

(g) Evaluation of results according to criteria of standard levels of performance

(h) Understanding and co-operation among the members of the organization set-up

Q.4. Discuss the important functions of management which support the philosophy of modern management thinkers.

Ans. Management process suggests that all the managers in the organization perform certain functions to get the things done by others. However, what are these functions which comprise management process is not quite clear and divergent views have been expressed on this. List of management functions varies from author to author with the number of functions ranging from three to eight.

There is enough disagreement among management writers on the classification of managerial functions. Newman and Summer recognize only four functions, namely, organizing, planning, leading and controlling. Henri Fayol identifies five functions of management, viz. planning, organizing, commanding, coordinating and controlling. Luther Gulick states seven such functions under the catch word "POSDCORB' which stands for planning, organizing, staffing, directing, coordinating, reporting and budgeting. Warren Haynes and Joseph Massie classify management functions into decision-making, organizing, staffing, planning, controlling, communicating and directing. Koontz and O'Donnell divide these functions into planning organizing, staffing, directing and controlling.

Davis includes planning, organizing and controlling. Breach includes planning, organizing, motivating, coordinating and controlling.

For our purpose, we shall designate the following six as the functions of a manager: planning, organizing, staffing, directing, coordinating and controlling. Henry Fayol, an early thinker of management process, has classified management functions into planning, organizing, commanding, coordinating and controlling. Gullick and Urwick have described the functions of management as POSDCORB referring to planning, organizing, staffing, directing, coordinating, reporting and budgeting. Koontz and O’Donell have included planning, organizing, staffing, leading and controlling. Earnest Dale has suggested innovation and representing also as important management functions besides these. Thus it can be seen that there is no agreement over the various functions of management. These functions have been treated differently over the period of time. Ervin Williams has summarized the various managerial functions developed over the period of time. All the above functions can be categorized into four basic functions of management i.e. planning, organizing, leading and controlling.

Planning

The planning function is the primary activity of management. Planning is the process of establishing goals and a suitable course of action for achieving those goals. Planning implies that managers think through their goals and actions in advance and that their actions are based on some method, plan, or logic rather than on a....... Plans give the organization its objectives and set up the best procedures for reaching them. The organizing, leading and controlling functions all derived from the planning function.

The first step in the planning is the selection of goals for the organization. Goals are then established for each of the organization’s subunits-its division, department and soon. Once these are determined, programs are established for achieving goals in a systematic manner.

The organizational objectives are set by top management in the context of its basic purpose and mission, environmental factors, business forecasts, and available and potential resources. These objectives are both long-range as well as short-range. They are divided into divisional, departmental, sectional and individual objectives or goals. This is followed by the development of strategies and courses of action to be followed at various levels of management and in various segments of the organization. Policies, procedures and rules provide the framework of decision making, and the method and order for the making and implementation of these decisions.

Every manager performs all these planning functions, or contributes to their performance. In some organizations, particularly those which are traditionally managed and the small ones, planning are often not done deliberately and systematically but it is still done. The plans may be in the minds of their managers rather than explicitly and precisely spelt out: they may be fuzzy rather than clear but they are always there. Planning is thus the most basic function of management. It is performed in all kinds of organizations by all managers at all levels of hierarchy.

Relationship and time are central to planning activities. Planning produces a picture of desirable future circumstances - given currently available resources, past experience etc. Planning is done by all managers at every level of the organization. Through their plans, managers outline what the organization must do to be successful while plans may differ in focus, they are all concerned with achieving organizational goals in the short and long term. Taken as a whole, an organization’s plans are the primary tools for preparing for and dealing with changes in the organization’s environment.

Organizing

After managers develop objectives and plans to achieve the objectives, they must design and develop an organization that will be able to accomplish the objectives. Thus the purpose of the organizing function is to create a structure of task and authority relationships that serves this purpose.

Organizing is the process of arranging and allocating work, authority, and resources among an organization’s members so they can achieve the organization’s goals.

Stoner defines “organizing as the process of engaging two or more people in working together in a structured way to achieve a specific goal or set of goals.

The organizing function takes the tasks identified during planning and assigns them to individuals and groups within the organization so that objectives set by planning can be achieved. Organizing, then, can be thought of turning plans into actions. Organizing function can be viewed as a bridge connecting the conceptual idea developed in creating and planning to the specific means for accomplishing these ideas.

The organizing function also provides on organizational structure that enables the organization to function effectively. Managers must match an organization’s structure to its goals and resources, a process called

organizational design. Organizing thus involves the following subfunctions:

(a) Identification of activities required for the achievement of objectives and implementation of plans.

(b) Grouping the activities so as to create self-contained jobs.

(d) Delegation of authority so as to enable them to perform their jobs and to command the resources needed for their performance.

(e) Establishment of a network of coordinating relationships.

Organizing process results in a structure of the organization. It comprises organizational positions, accompanying tasks and responsibilities, and a network of roles and authority-responsibility relationships.

Organizing is thus the basic process of combining and integrating human, physical and financial resources in productive interrelationships for the achievement of enterprise objectives. It aims at combining employees and interrelated tasks in an orderly manner so that organizational work is performed in a coordinated manner, and all efforts and activities pull together in the direction of organizational goals.

Staffing

Staffing is a continuous and vital function of management. After the objectives have been determined, strategies, policies, programmes, procedures and rules formulated for their achievement, activities for the implementation of strategies, policies, programmes, etc. identified and grouped into jobs, the next logical step in the management process is to procure suitable personnel for manning the jobs. Since the efficiency and effectiveness of an organization significantly depends on the quality of its personnel and since it is one of the primary functions of management to achieve qualified and trained people to fill various positions, staffing has been recognized as a distinct function of management. It comprises several sub-functions :

(a) Manpower planning involving determination of the number and the kind of personnel required

(b) Recruitment for attracting adequate number of potential employees to seek jobs in the enterprise

(d) Placement, induction and orientation

(e) Transfers, promotions, termination and layoff

(f) Training and development of employees.

As the importance of human factor in organizational effectiveness is being increasingly recognized, staffing is gaining acceptance as a distinct function of management. It need hardly any emphasize that no organization can ever be better than its people, and managers must perform the staffing function with as much concern as any other function.

Directing

Directing is the function of leading the employees to perform efficiently, and contribute their optimum to the achievement of organizational objectives. Jobs assigned to subordinates have to be explained and clarified, they have to be provided guidance in job performance and they are to be motivated to contribute their optimum performance with zeal and enthusiasm. The function of directing thus involves the following sub-functions:

(a) Communication

(b) Motivation

Once objectives have been developed and the organizational structure has been designed and staffed, the next step is to begin to move the organization toward the objectives. The directing function serves this purpose. It involves directing, influencing and motivating employees to perform essential tasks.

The best human resources employed will be of house if they are not motivated and directed in the right direction to achieve the organizational goals. Managers lead is an attempt to persuade others to join them in pursuit of the future that emerges from the planning, and organizing steps. By establishing the proper atmosphere, managers help their employees to do their best.

Effective leadership is a highly prized ability in organizations and is a skill that some managers have difficulty in developing. The ability requires both task-oriented capabilities and the ability to communicate, understand and motivate people.

Coordinating

Coordinating is the function of establishing such relationships among various parts of the organization that they all together pull in the direction of organizational objectives. It is thus the process of tying together all the organizational decisions, operations, activities and efforts so as to achieve unity of action for the accomplishment of organizational objectives.

The significance of the coordinating process has been aptly highlighted by Mary Parker Follet. The manager, in her view, should ensure that he has an organization "with all its parts coordinated, so moving together in their closely knit and adjusting activities, so linking, interlocking and interrelation, that they make a working unit that is not a congeries of separate pieces, but what I have called a functional whole or integrative unity". Coordination, as a management function, involves the following sub-functions :

(a) Clear definition of authority-responsibility relationships

(b) Unity of direction

(d) Effective communication

(e) Effective leadership

Controlling

Finally, the manager must be sure that actions of the organizations members do in fact move the organization towards its stated goals. This is the controlling function of management. The controlling is the process of ensuring that actual activities confirm to plan activities. It involves four main elements :-

1. Establishing standards of performance

2. Measuring current performance

3. Comparing this performance to the established standards

4. Taking correction actions if deviations are detected

Controlling implies that objectives, goals and standards of performance exist and are known to employees and their superiors. It also implies a flexible and dynamic organization which will permit changes in objectives, plans, programmes, strategies, policies, organizational design, staffing policies and practices, leadership style, communication system, etc., for it is not uncommon that employees failure to achieve predetermined standards is due to defects or shortcomings in any one or more of the above dimensions of management.

