MANAGEMENT CONCEPTS AND ORGANISATIONAL BEHAVIOUR

UNIT-2

Organization
Definition: - Organisation is that structure that assigns Authority & responsibility amongst
individuals working together for the accomplishment of a common objective.
Being organised reduces the time it takes to complete a task, giving you more time to get
ahead on your workload or relax. Having extra time means you can focus on advancing your
professional career. Being organised helps you save money in all aspects of your personal
and professional life.
The systematic arrangement of human resources in an organisation so as to achieve
common business objectives.
It provides the means for clarifying & communicating the lines of responsibility, authority, &
accountability.
It’s a group of people to achieving a common goal.
According to Talcott Parsons: “Organisation is defined as a social unit which is deliberately
constructed and reconstructed to seek specific goals.”

Features of Organisational
1. Division of work: The work is divided into manageable activities to eliminate
duplication and share the burden of work.
2. Structure: The structure outlines the roles of individuals, or their jobs. A line
organization structure has a clear division of accountability, authority, and
responsibility.
3. Adaptability and innovation: Adaptability encourages innovation and flexibility
within the organization. Employees should be given the chance to experiment and
add value to the organization.
4. Leadership: Effective leadership is one of the key drivers of organizational
development. The organization's development depends on the type of leadership
style used by an organization.
5. Delegation: Delegation is a central feature of organizational design.
6. Communication and coordination: Organizations uphold effective communication
and coordination.
 Types of Organisations

Formal Informal
 Types of Organisation Structure
Organisation structure is defined as “The logical arrangement of task and the network of
relationships and roles among various positions established to carry out the activities.
Organisation structure constitutes the arteries and veins through which the blood of work
flows in the body of organisation.
1. Line Organisation
2. Functional Organisation
3. Line & Staff Organisation
4. Committee Organisation
5. Project Organisation
6. Matrix Organisation
Types of Staff
 Decentralisation of Authority

• Decentralisation is passing of authority to make decisions to the lowest possible level

in the organisational hierarchy.
• Decentralisation is delegation of authority to the maximum possible
extent. Decentralization marks an extension of the process of delegation.
• Under decentralization, the central unit of an organization distributes functions,
responsibility, accountability and matching authority to regional and local units
situated away from it.

Definition: - According to Louis A. Allen – “Decentralization refers to the systematic

effort to delegate to the lowest level all the authority except that which can be
exercised only at central points. Decentralization is concerned with a placement of
authority with reference to responsibilities.”

Top Management Board of Directors

Managing Director
General Manager

Middle Management Branch Manager

Production Manager
Marketing Manager
Finance Manager

Essential Characteristics of Decentralization

1. Decentralization Not the Same Thing as Delegation-

Delegation: The process of assigning tasks and responsibilities to others, usually from a
manager to their subordinates. Delegation can be temporary or specific to certain tasks.

Decentralization: The process of systematically distributing authority to all levels and

functions of an organization. Decentralization is the end result of planned delegation and
is a permanent change in an organization's structure.

2. Decentralization is not a Type of Organization- Decentralization is a management

style where top management delegates decision-making and daily operations to
lower and middle levels of management.

Decentralisation of Authority – 10 Important Principles

1. The power to take the decisions regarding the decentralisation must be vested with
the top management.
2. Subordinates must be competent and capable enough to take the decisions.
3. Responsibilities should also be assigned along with authorities to the subordinates.
 4. Mutual understanding is essential for decentralisation. The main function of staff
must be to advice and counsel with the line staff so that the line staff may take
independent decisions and may improve themselves if required.
5. Authorities must be delegated in order to execute the arrangement of
decentralisation.
6. Top officers must delegate their authority to their subordinates in the real and true
sense.
7. Decentralisation depends on the assumptions that the collective decisions are better
than the decisions taken by one person.
8. Personnel policies be decided on standard basis and must be changed from time to
time according to the need. There must be a provision of reward to the efficient
workers and inefficient workers be punished.
9. Efforts be made that the decisions should be taken at the right time with the right
intention and after careful thought, otherwise the arrangement of decentralisation
will not be successful.
10. The arrangement of decentralisation depends on the need of organisation objectives,
organisational structure and the policies of enterprise.

Decentralisation of Authority – Factors Affecting the Degree of Decentralization

1. Nature Growth of Organization

2. Effect of Size of Business Organization
3. Availability of Competent (capable) Managers

Decentralisation of Authority – 7 Advantages of Decentralisation

1. It Reduces the Burden of the Top Executive

2. Management Development
3. It Facilitates Diversification
4. Emphasis on Product and Market
5. Higher Motivation
6. Ensures Effective Control
7. Minimizing Risks

Decentralisation of Authority – 4 Main Disadvantages

1. Lack of Co-Ordination
2. Difficulty in Control
3. Costly
4. Lack of Able Managers
 Decentralisation of Authority – Efforts to Make Decentralisation More Effective

1. There Should be Appropriate Centralisation to Make Decentralisation More Effective

2. There Should be Centralised Control in Basic Areas So that the Top Management May
Know Where Its Various Units are Going
3. The Availability of Qualified Managers in the Organisation is Essential
4. There Should be Fair and Proper Competition among the Various Units.
5. Open Communication System Should be Established in the Organisation.
6. Effective Co-Ordination is Essential.

Delegation of Authority

The Delegation of Authority is an organizational process wherein, the manager divides his
work among the subordinates and give them the responsibility to accomplish the respective
tasks. Along with the responsibility, he also shares the authority, i.e. the power to take
decisions with the subordinates, such that responsibilities can be completed efficiently.

Features of Delegation of Authority

1. Delegation means giving power to the subordinate to act independently but within
the limits prescribed by the superior. Also, he must comply with the provisions of the
organizational policy, rules, and regulations.
2. Delegation does not mean that manager give up his authority, but certainly he shares
some authority with the subordinate essential to complete the responsibility
entrusted to him.
3. Authority once delegated can be further expanded, or withdrawn by the superior
depending on the situation.
4. The manager cannot delegate the authority which he himself does not possess. Also,
he cannot delegate his full authority to a subordinate.
5. The delegation of authority may be oral or written, and may be specific or general.
6. The delegation is an art and must comply with all the fundamental rules of an
organization.
 Process of Delegation of Authority

1. Assignment of Duties to Subordinates: Before the actual delegation of authority, the

delegator must decide on the duties which he wants the subordinate or the group of
subordinates to perform. Here, the manager lists the activities to be performed along
with the targets to be achieved, and the same is spelled out to the subordinates.
Thus, in the first stage, the duties are assigned to the subordinates as per their job
roles.

2. Transfer of Authority to perform the duty: At this stage, an adequate authority is

delegated to the subordinate which is essential to perform the duty assigned to him.
A manager must make sure; that authority is strictly delegated just to perform the
responsibility, as more authority may lead to its misuse by the subordinate.

3. Acceptance of the Assignment: At this stage, the subordinate either accepts or

rejects the tasks assigned to him by his superior. If the subordinate or the delegate,
refuses to accept the duty and the authority to perform it, then the manager looks
for the other person who is capable of and is willing to undertake the assignment.
Once the assignment gets accepted by the subordinate, the delegation process
reaches its last stage.

4. Accountability: The process of delegation of authority ends at the creation of an

obligation on the part of the subordinate to perform his responsibility within the
powers assigned to him. Once the assignment is accepted by the subordinate, then
he becomes responsible for the completion of the duty and is accountable to the
superior for his performance.
 Elements of Delegation of Authority

Responsibility: The responsibility means, assigning the work to an individual. The managers
assign certain responsibility to the subordinates for the completion of certain tasks on his
behalf. An individual has to apply all his physical and mental ability to get the task completed
efficiently. Here it is to be noted, that manager can only assign the responsibility, and in the
case of the subordinate fouls, the manager will be answerable to his seniors. Thus, the
responsibility flows upwards.

Authority: To fulfil the responsibility, certain authority is delegated to the subordinate.

Authority means the power to take decisions. Hence, the manager along with the
responsibility also delegates authority to enable the subordinate to take decisions
independently and accomplish the task efficiently.

Accountability: Accountability means, to check whether the subordinates are performing

their responsibilities in an expected manner or not. The Accountability cannot be delegated
which means, in the case of non-completion of the task, the manager will only be held
responsible for it, not the subordinates. The accountability also flows upward, i.e.
subordinates will be accountable to the manager and the manager to his superior.

Meaning of Staffing

Staffing is the process of hiring eligible candidates in the organization or company for
specific positions. In management, the meaning of staffing is an operation of recruiting the
employees by evaluating their skills, knowledge and then offering them specific job roles
accordingly.
 Functions of Staffing

1. The first and foremost function of staffing is to obtain qualified personnel for
different jobs position in the organization.
2. In staffing, the right person is recruited for the right jobs, therefore it leads to
maximum productivity and higher performance.
3. It helps in promoting the optimum utilization of human resource through various
aspects.
4. Job satisfaction and morale of the workers increases through the recruitment of the
right person.
5. Staffing helps to ensure better utilization of human resources.
6. It ensures the continuity and growth of the organization, through development
managers.