Thus, controlling involves the following process :

(a) Measurement of performance against predetermined goals

(b) Identification of deviations from these goals

It may be pointed out that although management functions have been discussed in a particular sequence-planning, organizing, staffing, directing, coordinating and controlling – they are not performed in a sequential order. Management is an integral process and it is difficult to put its functions neatly in separate boxes. Management functions tend to coalesce, and it sometimes becomes difficult to separate one from the other. For example, when a production manager is discussing work problems with one of his subordinates, it is difficult to say whether he is guiding, developing or communicating, or doing all these things simultaneously. Moreover, managers often perform more than one function simultaneously.

Through the controlling function, managers keep the organization on track. Without the controlling functions, other functions lose their relevance. If all the activities are properly planned, organized and directed but there is no control on the activities then there are full chances that the organization does not achieve its planned goals. Controlling function helps us knowing the deviations but the reasons for such deviations and the corrective actions is to be taken depends on the managers. Hence, the personal ability of the managers makes the controlling function effective or ineffective.

Q.5. How can management be considered as a process? Discuss.

Ans. Management is considered a process because it involves a series of interrelated functions. It consists of getting the objectives of an organisation and taking steps to achieve objectives. The management process includes planning, organising, staffing, directing and controlling functions.

Management as a process has the following implications:

(i) Social Process: Management involves interactions among people. Goals can be achieved only when relations between people are productive. Human factor is the most important part of the management.

(ii) Integrated Process: Management brings human, physical and financial resources together to put into effort. Management also integrates human efforts so as to maintain harmony among them.

(iii) Continuous Process: Management involves continuous identifying and solving problems. It is repeated every now and then till the goal is achieved.

(iv) Interactive process: Managerial functions are contained within each other. For example, when a manager prepares plans, he is also laying down standards for control.

UNIT II

Q.6. Write a note on the evolution of management thought.

Ans. In the past, the business houses, particularly corporates, did not have a high academic stature and position in the society and it certainly compelled the scholars inculcate the academic interest in the study of business management so that its real fruits could be realized for the stakeholders under reference. There was a widespread belief that management process consisted of hidden tricks, mysterious clues and intuitive knowledge that could be mastered only by a few divinely gifted people. Moreover, the businessmen were very much afraid that through the study of management their tricks and secrets would be exposed.

But the advent of industrial revolution and the introduction of large scale mechanized production and the resultant growth of trade, industry and commerce necessitated the study of management. The evolution of management thoughts might be better approached through the framework as depicted in Figure. In the beginning there were two classical schools of management thoughts. These were- the scientific management school and the organizational school. Later on, behavioural school and the quantitative school came into existence. These four schools merged into integration school which led to the contemporary school of management thoughts.

Among the people who were in search of management principles, techniques and processes, a few emerged as outstanding pioneers. These are- Urwick and Brech, Boulton and Watt, Robert Owen, Charles Babbage, Oliver Sheldon, Lyndall Urwick, Herbert A. Simon, Frederick Winslow Taylor, H.S. Person, Henry L. Gantt, Frank Gilbreth, Harrington Emerson, H.P. Kendall, C.B. Barth, F.A. Halsey, Henri Dennison, Mooney and Reiley, Chester I. Barnard, Elton Mayo, F.J. Roethlisberger and T.N.Whitehead, Mary Parker Follett and Henry Fayol etc.

Q.7. “F.W.Taylor is said to be the father of scientific management. Critically examine the statement.

Ans. Fredrick W. Taylor (1856-1915): He is known as ‘father of scientific management’. His ideas about management grew out of his wide-ranging experience in three companies: Midvale Steel Works, Simonds Rolling Mills and Bethlehem Steel Co.

As an engineer and consultant, Taylor observed and reported on what he found to be inexcusably inefficient work practices, especially in the steel industry. Taylor believed that workers output was only about one-third of what was possible. Therefore, he set out to correct the situation by applying scientific methods. Taylor’s philosophy and ideas are given in his book, ‘Principles of Scientific Management’ published in 1911. Taylor gave the following principles of scientific management. These are outlined in the following Table:

Taylor concluded that scientific management involves a completer mental revolution on the part of both workers and management, without this mental revolution scientific management does not exist.

Scientific Management Approach

The impetus for the scientific management approach came from the first industrial revolution. Because it brought about such an extraordinary mechanization of industry, this revolution necessitated the development of new management principles and practices. The concept of scientific management was introduced by Frederick Winslow Taylor in USA in the beginning of 20th century. He defined scientific management as,” Scientific management is concerned with knowing exactly what you want men to do and then see in that they do it in the best and cheapest way”.

Elements and Tools of Scientific Management: The features of various experiments conducted by Taylor are as follows:

• Separation of Planning and doing: Taylor emphasized the separation of planning aspects from actual doing of the work. The planning should be left to the supervisor and the workers should emphasize on operational work.

• Functional Foremanship: Separation of planning from doing resulted into development of supervision system that could take planning work adequately besides keeping supervision on workers. Thus, Taylor evolved the concept of functional foremanship based on specialization of functions. This involve activities of workers as depicted in the following Figure:

• Job Analysis: It is undertaken to find out the best way of doing things. The best way of doing a job is one which requires the least movement consequently less time and cost.

• Standardization: Standardization should be maintained in respect of instruments and tools, period of work, amount of work, working conditions, cost of production etc.

• Scientific Selection and Training of Workers: Taylor has suggested that the workers should be selected on scientific basis taking into account their education, work experience, aptitudes, physical strength etc.

• Financial Incentives: Financial incentives can motivate workers to put in their maximum efforts. Thus, monetary (bonus, compensation) incentives and non monetary (promotion, upgradation) incentives should be provided to employees.

Principles of Scientific Management: Already discussed in the table above.

Criticism of Scientific Management: The main grounds of criticism are given below:

• Taylor advocated the concept of functional foremanship to bring about specialization in the organization. But this is not feasible in practice as a worker can’t carry out instructions from eight foremen.

• Workers were hired on a first-come, first-hired basis without due concern for workers ability or skills.

• Scientific management is production oriented as it concentrates too much on the technical aspects of work and undermines the human factors in industry. It resulted in monotony of job, loss of initiative, over speeding workers, wage reductions etc.

• Training was haphazard at best, with only minimal use of basic apprentice system.

• Tasks were accomplished by general rule of thumb without standard times, methods or motion.

• Managers worked side-by-side with the workers, often ignoring such basic managerial function of planning and organizing.

Q.8. “Henri Fayol, the father of principles of management”. Critically examine the statement.

Ans. Henri Fayol (1841-1925): was a Frenchman with considerable executive experience who focused his research on the things that managers do. He wrote during the same period Taylor did. Taylor was a scientist and he was managing director of a large French coal-mining firm. He was the first to envisage a functional process approach to the practice of management. His was a functional approach because it defined the functions that must be performed by managers. It was also a process approach because he conceptualized the managerial job in a series of stages such as planning, organizing and controlling. According to Fayol, all managerial tasks could be classified into one of the following six groups:

• Technical (related to production);

• Commercial (buying, selling and exchange);

• Financial (search for capital and its optimum use);

• Security (protection for property and person);

• Accounting (recording and taking stock of costs, profits, and liabilities, keeping balance sheets, and compiling statistics);

• Managerial (planning, organizing, commanding, coordinating and control);

He pointed out that these activities exist in every organization. He focused his work on the administrative or managerial activities and developed the following definition:

• Planning meant developing a course of action that would help the organization achieve its objectives.

• Organizing meant mobilizing the employees and other resources of the organization in accordance with the plan.

• Commanding meant directing the employees and getting the job done.

• Coordinating meant achieving harmony among the various activities.

• Controlling meant monitoring performance to ensure that the plan is properly followed.

Administrative Approach to Management

The advocates of this school perceive management as a process involving certain functions such as planning, organizing, directing and controlling. That’s why it is called as ‘functional approach’ or ‘management process’ approach. Fayol’s contributions were first published in book form titled ‘Administration Industrielle at Generale’ in French Language, in 1916. He defined management in terms of certain functions and then laid down fourteen principles of management which according to him have universal applicability. Thus, he was a pioneer in the field of management education. In brief, Fayol’s views on management command acceptability even today because they are much in tune with the requirements of management in the present day world.