Importance of Staffing

1. Efficient Performance of Other Functions: For the efficient performance of other

functions of management, staffing is its key. Since, if an organization does not have
the competent personnel, then it cannot perform the functions of management
like planning, organizing and control functions properly.

2. Effective Use of Technology and Other Resources: What is staffing and technology’s
connection? Well, it is the human factor that is instrumental in the effective
utilization of the latest technology, capital, material, etc. the management can ensure
the right kinds of personnel by performing the staffing function.

3. Optimum Utilization of Human Resources: The wage bill of big concerns is quite
high. Also, a huge amount is spent on recruitment, selection, training, and
development of employees. To get the optimum output, the staffing function should
be performed in an efficient manner.

4. Development of Human Capital: Another function of staffing is concerned with

human capital requirements. Since the management is required to determine in
advance the manpower requirements. Therefore, it has also to train and develop the
existing personnel for career advancement. This will meet the requirements of the
company in the future.

5. The Motivation of Human Resources: In an organization, the behaviour of

individuals is influenced by various factors which are involved such as education
level, needs, socio-cultural factors, etc. Therefore, the human aspects of the
organization have become very important and so that the workers can also be
motivated by financial and non-financial incentives in order to perform their
functions properly in achieving the objectives.

6. Building Higher Morale: The right type of climate should be created for the workers
to contribute to the achievement of the organizational objectives. Therefore, by
performing the staffing function effectively and efficiently, the management is able to
 describe the significance and importance which it attaches to the personnel working
in the enterprise.

Characteristics of Staffing

1. People-Cantered: Staffing can broadly view as people-cantered function and

therefore it is relevant for all types of organization. It is concerned with categories of
personnel from top to bottom of the organization.

2. Responsibility of Manager: Staffing is the basic function of management which

involves that the manager is continuously engaged in performing the staffing
function. They are actively associated with the recruitment, selection, training, and
appraisal of his subordinates. Therefore, the activities are performed by the chief
executive, departmental managers and foremen in relation to their subordinates.

3. Human Skills: Staffing function is mainly concerned with different types of training
and development of human resource and therefore the managers should use human
relation skill in providing guidance and training to the subordinates. If the staffing
function is performed properly, then the human relations in the organization will be
cordial and mutually performed in an organized manner.

4. Continuous Function: Staffing function is to be performed continuously which is

equally important for a new and well-established organization. Since in a newly
established organization, there has to be recruitment, selection, and training of
personnel. As we compare that, the organization which is already a running
organization, then at that place every manager is engaged in various staffing
activities.

Recruitment

Recruitment is the process of finding, screening, and hiring people for a job within an
organization. It's a key part of human resources (HR) management and can include the entire
hiring process, from identifying a staffing need to onboarding new employees.

This is the process of searching for and obtaining sufficient number and quality of potential
job seekers or applicants to enable the organization to select the most appropriate people to
fill its job needs. It is pertinent to note that the process of recruitment must begin with a
clear specification or understanding of manpower needs. It should consider the time that
the manpower requirement must be met for instance the Labour market for fresh graduates
with less than year experience in the National Youths Service Corps. Labour market simply
means an area where employers could easily get the type of workers they need to carry out
relevant duties and employees are available to sell their labour or seek employment.
 Selection and Placement

Selection is a process of gathering information for the purposes of evaluating and deciding
who should be employed or hired for the short and Long-term interests of the individual and
the organization. In other words, it is the process of getting the best of most qualified
candidates from the pool of job seekers adjudged to have potential for job performance.

The importance of selection and placement

1. To fairly and without any element of discrimination evaluate job applicants in view of
individual differences and capabilities.
2. To employ qualified and competent hands that can meet the job requirement of the
organization.
3. To place job applicants in the best interest of the organization and the individual.
4. To help in human resources| manpower planning purposes in organization.
5. To reduce recruitment cost that may arise as a result of poor selection and
placement exercises.

Recruitment Sources

Internal Sources of Recruitment

Internal sources of recruitment consist of employees who are already on the payroll of a
firm. It also includes former employees who have returned to work for the organization.
Recruitment from internal sources is done to fill up vacancies through promotion, re-hiring
and transferring employees within the company.
 Advantages of Internal Sources of Recruitment

1. Selecting and transferring existing employees is a simpler process.

2. The managers are aware of the talents and abilities of already existing employees.
3. Internal recruitment serves as a tool to boost the morale of employees as internal
hiring creates job and promotion opportunities for existing employees.
4. Internal hiring promotes a feeling of loyalty amongst the employees.
5. Existing employees are already aware of the company’s working methods and don’t
take a long time to adjust to new positions.

Characteristics of Internal Sources of Recruitment

Quick process.

Cheaper than the external recruitment process.

Works as a tool of motivation for the staff.

The company’s choice is limited to existing employees of the company.

Hiring fresh employees is a lost prospect.

External Sources of Recruitment

• External sources of recruitment refer to the sources that lie outside or exist external
to the organization.
• Encouraging existing employees to recommend suitable candidates can thus lead to
the hiring of the right individuals for the right jobs. A higher level of teamwork and
synchronization among employees would, therefore, be achieved.
People joining an Employment agencies(
Institutes like colleges
organization, e.g. naukri.com) or
Advertising and vocational schools
specifically through employment
(e.g. campus selection)
recommendations. exchanges.

Contractors Hiring unskilled labor List of applications Temporary workers.

Characteristics of External Sources

1. Long and time-consuming process.

2. It is an expensive process.
3. When external people are given opportunities over them, then existing workers lose
morale
4. Hiring new employees can lead to the introduction of new blood and thus the
introduction of a new set of skills and ideas
 Selection Process

Assessment and Background

Job Anaysis
Testing Checks

Job Posting Interviewing Job Offer

Candidate Resume
Onboarding
Sourcing Screening

Follow-UP

1. Job Analysis: The first step in recruitment involves identifying the need for a new
position or a replacement. A thorough job analysis is conducted to determine the
roles, responsibilities, qualifications, and skills required for the job.

2. Job Posting: Once the job description is prepared, the organization advertises the job
vacancy through various channels such as job boards, company websites, social
media, and recruitment agencies.

3. Candidate Sourcing: In this stage, recruiters actively search for potential candidates
through various means, including online platforms, databases, networking events,
referrals, and direct applications.

4. Resume Screening: Recruiters review the resumes and applications received to

shortlist candidates who meet the initial criteria. They look for relevant experience,
qualifications, and skills.

5. Interviewing: Shortlisted candidates are invited for interviews, which can be

conducted in person, over the phone, or via video conferencing. Interviews help
assess the candidate's suitability for the role and company culture.

6. Assessment and Testing: Some companies may conduct additional tests or

assessments to evaluate specific skills or cognitive abilities of the candidates.

7. Background Checks: Before making a final offer, organizations often perform

background checks to verify the candidate's credentials and employment history.

8. Job Offer: The selected candidate is presented with a job offer, including details
about compensation, benefits, and other terms of employment.
 9. Onboarding: Once the candidate accepts the offer, the onboarding process begins,
where they are introduced to the company's policies, procedures, and their new role.

10. Follow-up: After the candidate starts the job, HR and hiring managers usually
conduct follow-up sessions to ensure a smooth transition and address any initial
concerns.

Human Resource Management (HRM)

Human resource management (HRM) is one of the most important aspects of management
in general. It includes many functions like recruiting, staffing, training and controlling. Since
it is such an important function of most managers, one must know all the features of HRM. A
good understanding of this field of management can boost productivity, efficiency, and
profitability.

Features of HRM

It is an inherent part of the management

• One of the most important features of HRM is that it is inherently a part of the larger
function of management itself. Contrary to what people usually think, it is not
something that only personnel managers do.
• This is because every manager has to deal with people in one way or another.
Therefore, human resource management becomes a function for every manager.
It is people-centered
• The entire ambit of human resource management revolves around people. Managers
at all hierarchies in an organization have to manage people in one way or another.
• In other words, people are the main focus of human resource management. This is
true regardless of which level of management or the work profile of employees is
concerned.
It is a pervasive function of management
• Human resource management is a pervasive function present in every aspect of
management. In other words, all managers at every hierarchy or level have to deal with
HRM.
• This is because managers at all levels have to deal with people in different capacities.
Whether it is the top-level management or the bottom level, managers have to work
with people.

It is a continuous function
• The process of human resource management is continuous and has to go on all the
time without breaks. If an organization has to function smoothly and efficiently, it
must be able to manage its employees effectively. This is not a ‘one-shot’ venture;
instead, it is a continuous and permanent process. No manager ever stops dealing
with people.

It deals with personnel activities

 • Human resource management involves several important activities regulating
personnel. For example, it deals with staffing, recruiting, training, appraising,
compensating, etc. In order to look after these functions, most organizations have
dedicated HR departments and managers.

It is based on human relations

• One of the most important features of HRM is that it regulates human relations.
Managers cannot deal with human beings mechanically as if they are physical
resources. This is because humans are sentimental and emotional entities.
• Every person has different beliefs, aspirations, perceptions, and drawbacks.
Therefore, managers must be able to connect with their employees and subordinates
on a deeper personal level.