Fayol’s General Principles of Management

• Division of Work: The object of division of work is to produce more and better work with the same effort. It is accomplished through reduction in the number of tasks to which attention and effort must be directed.

• Authority and Responsibility: Authority is defined as ‘the right to command and the power to make oneself obeyed’. Responsibility coexists with authority and is its other side. Fayol made a distinction between official authority and personal authority, the latter stemming from the manager’s own intelligence, integrity,

experience, personality, knowledge and skills.

• Discipline: It implies respect for agreements designed to secure obedience. It must prevail throughout an organization to ensure its smooth functioning. Discipline requires clear and fair agreements, good supervision and judicious application of penalties.

• Unity of Command: Every employee should receive orders and instruction from only one superior and a subordinate should be accountable to only one superior.

• Unity of Direction: Each group of activities having one objective should be unified by having one plan and one head.

• Subordination of Individual to General Interest: The interest of any one employee or group of employees should not take precedence over the interests of the organization as a whole.

• Remuneration of Personnel: The amount of remuneration and the methods of payment should be just and fair and should provide maximum possible satisfaction to both employees and employers.

• Centralisation: It refers to the degree to which subordinates are involved in decision making. Whether decision making is centralized (to management) or decentralized (to subordinates) is a question of proper proportion. The task is to find the optimum degree of centralization for each situation.

• Scalar Chain: The scalar chain is the chain of superiors ranging from the ultimate authority to the lowest ranks. Communication should follow this chain. However, if following the chain creates delays, cross-communications can be followed if agreed to by all parties and superiors are kept informed.

• Order: It is a rational arrangement for things and people. Fayol emphasized both material order and human order. In material order, there should be a place for everything and everything should be in its proper place. In human order, there should be an appointed place for everyone and everyone should be in his and her

appointed place.

• Equity: Managers should be kind and fair to their subordinates. The application of equity requires good sense, experience and humanistic attitude for soliciting loyalty and devotion from subordinates.

• Stability of Tenure: High employee turnover is inefficient. Management should provide orderly personnel planning and ensure that replacements are available to fill vacancies.

• Initiative: Subordinates should be provided with an opportunity to show their initiative as a way to increase their skills and to inculcate a sense of participation.

• Espirit de Corps: Union is strength, and it comes from the harmony and mutual understanding of the personnel. Management should not follow the policy of ‘divide and rule’. Rather it should strive to maintain team spirit and co-operation among employees so that they can work together as a team for the accomplishment of common objectives.

Criticism: Fayol’s work has been criticized on the following grounds:

• His theory is said to be too formal. There is no single classification of managerial functions acceptable to all the functional theorists. There is also lack of unanimity about the various terms such as management, administration etc.

• He did not pay adequate attention to workers.

• The fundamentalists considered their principles to be universal in nature.

But many of the principles have failed to deliver the desired results in certain situations.

• There is a vagueness and superficiality about some of his terms and definition.

Q.9. Assess the role of Elton Mayo in development of management thoughts.

Ans. George Elton Mayo (1880-1949): Mayo was a professor at the Harvard Business School. He served as the leader of the team which carried out the famous Hawthorne Experiments at the Hawthorne plant of the

Western Electric Company (USA) during 1927-32. Originally the research was an application of Taylor’s management science techniques designed to improve production efficiency.

Mayo discussed in detail the factors that cause a change in human behaviour. Mayo’s first study involved the manipulation of illumination for one group of workers and comparing their output with that of another group whose illumination was held constant. He concluded that the cause of increase in the productivity of workers is not a single factor like changing working hours or rest pauses but a combination of these several other factors. Considerate supervision, giving autonomy to the workers, allowing the formation of small cohesive groups of workers, creating conditions which encourage and support the growth of these groups and the cooperation between workers and management lead to increase in productivity.

Mayo’s contribution to management thoughts lies in the recognition of the fact that worker’s performance is related to psychological, sociological and physical factors. Mayo and his associates concluded that a new social setting created by their tests had accounted for the increase in productivity. Their finding is now known as the Hawthorne Effect or the tendency for people, who are singled out for special attention, to improve their performance. Hawthorne study was an important landmark in studying the behaviour of workers and his relationship to the job, his fellow workers and organization. He highlighted that workers were found to restrict their output in order to avoid displeasure of the group, even at the sacrifice of incentive pay. Thus, Hawthorne studies were a milestone in establishing the framework for further studies into the field of organizational behaviour.

Human Relation Approach to Management

The criticism of the Scientific and Administrative Management as advocated by Taylor and Fayol, respectively, gave birth to Human Relation Approach. The behavioural scientists criticized the early management approaches for their insensitiveness to the human side of organization. The behavioural scientists did not view the employees mechanically in work situation, but tried to show that the employees not only have economic needs but also social and psychological needs like need for recognition, achievement, social contact, freedom, and respect. Human relations school regards business organization as a psycho-social system.

Elton Mayo of Harvard and his associates conducted a famous study on human behaviour at the Hawthorne plant of the Western Electric Company and this study formed the foundation of this school of management thoughts. The basic hypotheses of this study as well as the basic propositions of the Human Relation Approach are the following:

• The business organization is a social system.

• The employees not only have economic needs but also psychological needs and social needs, which are required to be served properly to motivate them.

• Employees prefer self-control and self-direction.

• Employee oriented democratic participative style of management is more effective than mechanistic task oriented management style.

• The informal group should be recognized and officially supported.

The human relations approach is concerned with recognition of the importance of human element in organizations. It revealed the importance f social and psychological factors in determining worker’s productivity and satisfaction. It is instrumental in creating a new image of man and the work place. However, this approach also did not go without criticism. It was criticized that the approach laid heavy emphasis on the human side as against the organizational needs. However, the contribution of this approach lies in the fact that it advises managers to attach importance to the human side of an organization.

Q.10. Assess the role of Chester Barnard in development of management thoughts.

Ans. Chester Barnard (1886-1961): Chester Barnard, president of Bell Telephone Company, developed theories about the functions of the manager as determined by constant interaction with the environment. Barnard saw organizations as social systems that require human cooperation. He expressed his view in his book The Function of the Executive. He proposed ideas that bridged classical and human resource view points. Barnard believes that organizations were made up of people with interacting social relationships.

The manager’s major functions were to communicate and stimulate subordinates to high level of efforts.

He saw the effectiveness of an organization as being dependent on its ability to achieve cooperative efforts from a number of employees in a total, integrated system. Barnard also argued that success depended on maintaininggood relations with the people and institutions with whom the organization regularly interacted. By recognizing the organization’s dependence on investors, suppliers, customers, and other external stakeholders, Barnard introduced the idea that managers had to examine the external environment and then adjust the organization to maintain a state of equilibrium. Barnard also developed set of working principles by which organizational communication systems can maintain final authority for the management team. These principles are:

• Channels of communication should be definitely known.

• Objective authority requires a definite formal channel of communication to every members of an organization.

• The line of communication must be as direct or short as possible.

• The complete line of communication should usually be used.

• Competence of the persons serving at communication centres that is officers, supervisory heads, must be adequate.

• The line of communication should not be interrupted during the time the organization is to function.

Social System Approach to Management

It is developed during social science era, is closely related to Human Relation Approach. It includes those researchers who look upon management as a social system. Chester I. Barnard is called as the spiritual father of this approach.

According to this approach, an organization is essentially a cultural system composed of people who work in cooperation. The major features of this approach are as follows:

• Organization is a social system, a system of cultural relationships.

• Relationships exist among the external as well as internal environment of the organization.

• Cooperation among group members is necessary for the achievement of organizational objectives.

• For effective management, efforts should be made for establishing harmony between the goals of the organization and the various groups therein.

UNIT III

Q.11. "There is no important area of human activity than management since its task is that of getting things done through people". Discuss the statement and explain with examples.

Ans. Management practice is as old as human civilization, when people started living together in groups, for every human group requires management and the history of human beings is full of organizational activities. Even a smallest human group in our society i.e. family also needs management. The head of the family acts as top management and the housewife acts as a home manager. She plans about the work to be done, how the work has to be done, who is to do the work and whether the work is done properly or not. She performs all the four functions of management i.e. planning the budget and day to day activities, organizing the things and activities of different people, directing the servants and different members of the family and controlling activities of different members of the family. Family is a very informal type of human group. Even if this informal human group is not managed properly it will lead to great fuse and confusion. So, just imagine about large and complex institutions emerging these days.