Operative Functions of HR Manager

1. Employment
2. Development
3. Compensation
4. Working Conditions and Welfare
5. Motivation
6. Personnel Record Keeping
7. Industrial Relations

1.Employment
• Human resource is the most important resource for any enterprise since it is the
resource that converts other resources into the final product.
• But that does not mean that the organization starts keeping thousands of workers
without proper requirement estimation.
• So, under this first operative function of the HR manager, he estimates the
manpower requirement in the organization. He does so by using workforce and
workload analysis

2.Development
• Undoubtedly, the acquisition of human resource in any organization is very
important. But we should not forget the fact that the world is changing at a rapid
pace demanding the companies to change along with it. In order to cope up with the
changing world, the company needs upgraded employees.
• Each time a company cannot just retrench the old staff and hire a new one because
of a lot of disadvantages in doing so.
3.Compensation
• Everyone works for some benefit or the other. Mostly, people work in exchange for
some monetary benefits. Compensation is nothing but the payment for the work
done by the workers in the company.
 • HR manager should consider the fact of equitable compensation for the same level
and quality of work for different workers. This function focuses on the determination
of adequate and equitable remuneration of the employees.
4.Working Conditions and Welfare
• Training and Development just upgrade the workers to work effectively and
efficiently but that does not ensure good productivity or fulfillment of the objectives.
• It is because there are factors too which are equally important. These include the
working environment, conditions, etc.
• This function focuses on the good maintenance of the workplace and providing an
atmosphere for the workers for effective and efficient working.
5.Motivation
• People generally work to a certain level with full efficiency. After some time, they
need to be provided with some new incentives to work. Here comes the concept of
motivation. This function states that the HR manager should motivate the workers
with both financial and non-financial incentives.
6. Personnel Record Keeping
• This function states that an HR manager keeps records of the personnel working in
different departments under different heads.
• Moreover, he keeps the record of their work and the level of improvement. This
record keeping helps them to build motivational techniques, staffing function, etc.
7. Industrial Relations
• The relation of all the workers in the industry is an important aspect for any
organization. This function is nowadays fulfilled by the HR managers in the
organization.
• He helps in collective bargaining, joint consultation, and settlement of disputes. It is
because he has a working knowledge of various labour enactments.

Training and Development

Training and Development is one of the main functions of the human resource management
department. Training refers to a systematic setup where employees are instructed and
taught matters of technical knowledge related to their jobs. It focuses on
teaching employees how to use particular machines or how to do specific tasks to increase
efficiency.

Methods of Training

On the Job Training Off the Job Training

Job Rotation Vestibule Training Method
Job Instructions Case Study Method
Coaching Incident Method
Committee assignments Conferences
On-the-Job Training Methods

Job Rotation
• There are various jobs in all organizations. Each job or work requires a different set of
skills in the workforce. In order to develop the workforce in all the sectors and zones
of the organization, this method is used.
• In this method, a worker gets an opportunity to work on different posts with a
different set of responsibilities without any increase in the pay scale. Hence, it is also
known as ‘lateral movements.

Job Instructions
• There are various steps to accomplish a particular task. In this method of training, a
worker is guided by a supervisor or a trainer who tells him/her about the exact steps
for the accomplishment of the work. Moreover, new works are being taught to the
workers by the supervisor.

Coaching
• There is a need for both theoretical as well as practical development of the worker in
any organization. In order to do so, most of the organizations opt for this method of
training.
• In this method, the company provides the worker with a coach who trains him. Also,
the trainer provides him regular feedbacks.
•
Committee assignments
• Under this method of training, the organization organizes a meeting or seminar of
workers where they get a real-life problem of the organization.
• The organization asks them to take it as an assignment and try to solve it with their
wits. Hence, it leads to the generation of teamwork, leadership qualities, etc. among all
the workers in the organization

Off-the-Job Training Method

Vestibule Training Method

• Vestibule Training Method is a very famous means of training the employees
especially the manual workers. If the company starts to train the workers in the
factory or the workplace itself then there are chances of mishappening with the
machinery of the factory.
• In this method, similar tools and machinery are arranged outside the organization.
Hence, this allows the workers to enhance their skills by working with the same tools
and machinery.

Case Study Method

• Generally, case study deals with an issue which a business confronts and provides an
opportunity for workers to come out with a solution.
• This provides them the opportunity to analyse the case and come out with effective
solutions. This method can enhance the critical and creative thinking of an employee.
Incident Method
• Under this method, firstly the organization prepares a list of series of real incidents.
Then they ask the employees to state their reaction to the incident or the situation.
• Later, everyone sits and decide a common solution to the incident on the basis of the
individual as well as group decisions.

Conferences
• Whenever several people meet to discuss any particular topic or subject, that is
known as a ‘Conference’. Each worker analyses and discusses various problems
related to the topic. Moreover, this method enables each worker to express their
respective viewpoints.

Direction

Directing consists of process or technique by which instruction can be issued and operations
can be carried out as originally planned” Therefore, Directing is the function of guiding,
inspiring, overseeing and instructing people towards accomplishment of organizational
goals.

Principles of Directing

1. Minimum Individual Contribution: This principle emphasizes that directing

techniques must help every individual in the organisation to contribute to lies
minimum potential for achievement of organisation objectives. It should bring out
confuted energies of employees for the efficiency of organisation.

2. Harmony of Objectives: Very often, we find that individual objectives of employees

and the organisation objectives as understood are conflicting to each other. This
principle explains that there should be cordial relationship between all the stake
holders of the organisation. The different objectives should not be the barrier of the
organisation, but they should be complementary to each other.

3. Unity of Command: This principle insists that a person in the organisation should
receive instructions from one superior only. If instructions are received from more
than one it creates confusions, conflict and disorder in the organisation. Following
this principle ensures effective direction.

4. Appropriateness of Direction Technique: According to this principle appropriate

technique should be used while directing the people based on subordinate needs,
capabilities, attitudes and other situational variables.

5. Managerial Communication: Effective managerial communication across all the

levels in the organization makes direction effective. Directing should convey clear
instruction to create total understanding to subordinates, through proper feedback,
the mangers should ensure that subordinate understands his instructions clearly.
 6. Use of Informal Organization: A manger should realize that informal groups or
organization exits within every formal organization. He should spot and make use of
such organizations for effective directing.

7. Leadership: While directing the subordinates mangers should exercise good

leadership as it can influence the subordinates positively without causing
dissatisfaction among them.

8. Follow Through: Mere giving of an order is not sufficient. Mangers should follow it
up by reviewing continuously whether orders are being implemented accordingly or
few problems are being encountered. If necessary suitable modifications should be
made in the directions.

Coordination
Coordination is concerned with harmonious and unified action directed toward a
common objective. It ensures that all groups and persons work efficiently, economically and
in harmony. Coordination requires effective channels of communication. Person to person
communication is most effective for co-ordination. Co-ordination is undertaken at every
level of management.

Essence of Coordination
• Co-ordination is the synchronisation of human efforts in an organisation and
management too tries to correlate various managerial functions for achieving
business objectives. Business goals will be achieved only when activities of various
functions will be co-ordinated. It will be a collective effort of all the functions which
will be instrumental in reaching business goals. So, management itself is the
synchronisation of various activities being undertaken in the business.

• Every business function has some objectives. In order to achieve these objectives
various activities are undertaken, some more important and some less important.
The functions of planning, organising, staffing, directing and controlling comprise of
various sub-functions or activities. Unless these activities of various functions are
synchronised the objectives of the functions will not be achieved.

• if every activity is taken up without having regard to other activities, then there will
be chaos and mismanagement. There will be a need of coordination for setting the
things right. It was this reason that classical school of management considered co-
ordination as a separate function of management. In the systems approach of
management execution of management functions proceeds on integrative basis and
the problem of co-ordination does not arise but it becomes automatic process.
All managerial functions try to achieve integration of various efforts and co-
ordination becomes the essence of management and not a separate function.
 Importance of coordination
1. Better Personnel Relations: Management and staff create cordial human relations
through coordination. The points of dispute or conflict among different persons,
between line and staff, etc. can be settled by mutual discussions. Better personal
relations are also helpful in increasing the morale of employees which ultimately
leads to job satisfaction.

2. Unity of Direction: Co-ordination helps in creating unity of direction. Different

segments of the business may set different goals. The co-ordination process helps in
synchronising various efforts. It motivates various employees to view their work from
the standpoint of the business. In the absence of co-ordination, there may be
conflicting goals and everybody may perceive the objectives in a different way. This
will create confusion and chaos in the organisation. Coordination will help in
reconciling conflicting views.

3. Essential for Management: The increase in the size of organisation has brought a
number of complexities. There is a degree of specialisation, division of labour and
large number of individuals. Everybody has his own personality traits and ways of
working. It is essential to synchronise the work of all persons in the organisation. Co-
ordination helps in bringing unity of action for achieving business goals.