During the last five decades, management as a discipline has attracted the attention of academicians and practitioners to a very great extent. The basic reason behind this phenomenon is the growing importance of management in day to day life of people. Today, the society has large and complex institutions with many people working together. The relationship between managers and managed has changed as compared to the older master-servant relationship making it more complex. People have greater expectations from their jobs. In order to make all these things function properly, people have been trying to evolve some method and techniques. Such attempts have given birth to management as a separate discipline. It has grown over the period of time making itself one of the most respected disciplines. Today, the study of management has become an important fact of human life.

The term management can have different meanings, and it is important to understand these different definitions. The term management can be considered as :-

1. Management as a process : Have you ever said “That is a well managed company” or “That organization has been mismanaged”? If you have, you seem to imply that : (i) management is some type of work or set of activities and (ii) sometimes the activities are performed quite well and sometimes not so well.

You are referring to management as a process involving set of activities. Since the late nineteenth century, it has been common practice to define management in terms of four specific functions of managers. Planning, organizing, leading and controlling. We can thus say that management is the process of planning, organizing, leading and controlling the efforts of organization members and of using all other organizational resources to achieve stated organizational goals.

2. Management as a discipline : If you say you are a student of management or majoring in management, you are referring to the discipline of management. Classifying management as a discipline implies that it is an accumulated body of knowledge that can be learned. Thus management is a subject with principles, concepts and theories. A major purpose of studying the discipline of management is to learn and understand the principles, concepts, and theories of management and how to apply them in the process of managing.

3. Management as people : Whether you say, “That company has an entirely new management team” or “She is the best manager I have ever worked for” you are referring to the people who guide, direct and thus, manage organizations. The word management used in this manner refers to the people, manager who engage in the process of management.

4. Management as a career : “Mr. Saxena has held several managerial positions since joining the bank upon his graduation from college”. This statement implies that management is a career. People who devote their working lives to the process of management progress through a sequence of new activities and, often, new challenges. More than ever before, today’s business environment is fast changing and competitive, posing challenges, opportunities, and rewards for individuals pursuing management as a career.

These different meanings of the term management has been related as follows by John M. Ivancevich -

“People who wish to have a career as a manager must study the discipline of management as a means toward practicing the process of management”.

Q.12. "Management starts from planning and ends up with controlling". Discuss this statement, giving suitable examples.

Henri Fayol identifies five functions of management, viz. planning, organizing, commanding, coordinating and controlling. Luther Gulick states seven such functions under the catch word "POSDCORB' which stands for planning, organizing, staffing, directing, coordinating, reporting and budgeting. Warren Haynes and Joseph Massie classify management functions into decision-making, organizing, staffing, planning, controlling, communicating and directing. Koontz and O'Donnell divide these functions into planning organizing, staffing, directing and controlling.

Davis includes planning, organizing and controlling. Breach includes planning, organizing, motivating, coordinating and controlling.

For our purpose, we shall designate the following six as the functions of a manager: planning, organizing, staffing, directing, coordinating and controlling.

Henry Fayol, an early thinker of management process, has classified management functions into planning, organizing, commanding, coordinating and controlling.

Gullick and Urwick have described the functions of management as POSDCORB referring to planning, organizing, staffing, directing, coordinating, reporting and budgeting.

Koontz and O’Donell have included planning, organizing, staffing, leading and controlling.

Earnest Dale has suggested innovation and representing also as important management functions besides these. Thus it can be seen that there is no agreement over the various functions of management. These functions have been treated differently over the period of time.

Ervin Williams has summarized the various managerial functions developed over the period of time.

All the above functions can be categorized into four basic functions of management i.e. planning, organizing, leading and controlling.

Planning

Organizing

Organizing is the process of arranging and allocating work, authority, and resources among an organization’s members so they can achieve the organization’s goals.

Stoner defines “organizing as the process of engaging two or more people in working together in a structured way to achieve a specific goal or set of goals.

(a) Identification of activities required for the achievement of objectives and implementation of plans.

(b) Grouping the activities so as to create self-contained jobs.

(d) Delegation of authority so as to enable them to perform their jobs and to command the resources needed for their performance.

(e) Establishment of a network of coordinating relationships.

Staffing

sub-functions :

(a) Manpower planning involving determination of the number and the kind of personnel required.

(b) Recruitment for attracting adequate number of potential employees to seek jobs in the enterprise.

(d) Placement, induction and orientation.

(e) Transfers, promotions, termination and layoff.

(f) Training and development of employees.

Directing

(a) Communication

(b) Motivation

By establishing the proper atmosphere, managers help their employees to do their best.

Coordinating

(a) Clear definition of authority-responsibility relationships

(b) Unity of direction

(d) Effective communication

(e) Effective leadership

Controlling

1. Establishing standards of performance

2. Measuring current performance

3. Comparing this performance to the established standards.

4. Taking correction actions if deviations are detected.

Thus, controlling involves the following process :

(a) Measurement of performance against predetermined goals.

(b) Identification of deviations from these goals.

Management is an integral process and it is difficult to put its functions neatly in separate boxes. Management functions tend to coalesce, and it sometimes becomes difficult to separate one from the other. For example, when a production manager is discussing work problems with one of his subordinates, it is difficult to say whether he is guiding, developing or communicating, or doing all these things simultaneously. Moreover, managers often perform more than one function simultaneously.

Q.13. "Decision-making is the primary task of the manager". Discuss and explain the scientific process of decision-making.

Ans. As a leader, you will make decisions involving not only yourself, but the morale and welfare of others. Some decisions, such as when to take a break or where to hold a meeting, are simple decisions which have little effect on others. Other decisions are often more complex and may have a significant impact on many people. Therefore, having a decision-making, problem-solving process can be a helpful tool. Such a process can help you to solve these different types of situations. Within business and the military today, leaders at all levels use some form of a decision-making, problem-solving process. There are several different approaches (or models) for decision-making and problem solving. We would briefly discuss it in this lesson as well.

It is beyond doubt that the decision making is an essential part of every function of management. According to Peter F. Drucker, “Whatever a manager does, he does through decision making”. Decision making lies deeply embedded in the process of management, spreads over all the managerial functions and covers all the areas of the organization. Management and decision making are bound up and go side by side in every activity performed by manager. Whether knowingly or unknowingly, every manager makes decisions constantly.

Right from the day when the size of the organization used to be very small to the present day huge or mega size of the organization, the importance of decision making has been there. The significant difference is that in today's complex organization structure, the decision making is getting more and more complex. Whatever a manager does, he does through making decisions. Some of the decisions are of routine and repetitive in nature and it might be that the manager does not realize that he is taking decisions whereas, other decisions which are of strategic nature may require a lot of systematic and scientific analysis. The fact remains that management is always a decision making process.

The most outstanding quality of successful manager is his/her ability to make sound and effective decisions. A manager has to make up his/her mind quickly on certain matters. It is not correct to say that he has to make spur of the moment decisions all the time. For taking many decisions, he gets enough time for careful fact finding, analysis of alternatives and choice of the best alternative. Decision making is a human process. When one decides, he chooses a course alternative which he thinks is the best.

Decision making is a proper blend of thinking, deciding and action. An important executive decision is only one event in the process which requires a succession of activities and routine decisions all along the way. Decisions also have a time dimension and a time lag. A manager takes time to collect facts and to weigh various alternatives. Moreover, after decides, it takes still more time to carry out a decision and, often, it takes longer before he can judge whether the decision was good or bad. It is also very difficult to isolate the effects of any single decision.

DECISION MAKING PROCESS

The following procedure should be followed in arriving at a correct decision:

1. Setting objectives : Rational decision-making involves concrete objectives. So the first step in decision-making is to know one's objectives. An objective is an expected outcome of future actions. So before deciding upon the future course of efforts, it is necessary to know beforehand what we are trying to achieve. Exact knowledge of goals and objectives bring purpose in planning and harmony in efforts. Moreover, objectives are the criteria by which final outcome is to be measured.

2. Defining the Problem : It is true to a large extent that a problem well defined is half solved. A lot of bad decisions are made because the person making the decision does not have a good grasp of the problem. It is essential for the decision maker to find and define the problem before he takes any decision.

Sufficient time and energy should be spent on defining the problem as it is not always easy to define the problem and to see the fundamental thing that is causing the trouble and that needs correction. Practically, no problem ever presents itself in a manner that an immediate decision may be taken. It is, therefore, essential to define the problem before any action is taken, otherwise the manager will answer the wrong question rather than the core problem. Clear definition of the problem is very important as the right answer can be found only to a right question.

3. Analyzing the problem : After defining the problem, the next step in decision-making is analyzing it. The problem should be thoroughly analyzed to find out adequate background information and data relating to the situation. The problem should be divided into many sub-problems and each element of the problem must be investigated thoroughly and systematically. There can be a number of factors involved with any problem, some of which are pertinent and others are remote. These pertinent factors should be discussed in depth. It will save time as well as money and efforts.

In order to classify any problem, we require lot of information. So long as the required information is not available, any classification would be misleading. This will also have an adverse impact on the quality of the decision. Trying to analyze without facts is like guessing directions at a crossing without reading the highway signboards. Thus, collection of right type of information is very important in decision making. It would not be an exaggeration to say that a decision is as good as the information on which it is based. Collection of facts and figures also requires certain decisions on the part of the manager. He must decide what type of information he requires and how he can obtain this.

4. Developing Alternatives : After defining and analyzing the problem, the next step in the decision making process is the development of alternative courses of action. Without resorting to the process of developing alternatives, a manager is likely to be guided by his limited imagination. It is rare for alternatives to be lacking for any course of action. But sometimes a manager assumes that there is only one way of doing a thing. In such a case, what the manager has probably not done is to force himself consider other alternatives. Unless he does so, he cannot reach the decision which is the best possible. From this can be derived a key planning principle which may be termed as the principle of alternatives. Alternatives exist for every decision problem. Effective planning involves a search for the alternatives towards the desired goal.

Once the manager starts developing alternatives, various assumptions come to his mind, which he can bring to the conscious level. Nevertheless, development of alternatives cannot provide a person with the imagination, which he lacks. But most of us have definitely more imagination than we generally use. It should also be noted that development of alternatives is no guarantee of finding the best possible decision, but it certainly helps in weighing one alternative against others and, thus, minimizing uncertainties.

While developing alternatives, the principle of limiting factor has to be taken care of. A limiting factor is one which stands in the way of accomplishing the desired goal. It is a key factor in decision making. If such factors are properly identified, manager can confine his search for alternative to those which will overcome the limiting factors. In choosing from among alternatives, the more an individual can recognize those factors which are limiting or critical to the attainment of the desired goal the more clearly and accurately he or she can select the most favourable alternatives.

5. Selecting the Best Alternative : After developing alternatives one will have to evaluate all the possible alternatives in order to select best alternative. There are various ways to evaluate alternatives. The most common method is through intuition, i.e., choosing a solution that seems to be good at that time. There is an inherent danger in this process because a manager's intuition may be wrong on several occasions.

The second way to choose the best alternative is to weigh the consequences of one against those of the others. Peter F. Drucker has laid down four criteria in order to weigh the consequences of various alternatives. They are :

(a) Risk : A manager should weigh the risks of each course of action against the expected gains. As a matter of fact, risks are involved in all the solutions. What matters is the intensity of different types of risks in various solutions.

(b) Economy of Effort : The best manager is one who can mobilize the resources for the achievement of results with the minimum of efforts. The decision to be chosen should ensure the maximum possible economy of efforts, money and time.

(c) Situation or Timing : The choice of a course of an action will depend upon the situation prevailing at a particular point of time. If the situation has great urgency, the preferable course of action is one that alarms the organization that something important is happening. If a long and consistent effort is needed, a slow start gathers momentum approach may be preferable.

(d) Limitation of Resources : In choosing among the alternatives, primary attention must be given to those factors that are limiting or strategic to the decision involved. The search for limiting factors in decision-making should be a never ending process. Discovery of the limiting factor lies at the basis of selection from the alternatives and hence of planning and decision making. There are three bases which should be followed for selection of alternatives and these are experience, experimentation and research and analysis which

are discussed below :

In making a choice, a manager is influenced to a great extent by his past experience. He can give more reliance to past experience in case of routine decisions; but in case of strategic decisions, he should not rely fully on his past experience to reach at a rational decision.

Under experimentation, the manager tests the solution under actual or simulated conditions. This approach has proved to be of considerable help in many cases in test marketing of a new product. But it is not always possible to put this technique into practice, because it is very expensive.

Research and Analysis is considered to be the most effective technique of selecting among alternatives, where a major decision is involved. It involves a search for relationships among the more critical variables, constraints and premises that bear upon the goal sought.

6. Implementing the Decision : The choice of an alternative will not serve any purpose if it is not put into practice. The manager is not only concerned with taking a decision, but also with its implementation. He should try to ensure that systematic steps are taken to implement the decision. The main problem which the manager may face at the implementation stage is the resistance by the subordinates who are affected by the decision. If the manager is unable to overcome this resistance, the energy and efforts consumed in decision making will go waste. In order to make the decision acceptable, it is necessary for the manager to make the people understand what the decision involves, what is expected to them and what they should expect from the management.

In order to make the subordinates committed to the decision it is essential that they should be allowed to participate in the decision making process. The managers who discuss problems with their subordinates and give them opportunities to ask questions and make suggestions find more support for their decisions than the managers who don't let the subordinates participate. The area where the subordinates should participate is the development of alternatives. They should be encouraged to suggest alternatives. This may bring to surface certain alternatives which may not be thought of by the manager. Moreover, they will feel attached to the decision. At the same time, there is also a danger that a group decision may be poorer than the one man decision. Group participation does not necessarily improve the quality of the decision, but sometimes impairs it. Someone has described group decision like a train in which every passenger has a brake. It has also been pointed out that all employees are unable to participate in decision making. Nevertheless, it is desirable if a manager consults his subordinates while making decision.

7. Follow-up the Decisions : Kennetth H. Killer, has emphatically written in his book that it is always better to check the results after putting the decision into practice. He has given reasons for following up of decisions and they are as follows:

(i) If the decision is a good one, one will know what to do if faced with the same problem again.

(ii) If the decision is a bad one, one will know what not to do the next time.

(iii) If the decision is bad and one follows-up soon enough, corrective action may still be possible.

In order to achieve proper follow-up, the management should devise an efficient system of feedback information. This information will be very useful in taking the corrective measures and in taking right decisions in the future.

Q.14. How you will define the leadership? Discuss the main leadership styles with their application.

Ans. It is difficult to define the term “leadership”. However, as a starting point, we may proceed with the workable definition that a leader is one who leads others and is able to carry an individual or a group towards the accomplishment of a common goal. He is able to carry them with him, because he influences their behaviour. He is able to influence their behaviour, because he enjoys some power over them. They are willing to be influenced, because they have certain needs to satisfy in collaboration with him. French and Raven have proposed the following bases of power for a person exerting influence:

1. Legitimate- That the targets of influence, followers or sub-ordinates understand that the power the leader enjoys is legitimate and they should comply with his orders in order to meet their own goals.

2. Reward-That the followers know that the leader has the power to grant promotions, monetary inducements or other rewards if his orders are complied with.

3. Coercive- That the followers know that if the leader’s orders are not complied with, he has the power to hire, fire, perspire and discharge the followers.

4. Expert- That the followers know that the leader possesses specialist’s knowledge in the field they lack it.

5. Referent- That the followers feel attracted towards him because of his amiable manners, pleasing personality or they feel that he is well connected with high-ups.

It is apparent then that the first three power bases indicate positional power, which one derives from one’s position. The other two indicate personal power, which is based on the individual’s own characteristics. In any case, the leader exercises his influence because of one or more of these types of power and obtains compliance from the followers. How far he succeeds in his attempts will depend upon several other factors that we will discuss during the course of this lesson.

Leadership is, therefore, regarded as the process of influencing the activities of an individual or a group in efforts towards goal achievement in a given situation. This process, as Heresy and Blanchard suggest, can be explained in the form of the following equation:

L = f (L, F, S,)

That is, the leadership is a function of the leader(L), the follower(F) and other situational variables( S). One who exercises this influence is a leader whether he is a manager in a formal organization, an informal leader in an informal group or the head of a family. It is undoubtedly true that a manager may be a weak leader or a leader may a weak manager, but it is also equally probable that a manager may be a true leader or a leader may be true manager. A manager who is a true leader as well is always desirable. Situational variables include the whole environment like the task, the group, organizational policies, etc.