4. Efficiency and Economy: Co-ordination promotes efficiency and economy in

the organisation. By co-ordinating activities, the efficiency is brought in the working.
It also helps in avoiding delays and eliminating duplication of efforts. This will result
in saving of time and energy, thus bringing economy to the business.

5. Helpful in Developing and Retaining of Personnel: Co-ordination by synchronising

various activities, helps in promoting team spirit among organizational personnel.
There will be no conflict or confusion in division of work and everybody will try to
improve his own performance. This helps in developing potentialities of every person
in the organization. Coordination also helps in promoting job satisfaction among
employees by giving them personal contentment. The concern will be able to retain
the services of good employees.

Techniques of Effective Coordination

1. Goals are Well Defined: The goals of the organisation should be clear and well-
defined. Everybody should know the objectives and his contribution towards its
achievement. Unity of purpose will be achieved through proper co-ordination.

2. Simplified Organisation: The organisational structure should clearly define the

authority and responsibility of each and every person. This will help in reducing
conflicts among persons. Over specialisation of activities also creates problems of co-
ordination.
 3. Effective Communication: Effective communication helps in creating proper
understanding among persons whose work needs to be co-ordinated. Through
communication every individual understands his scope, limitations, his position in
the organization and his relationship with others.

4. Effective Leadership: Effective leadership is essential for better co-ordination. A good

leader is able to achieve co-ordination both at planning and execution stages. If a
leader is undecided about his task, then he will not be able to either guide or co-
ordinate their activities.

Controlling

It is the process that measures current performance and guides it towards some
predetermined objectives. Under primitive management, control was undertaken only when
something went wrong and the objectives of control was to reprimand the person
responsible for these events and take action against him.

Control is the process through which managers assure that actual activities conform to
planned activities. According to Breach. - "Control is checking current performance against
predetermined standards contained in the plans, with a view to ensuring adequate progress
and satisfactory performance."

Characteristics of Controlling

1. Control is the function of every manager. Managers at all levels have to perform this
function to contribute to the achievement of organizational objectives.

2. Control leads to appraisal of past activities. The deviations in the past are revealed by
the control process. Corrective actions can be initiated accordingly.

3. Control is linked with future, as past cannot be controlled. It should anticipate

possible deviations and to think of corrective action for the control of such deviations
in the future. It is usually preventive as presence of control system tends to minimize
wastages, losses and deviations from standards.

4. Control is concerned with setting standards, measurement of actual performance,

comparison of actual performance with predetermined standards and bringing to
light the variations between the actual performance and the standard performance.

Scope of Controlling

1. Control over policies: The success of any business organisation to a large extent, depends
upon, how far its policies are implemented. Hence the need of control over policies is self-
evident. In many enterprises, policies are controlled through policy manuals.
2. Control over organisation: Control over organisation is accomplished through
the development of organisation chart and organisation manual. Organisation manual
attempts at solving organisational problems and conflicts making long-range organisation
planning possible, enabling rationalisation of organisation structure, helping in proper
designing of organisation and department.

3. Control over personnel: The statement that 'Management is getting the work done
through people' underlines sufficiently the importance of control of personnel. All
employees working at different levels must perform their assigned duties well and direct
their efforts in controlling their behaviour. Personal Director or Personnel Manager prepares
control plan for having control over personnel.

4. Control over wages and salaries: Such type of control is done by having programme of
job evaluation and wage and salary analysis. This work is done either by personnel
department or industrial engineering department. Often a wage and salary committee are
constituted to help these departments in the task of controlling wages and salaries.

5. Control over costs: Cost control is exercised by the cost accountant, by setting cost
standards for material, labour and overheads and making comparison of actual cost data
with standard cost. Cost control is supplemented by budgetary control systems.

Types of Control Techniques

(i) Budgeting
and
(vii) Statistical Data
Budgetary
Analysis Control

Profit
(vi)
(ii) Cost
and Loss
Control
Control
(iii) Produc
(v) Break tion
Even Planning
Analysis and
(iv) Invent
Control
ory
Control

Budgetary Control: "Budgetary control is a system of controlling costs which includes the
preparation of budgets, coordinating the departments and establishing responsibilities,
comparing actual performance with the budgeted and acting upon results to achieve
maximum profitability. Weldon characterizes budgetary control as planning in advance
of the various functions of a business so that the business as a whole is controlled.