Leadership Styles

Leadership style is the way a managerial leader applies his influence in getting work done through his subordinates in order to achieve the organizational objectives. The main attitude or belief that influences leadership style is the perceived role of the manager versus the role of the subordinates. It depends upon the role of the leader whether he likes to work more of a colleague, facilitator and decision maker and on the other hand the response of the subordinates would determine the particular style to be in application. Broadly speaking, there are three basic leadership styles: -

1. Autocratic or Dictatorial Leadership: In this leadership style the leader assumes full responsibility for all actions. Mainly he relies on implicit obedience from the group in following his orders. He determines plans and policies and makes the decision-making a one man show. He maintains very critical and negative relations with his subordinates. He freely uses threats of punishment and penalty for any lack of obedience. This kind of leadership has normally very short life.

2. Democratic Leadership: In this case, the leader draws ideas and suggestions from his group by discussion, consultation and participation. He secures consensus or unanimity in decision-making. Subordinates are duly encouraged to make any suggestion as a matter of their contribution in decision-making and to enhance their creativity. This kind of leadership style is liked in most civilized organization and has very long life.

3. Laissez-faire Free Rein Leadership: Quite contrary to autocratic leadership style, in this leadership style the leader depends entirely on his subordinates to establish their own goals and to make their own decisions. He let them plan, organize and proceed. He takes minimum initiative in administration or information. He is there to guide the subordinates if they are in a problem. This kind of leadership is desirable in mainly professional organization and where the employees are self-motivated. Leader works here just as a member of the team.

Q.15. Motivation is defined as a drive, which tries to satisfy an existing unsatisfied need. Is this drive within you as an inherited trait or is it the force of environmental factors, which creates this drive?

Ans. The word motivation is derived from motive, which is defined as an active form of a desire, craving or need, which must be satisfied. All motives are directed towards goals and the needs and desires affect or change your behaviour, which becomes goal oriented. For example, if you ordinarily do not want to work overtime, it is quite likely that at a particular time, you may need more money (desire) so you may change your behaviour, work overtime (goal oriented behaviour) and satisfy your needs. Viteles defines motivation as: “Motivation represents an unsatisfied need which creates a state of tension or disequilibria, causing the individual to move in a goal directed pattern -towards restoring a state of equilibrium, by satisfying the need.”

SOURCES OF MOTIVATION

Experts in the organizational behaviour field have a divided opinion as to whether workers are motivated by factors in the external environment such as rewards or fear or whether motivation is self generated without the application of external factors. It is quite well understood that under the same set of external factors all workers are not equally motivated. Some of these motivational sources are:

1 Positive Motivation: Positive motivation involves proper recognition of employee, efforts and appreciation of employee contribution towards the organizational goal-achievement. Such motivations improve the standards of performance, lead to good team spirit and pride, a sense of cooperation and a feeling of belonging and happiness. Some of the positive motivators are:

􀂾 Praise and credit for work done

􀂾 A sincere interest in the welfare of subordinates

􀂾 Delegation of authority and responsibility to subordinates

􀂾 Participation of subordinates in the decision making process

2 Negative or Fear Motivation: This motivation is based upon the use of force, power, fear and threats. The fear of punishment or unfavourable consequences affects the behavioural changes. Some examples of negative motivation include the fear of failing in the examination, and fear of being fired or demoted. Fear of failure in the examination induces motivation in many students to work harder and pass the course. Similarly, fear of being fired keeps the workers in the line with the organizational rules and regulations as well as do a satisfactory job. While the fear of punishment and actual punishment has resulted in controlling individual misbehaviour and has contributed towards positive performance in many situations and is necessary and useful in many other situations such as disciplining a child or handling a riot. It is not recommended or considered as a viable alternative in the current business and industrial environment. This is based upon the trend and changes in the workforce including higher level of employee education and extensive employee unionization. However, punishment or fear of it is still the most common technique of behaviour modification or control in today's life. When a child misbehaves, he is still spanked. If a worker does not behave according to the way the organization wants him to behave, he is fired. If a person does not behave as the society and law wants him to behave, he is punished by arrest and jail. All religions threaten punishment in the life hereafter if a person does not behave according to God's and religious rules.

Does the punishment system work? Does it change behaviour? Does the prison system reform the criminal? Does spanking make a "good" child? This area has received considerable attention and has become highly controversial. It has been proposed that while punishment has immediate and short-term effect in affecting and changing behaviour, the long-term effects are highly questionable. A driver who gets fined for running a red light where he is supposed to stop may vow never to do it again at that time, but as the time passes, he will do it again.

In the context of organizational behaviour, no worker likes to be criticized, or threatened with employment termination. Specifically, if the worker is punished for an occasional undesired behaviour, it will have a negative effect on his morale, make him bitter with a hostile 'state of mind, affecting negatively his social interaction as well as his sense of loyalty, perhaps resulting in poor performance and productivity and quality.

3 Extrinsic Motivation: This type of motivation is induced by external factors, which are primarily financial in nature. It is based upon the assumption that the behaviour, which results in positive rewards, tends to be repeated. However, the reward the desired behaviour should be sufficiently powerful and durable so that it improves the probability of occurrence' of desirable behaviour. Money is probably the most important incentive for positive behaviour since money can be used for a number of other resources. These financial incentives and rewards have been a subject of debate whether they really motivate the employees or simply move them to work and perform. These include higher pay, fringe benefits such as retirement plans, stock options, profit sharing scheme, paid vacation, health and medical insurance, sympathetic supervision and people oriented company policies.

4 Intrinsic Motivation: Intrinsic motivation stems from feelings of achievement and accomplishment and is concerned with the state of self-actualization in which the satisfaction of accomplishing something worthwhile motivates the employee further so that this motivation is self-generated and is independent of financial rewards. For example, there are many retired doctors who -work free in the hospital because it gives them a sense of accomplishment and satisfaction. Mother Teresa's work in the slums of Calcutta, India, not only motivates the people who work with her but also many others who simply hear about her work and then want to join the team. Similarly, Peace Corps workers work in uncomfortable environments at a minimal pay. Some of the intrinsic motivators are praise, recognition, responsibility, esteem, power, status, challenges and decision-making responsibility.

UNIT IV

Q.16. What do you mean by social responsibility of a business?

Ans. Social responsibility of business refers to what the business does, over and above the statutory requirement, for the benefit of the society. The word responsibility connotes that the business has some moral obligations to the society. The term corporate citizenship is also commonly- used to refer to the moral obligations of business to the society. This implies that, just as individuals, corporates are also integral part of the society and that their behaviour shall be guided by certain social norms. The operations of business enterprises affect a wide spectrum. The resources they make use of are not limited to those of the proprietors and the impact of their operations is felt also by many a people who are in no way connected with the enterprises. The shareholders, the suppliers of resources, the consumers, the local community and society at large are affected by the way an enterprise functions. Hence, a business enterprise has to be socially very responsive so that a social balance may be struck between the opposing interests of these groups. Goyder argues: Industry in the twentieth century can no longer be regarded as a private arrangement for enriching shareholders. It has become a joint enterprise in which workers, management, consumers, the locality, Government and trade union officials all play a part. If the system, which we know by the name private enterprise, is to continue, some way must be found to embrace many interests, which go to make up industry in a common purpose. Later, in 1978, while delivering the C.C. Desai Memorial Lecture, he reiterated his plea that if the corporation has to function effectively, it has to be accountable to the public at large; and he sought to equate the suggestion of a responsible company with the trusteeship concept advocated by Gandhiji, the aim of which was to ensure that private property was used for the common good. The declaration issued by the international seminar on the social responsibility of business held in India in 1965 also co-related the Gandhian concept of trusteeship with the social responsibility of business as "responsibility to customers, workers, shareholders and the community." There has been a growing acceptance of the plea that business should be social1y responsible in the sense that the business enterprise, which makes use of the resources of society and depends on society for its functioning, should discharge its duties and responsibilities in enhancing the welfare of the society of which it is an integral part. H.S. Singhania classifies the nature of the social responsibility of business into two categories. The manner, in which, a business carries out its own business activity. The first involves the acceptance of the fact that business is not merely a profit-making occupation but a social function, which involves certain duties, and requires that appropriate ethics are followed. For example, a business must obey all the laws, even when they are disagreeable; it should produce the maximum goods of good quality, ensure smooth supplies at competitive prices, pay taxes, shun malpractices, pay a fair wage to employees and a reasonable dividend to shareholders. It is also the duty of a business to undertake new investment and promote the dispersal of economic activity through ancillarisation and the setting up of industries in backward areas so as to spread enterprise and take employment to the doorsteps of labour. In addition to its commercial activity, business also plays a role in promoting social welfare activity, even directly.