Cost Control: Cost control is a control of all the costs of an enterprise in order to achieve
cost effectiveness in business operations. Cost can be classified as: fixed cost, variable cost,
semi-variable cost. The fixed costs are incurred over a period over a period of time and are
not directly related to production. These costs remain the same even if there is an increase
or decrease in production. Variable costs; on the other hand, change in the proportion of
output. Semi-variable costs are fixed as well as variable in nature. Some costs may "be
incurred continuously, others now and then and still others only deemed to be incurred
(depreciation).

Inventory Control: Inventory control or materials management connotes controlling the

kind, amount, location and timing of various commodities used in and produced by the
industrial enterprises. It is the control of materials in such a manner that it ensures
maximum return on working capital. Inventory control is necessary for the smooth and
uninterrupted functioning of production department. Its main purpose is to maintain an
adequate supply of correct material at the lowest total cost. Inventory control is exercised at
three stages. (I) purchasing of materials (ii) storing of materials (iii) issuing of materials.

Break-even Point: It is a level of production at which revenue and costs (fixed and variable)
are the same, at this point there is neither profit nor loss. Every concern tries to reach this
level of production at the earliest and profit starts only when production increases beyond
this level.

Modern Control Techniques

Return on
Investment Control

Programme Evalu
ation and
Review Technique
(PERT)

Management
Management
Information Audit
System (MIS)

Return On Investment Control (ROI): Profits are the measure of overall efficiency of
a business. Profit earned in relation to the capital employed in a business is an important
control device. If the rate of return on investment (shareholder’s funds) is quite satisfactory,
it will be taken as a yard-stick of good performance.

The return on investment is computed by dividing the operating net profit (before interest
and tax) by the capital employed in the concern. The following formula is used for this
purpose.
Programme Evaluation and Review Technique (PERT): Programme evaluation and
review technique (PERT) was first developed as a management tool for coordination and
early completion of Polaris Ballistic Missile Project in USA resulting in a reduction of 30 per
cent time in project execution. A contemporary of PERT is CPM (Critical Path Method) and
was developed in connection with maintenance and construction work.

Management Information System (MIS): Management information system (MIS) is

an approach of providing timely, adequate and accurate information to the right person in
the organisation which helps in taking right decisions. So, MIS is a planned and
organised approach to the transferring of intelligence within an organisation for better
management. The information is furnished into useful quantum’s of knowledge in the form
of reports. An effective system of MIS collects data from all possible sources. The
information is properly processed and stored for use in future.

Management Audit: Management audit is an investigation by an independent organization

to find out whether the management is carried out most effectively or not. In case there
are drawbacks at any level then recommendations should be given to improve
managerial efficiency. In the words of Leslie R. Howard, "Management audit is an
investigation of a business from the highest level downward in order to ascertain whether
sound management prevails throughout, thus facilitating the most effective relationship
with the outside world and the most efficient organisation and smooth running internally.

Management by Exception

Management by exception is the practice of examining the financial and operational results
of a business, and only bringing issues to the attention of management if results represent
substantial differences from the budgeted or expected amount. For example, the company
controller may be required to notify management of those expenses that are the greater of
$10,000 or 20% higher than expected.

The purpose of the management by exception concept is to only bother management with
the most important variances from the planned direction or results of the business.
Managers will presumably spend more time attending to and correcting these larger
variances. The concept can be fine-tuned, so that smaller variances are brought to the
attention of lower-level managers, while a massive variance is reported straight to senior
management.

Advantages of Management by Exception

• It reduces the amount of financial and operational results that management must
review, which is a more efficient use of their time.
• The report writer linked to the accounting system can be set to automatically print
reports at stated intervals that contain the predetermined exception levels, which is
a minimally-invasive reporting approach.
• This method allows employees to follow their own approaches to achieving the
results mandated in the company's budget. Management will only step in if
exception conditions exist.
• The company's auditors will make inquiries about large exceptions as part of their
annual audit activities, so management should investigate these issues in advance of
the audit.

Disadvantages of Management by Exception

• This concept is based on the existence of a budget against which actual results are
compared. If the budget was not well formulated, there may be a large number of
variances, many of which are irrelevant, and which will waste the time of anyone
investigating them.

• The concept requires the use of financial analysts who prepare variance summaries
and present this information to management. Thus, an extra layer of corporate
overhead is required to make the concept function properly. Also, an incompetent
analyst might not recognize a potentially serious issue, and will not bring it to the
attention of management.

• This concept is based on the command-and-control system, where conditions are

monitored and decisions made by a central group of senior managers. You could
instead have a decentralized organizational structure, where local managers can
monitor conditions on a daily basis, and so do not need an exception reporting
system.

• The concept assumes that only managers can correct variances. If a business were
instead structured so that front line employees could deal with most variances as
soon as they arise, there would be little need for management by exception.

END