The contemporary view of social responsibility of business is substantially broader and benevolent than the classical one. According to the classical view, business has only economic objectives and no other responsibility beyond that. Milton Friedman, a Nobel economist and a proponent of this view, argues that "there is one and only one social responsibility of business-to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition, without deception or fraud Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible. This is a fundamentally subversive doctrine. The contemporary view of business is an ecological one according to which business is an integral part of the society to serve a social purpose. Proponents this view like Davis and Blomstorm hold that business is a social institution, performing a social mission and having a broad influence on the way people live and work together. According to Steiner and Steiner, a reasonable approach to social responsibility is as follows:

1. Each business must take into account the situation in which it finds itself in meeting stakeholder expectations.

2. Business is an economic entity and cannot jeopardize its profitability meeting social needs.

3. Business should recognize that in the long run, the general social good benefits everyone.

4. The social responsibility expected of a business is directly related to its social power to influence outcomes.

5. Social responsibility is related to the size of the company and to the industry it is in.

6. A business should fickle only those social problems in which it has competence.

7. Business must assume its share of the social burden and be willing to absorb reasonable social costs

Q.17. How can you evaluate the social responsibilities of business in Indian economy?

Ans. The Indian business sector presents a mixed picture as far as social responsibility is concerned. Shri J.R.D. Tata, who was instrumental in conducting the first social audit in India and perhaps in the world, was of the opinion that while on the side of production, of growth, of efficiency, Indian industry, on the whole, did remarkably well, usually against odds and in spite of crippling infrastructural shortages unknown in advanced countries, on the distributional side, however, its record was often poor and, in some respects, dismal, judged by the size of the black-market, the volume of black money and the general corruption that pervaded our economic life. True, many a time the imperfections on the distribution side-mostly hoarding and black-marketing - mercilessly gouge the unfortunate consumer. "Although it is the trader rather than the manufacturer who is mainly responsible for such diversion of goods and for the resulting heavy burden imposed on the consumer, the fact remains that, to that extent, corporate management of even of large Indian industries has, perhaps unavoidably, failed in the important obligation of ensuring that their -goods reach the consumer at fair prices". It is high time the producer realised that his responsibility does not end with producing goods and services; he should ensure that whatever is produced reached the ultimate consumer in time and at reasonable prices. It is gratifying to note that a number of leading companies in India have shown recognition of the social responsibility of the corporate sector. The business community has been instrumental in setting. up hundreds of institutions of public service like schools, colleges, management institutes, dispensaries, hospitals, technological institutes, research institutes (medical, scientific and technological), libraries, dharamshalas, cultural institutions, institutes for the dumb, deaf and blind, museums and places of religions worship. Some of the leading enterprises have extended welfare measures like health and medical facilities to people of the surrounding villages. Many businessmen have risen up to the occasion to help the victims of droughts, floods, earthquakes and other natural calamities.

One of the important externalities of industrialisation is the serious ecological damage it has inflicted. The problem of environmental pollution caused by industries is very serious in a number of places in our country. Though some enterprises have taken pollution abatement measures, many - both in the private and public sectors - continue to be major offenders against the environment. In fact, some of the public sector enterprises are notorious for their irresponsibility in this matter. As J.R.D. Tata has rightly pointed out, high standards of behaviour and the discharge of social obligations should be expected of or demanded from, not only business and industry but from all economic groups in the country whose actions have an impact on the public weal. This applies in particular to trade unions which, both in India and abroad, have, in recent years, acquired and often misused enormous economic powers, exceeded only by the Government's own. The millions of man-days of production lost in India every year owing to labour unrest and the violent form, which such unrest has taken in many cases, clearly indicate the need for a new approach to trade unionism and recognition of its social obligations.

The participation of labour in management has been suggested as a remedy for many a causes of industrial unrest. While it is a welcome suggestion, it should be ensured that the "collaboration" between labour and capital does not become instrumental in exploiting society.

The social responsibility of business is usually advocated for the private sector, presumably on the assumption that the public sector is socially quite responsible. But the fact remains that the public sector in India has yet to prove that it is more responsive to society than the private sector. In some cases, in fact, the record of the public sector is more dismal than that of the private. As far as the pollution of the environment is concerned, the public sector is as guilty as the private.

Many public sector enterprises in India have undoubtedly failed to discharge their primary responsibilities - increase in the productivity and production, efficiency in the provision of the services, etc. This is reflected in the mounting losses of many public enterprises. Some may argue that the public sector is not, and should not be, profit-motivated. But gone are the days of such philosophy. It has been clearly laid down that the public sector should generate surplus to finance our future development programmes. The huge losses incurred by the Indian public sector are not the result of any charity; they are the inevitable outcome of inefficiency, irresponsibility and mismanagement at various levels. The failure of the public sector in discharging its primary duties has made the plight of the common man worse than it would have been, for it resulted in shortages, higher prices and more taxes. There is also a very wide gap between the sweet expectations from the public distribution system designed to save the Common man from the clutches of the "unscrupulous private sector" and the bitter experiences of the way the public distribution system functions. The least saidabout the efficiency of the service of the public sector transport undertakings the better. In our country a social audit is indeed, perhaps, more for the public sector than the private sector.

The Sachar Committee suggested that companies in the public sector, which were very much a part of the total corporate sector and accounted for about 70 per cent of the total investment in the corporate sector, must reckon with the social cost and social benefits arising out of any given investment. As a matter of fact, social cost-benefit analysis is accepted as one of the prime considerations for making any investment in the public sector. It is natural, therefore, to expect from the private corporate sector that, in the matter of investment, it will also show a similar consideration of social cost and social benefit. The accountability of the public sector to the people through parliament must find its parallel in the private sector in the form of social accountability, at least to the extent of informing the public about the extent and manner in which it has or has not been able to discharge its social obligations in the cause of its own economic operations. It is in this sense that the social responsibility of business, as far as the private sector is concerned, is another name for social accountability and is, in our view, a mere extension of the principle of public disclosure to which the corporations must be subject. It has also been repeatedly emphasised that the report on social responsibility of the company should not be in a vague or general manner, but should have an element of particularisation and certainty.

Q.18. Environment Friendly management

Ans. Your business depends on and affects the environment in many ways. Being environmentally friendly can save you money, give you good publicity and even attract new customers. There are many ways that you can help protect the environment while reducing your own costs. For example, you could recycle products instead of buying new ones or save power by turning off machines that are not in use. An environmentally friendly business that uses resources efficiently is more sustainable and more likely to minimise the impact of environmental risks. This guide will help you put your business on track for environmental sustainability.

The benefits of an environmentally friendly business

Running an environmentally friendly business helps you reduce your impact on the environment and preserves natural resources. Your business can help the environment in many ways. For example, you can:

use products that reduce your reliance on natural resources (e.g. rainwater tanks, solar hot water systems)
use products that are made from recycled material (e.g. office supplies made from recycled plastic, furniture made from recycled rubber)
look at all your business activities to see if you can do anything differently (e.g. reducing air travel by holding conference calls instead of interstate meetings).

Making your business environmentally friendly not only benefits the environment but can also save you money.

Recycling reduces your costs

Avoiding, reducing, reusing and recycling can lower your costs. For example, a few simple changes to how you deal with paper can involve your staff in environmentally friendly processes while saving you money:

avoid using materials unnecessarily
reduce your paper needs by asking staff to print double-sided
reuse by encouraging staff to use scrap paper for message-taking instead of purchasing message pads
recycle by shredding excess paper - you could recycle this commercially or invite staff to take it home for their compost or mulch heaps.

Good practice can attract new customers

Promoting your environmentally friendly methods can set your business apart from your competitors and attract new customers who want to buy products and services from an environmentally friendly business. Focusing more on your environmental impacts can also help to attract and retain staff.

Improves sustainability

Reducing the environmental impact of your business will improve the sustainability of your business. If you are less dependent on natural resources than your competitors and have ways to deal with rising costs due to climate change, your business will have a greater chance of long-term success.

Make your business environmentally friendly

Making your business environmentally friendly should save you money on electricity, paper and other resources - money that you can reinvest in your business.

Assess your impact

You should assess your current impact on the environment.

Get everyone involved

Set up regular discussions with employees so they can suggest ideas to help your business help the environment. This boosts morale and generates goodwill as every person in your business can contribute to your environmental goals.
Tell your customers how your business is environmentally friendly so they can make an informed decision to choose you over your competitors.
Contact your suppliers and ask them to help you. Do they offer a discount if you order in bulk and reduce the frequency of deliveries? Can you return their packing materials for them to re-use in exchange for a discount on goods?

Make green purchasing decisions

Almost everything your business buys uses energy and resources, and creates waste. Sustainable purchasing is a great way to reduce your impact on the environment. Ask your suppliers if their products are made from recycled materials. Research which suppliers have the least impact on the environment.

Spread the word

Make your environmental policy clear to new staff at induction so they know what they can do to help.
Use signs around your business and on your website, packaging and invoices/receipts to tell customers what you are doing to help the environment.
Encourage suppliers to help you; for example, your email sign-off could include a request not to print emails unless necessary.

Support to help your business go green

What we do, what we buy, and how we use and dispose of things makes us all responsible for the environment. As long as climate change continues to affect our lives, there will be environmental regulation for businesses.

Many government and support programs are available to help you understand what these regulations mean for your business, as well as how your business can cope with climate change.

Q.19. What is Management of Change?

Ans. Management of change is a systematic way to deal with change within an organization in order to effectively deal with the change and to capitalize on change opportunities. Change management includes adapting to the change, controlling the change and effecting new change. Management of change requires an organization to take a proactive approach to change.

Effective management of change is crucial if an organization is to adapt and thrive. All organizations encounter changes that they are unable to control. Developing a structured methodology to deal with change allows businesses to effectively cope with environmental changes. Changes that are likely to impact an organization may include competitive threats, changes to the economy, workplace regulations and governmental policies. Management of change involves the application of a structured system to provide a competitive advantage, as the marketplace is forced to adapt to the changing environment.

A business enterprise operates in a constantly changing environment. Changes in business environment create uncertainties and risk and also produce opportunities for growth. An enterprise has to change and adjust itself in the ever changing environment. Sound management moulds not only the enterprise but also alters the environment itself to ensure the success of the business. Many of the giant business corporations of today had a humble beginning and grew continuously through effective management.

An individual originates a change request. Qualified personnel, normally independent of the MOC originator, review the request to determine if any potentially adverse risk impacts could result from the change, and may suggest additional measures to manage risk. Based on the review, the change is either authorized for execution, amended, or rejected. Often, final approval for implementing the change comes from another designated individual, independent of the review team. A wide variety of personnel are normally involved in making the change, notifying or training potentially affected employees, and updating documents affected by the change.

Organizations usually have written procedures detailing how MOC will be implemented. The results of the review process are typically documented on an MOC Review form. Once the change is approved, it can be implemented. Potentially affected personnel are either informed of the change or provided more detailed training, as necessary, prior to start-up of the change. Follow-on activities, such as updates to affected elements, are assessed to identify which are required before start-up, and which may be deferred until after start-up. All such activities are tracked until completed.

Higher risk situations usually dictate a greater need for formality and thoroughness in the implementation of an MOC protocol, for example, a detailed plan that specifies exactly how changes are identified, reviewed, and managed. Companies having lower risk situations may appropriately decide to manage changes in a less rigorous fashion, for example, through a general policy about managing changes that is implemented via informal practices by trained key employees. Facilities that exhibit a high demand rate for managing changes may need greater specificity in the MOC procedure and a larger allocation of personnel resources to fulfil the defined roles and responsibilities. Lower demand situations can allow facilities to operate an MOC protocol with greater flexibility. Facilities with a sound culture may choose to have more performance-based MOC procedures, allowing trained employees to use good judgment in managing changes in an agile environment. Facilities with an evolving or uncertain culture may require more prescriptive MOC procedures, more frequent training, and greater command and control management to ensure good MOC implementation discipline.

The first step in the change process is to identify the need for change and the area of change as to whether it is a strategic change, process-oriented change or employee-oriented change. This need for change can be identified either through internal factors or through external forces that may be in place. Once the need for change is identified, the following general steps can be taken to implement such change.

(i) Develop new goals and objectives : The managers must identify as to what new outcomes they wish to achieve. This may be a modification of previous goals due to changed internal and external environment or it may be a new set of goals and objectives.

(ii) Select an agent for change : The management must decide as to who will initiate and oversee this change. A manager may be assigned this duty or even outside specialists and consultants can be brought in to suggest the various methods to bring in the change and monitor the change process.

(iii) Diagnose the problem : It is important to gather all pertinent data regarding the area or the problem where the change is needed. This data should be critically analyzed to pinpoint the key issues. Then the solutions can be focused on those key issues.

(iv) Select methodology : Because of natural resistance to change, it is very important to chart out a methodology for change which would be correct and acceptable to all. Members’ emotions must be taken

into consideration while devising such methodology.

(v) Develop a plan : This step involves putting together a plan as to what is to be done. For example, if the company wants to develop and implement a flexitime policy, it must decide as to what type of workers will be affected by it or whether flexitime should be given to all members or only to some designated workers.

(vi) Strategy for implementation of the plan : In this stage, the management must decide on the “when”, “where” and “how” of the plan. This includes the right timing of putting the plan to work, how the plan will be communicated to workers in order to have the lesser resistance and how the implementation will be monitored.

(vii) Implementation of the plan : Once the right timing and right channels of communication have been established, the plan is put into action. It may be in the form of simple announcement or it may require briefing sessions or in-house seminars so as to gain acceptance of all the members and specially those who are going to be directly affected by the change.

(viii) Receive and evaluate feedback : Evaluation consists of comparing actual results to the set goals. Feedback will confirm if these goals are being met so that if there is any deviation between the goals and the actual performance outcomes, then corrective measures can be taken.

Q.20. Are all managers change agents? Discuss. Identify the role of change agents in an organization.

Ans. The change agents are those factors that are responsible for bringing about the change in the individual behaviour patterns. This is the most important type of change since other types of changes such as in strategy, structure or process can always be introduced simply by the management and most often these changes are accepted by the workers and also because behaviour is a highly complex phenomenon and it may require a number of strategies to make desirable changes in human behaviour. These change agents may either be the initiators of change or serve as catalysts for such change. Four types of change agents have been identified.

(i) Outside Pressures : These are pressures from the external environment and are directed towards change in the entire organization. These may be in the form of government intervention if there are serious quality or safety defects. The government may also get involved if there are labour strikes for a long period of time

or mass demonstrations against the organization.

(ii) Internal organizational development : This can come slowly and through and within the organization itself. This may include redefinement of goals as well as participative goal setting such as MBO (Management by Objectives), work redesign, team development and so on.

(iii) Individual change : This change is the modification of behaviour within the individual where personal goals may be better served in the changed environment of the organization. For example, in a government job, if a person who is habitually coming late to work without any obvious repercussions or reprimands, might change his behaviour if the organization starts taking notice of such tardiness in a negative way.

(iv) Changes from central management : The organizational change may come from the top management who may be convinced about its necessity and may direct the structural, strategic or technological changes that would be beneficial to the organization and its members.

There have been a number of change agents that have been at work in changing the organizational processes and structures. In America, for example, Ralph Nader, a consumer advocate has been responsible for many changes in the area of quality and safety of many products and especially in the automobiles. In addition, forces such as women’s liberation movement and strong labour unions have brought about changes that have affected the work ethics of the organizations and work roles of its members.

Similarly, in India where the bureaucratic structure is deeply embedded in the organizational system, changes are being brought about by government regulations and by social pressures to give more freedom to the workers, to bring about equal opportunity for employment, irrespective of religion or gender and to keep pace with the changing world in technological processes.

The change agent may be in the form of a consultant who helps the client find solutions to the organizational problems. It could also be in the form a trainer who trains the client to achieve a set of skills that could be used in bringing about the change for desired outcomes. This change agent must have certain characteristics which would identify it to be more effective than others.

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