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MANAGEMENT AND PLANNING

Definition of management:

Management is a function of guidance and leadership control of efforts of a group or

individuals in order to achieve goals/objectives of an organization. Simplest definition is
that it is defined as the art of getting things done through people. Management can also
be defined as the process consisting of planning, organizing, actuating, and controlling
performed to determine and accomplish the use of people and resources. Putting
together 4Ms- Money, Men, Material, and Machines together is management.
Management is the life giving element of an organization.

Management is the creative process which integrates and utilizes various available
resources effectively and efficiently to accomplish the goal of an organization. The
person who is responsible to develop the ideas to plan and to get things done through the
workers is titled as “Manager”. A manager is one who contributes to the organizational
goals indirectly by directing the efforts by others not performing the task by him.

A person who is makes his contribution to the organizational goals directly by

performing the task by himself is the worker. Before the industrial revolution, there were
no manufacturing industries. There were few individuals who were carrying out the
production of the commodities. This was mostly family oriented and head of the family

was managing the business. During the half of 18th century, industrial revolution had
started and factory systems had evolved. Then on, management became necessary.

MEANING

Managing is one of the most important activities of human life. To accomplish aims that
could not be achieved individually, people started forming groups. Managing has become
essential to ensure the coordination of individual efforts. Management applies to all kinds of
organizations and to managers at all organizational levels. Principles of management are
now used not only for managing business but in all walks of life viz., government, military,

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social and educational institutions. Essentially, management is same process in all forms
of organization. But it may vary widely in its complexity with size and level of
organization. Management is the life giving element of any organization.

Definitions suggested by some of the management experts are presented below:

 Henri Fayol: "Management is conduct of affairs of business, moving towards its

objective through a continuous process of improvement and optimization of resources".
 Koontz: "Management is the process of designing and maintaining an environment in
which individuals, working together in groups, efficiently accomplish selected
aims".
 Mary Parker Follett: "Management is the art of getting things done through people".
 George R. Terry: "Management is a process consisting of planning, organizing, actuating
and controlling, performed to determine and accomplish the objectives by use of people
and resources".
 ILO: "Management is the complex of continuously coordinated activity by means of
which any undertaking administration/public or private service conducts its
business".
 Lawrence A. Appley: "Management is guiding human and physical resources into a
dynamic, hard hitting organization until 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".

The Need/Importance of management

The need and importance of the management for any type of organisation is discussed below

1. Optimum utilization of resources

Management brings all the available resources together. All these available resources are
important for achieving the objectives of the organization which are:

 Men,
 Money,
 Machines,
 Methods,

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 Optimum (best)
 Utilization (use)
2. Expansion and diversification
Management helps the organization to achieve its objectives efficiently,
systematically, easily and quickly. It helps the organization to face the cut- throat
competition to grow, expand and diversify.
3. Reduction of employers absenteeism and turnover
Management motivates people. It provides different incentives to the employees. This
includes positive, negative, monetary and non-financial incentives. These incentives
increase the willingness and efficiency of the employees. This increases the
productivity and profitability of the organization. Management also develops team spirit
and increases the efficiency within the organization. It in addition reduces labor turnover
and absenteeism.
4. utilizes the benefits of science and technology
Man has made rapid progress within the field of Science and Technology.
Management utilizes the benefits of this progress. It provides industries with the latest
machines. It provides the consumers with the newest products.
5. Encourages initiative and innovation
Management spurs initiative. This means it initiative the employees to make their
own plans and to execute these plans. It inspires the employees to give their
suggestions. Initiative gives satisfaction to the laborers and success to the organization.
Management in addition encourages innovation. It brings innovative ideas, modern
methods, and latest techniques to the organization.
6. Minimizes wastages
Management minimizes the wastages of human, waste materials and monetary
resources. Work is done through arrangement, proper manufacturing and Control.
Managers motivate subordinate to reduce wastages. Reduction in wastage's brings a
higher return to firm.
7. Team work
Management always builds a team spirit in the organization. The combine effort of
work and unity lead to the prosperity within the organization. Team work plays an
important part in the success of organization.
8. Motivation
Management motivates employees by sharing their profits by the mean of bonus.

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They also give a good amount of incentives to the employees. This motivation zeal the
employee to work harder, which results in higher efficiency in production.
9. Reduction in labour turnover
Management helps to reduce labor turnover in the organization. Employee
turnover takes place when some employees leave the organization, and others join in
their place. Frequent labor turnover increases selection and training cost. Management
creates a sense of responsibility among the employees who brings down labor turnover.
10. Higher efficiency
Management always wants that his employees should produce higher efficiency.
Productivity is the relationship between returns and costs. Higher returns at minimum
investment then the organization is said to be more proficient.
11. Improves the quality of life of the workers
Management provides bonus and incentive to the employees for their work. It
gives a healthy work environment to the workers. It also provides medical and insurance
faculties to worker and their families. It provides a financial stability which helps in
boosting life of the workers.
12. Cordial industrial relations
Management ensures industrial peace. It gives more importance to the ‘Human
Element’ in business. It applies positive motivation. All this improves the relations
between the employees and the employers.
13. Corporate image
Efficient and effective management maintains a good image and goodwill of
organization. This is because of quality of products and services offered by the
organization and also due to the social responsibility of organization towards society.
14. Promotes national development
Management is regarded as a key to the economic development of nation. It puts
resources to the optimum use. It leads to capital formation and tech advancement. It
generates handsome revenue for government. It increases national income and standard
of living of people. Thus, it leads to development across all sectors, and significant
growth throughout the nation.
15. It helps society
In management, profit is not only the objective of business. Today, the managers
are combining profit objective with social purposes. They are providing society with a
regular supply of good quality goods and services at reasonable prices. They are also

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providing employment opportunities to people. They in addition pay high taxes to the
government. These taxes are used for improving nations.

FUNCTIONS OF MANAGEMENT

Though many authors have defined several functions of management, there are five
essential and well accepted functions of management. They are:

Planning.
Organizing.
Staffing.
Directing (leading) and
Controlling.

PLANNING:

Planning is an executive function that is referred to as decision making. It involves

missions and objectives and the actions to achieve them. This requires decision
making that is, choosing future courses of action from available alternatives. This
involves the following:

 Setting short and long term goals for organization.

 Selecting objectives, strategies and policies for accomplishing the planned
goals.
 Deciding in advance what to do, how to do, who has to do, when to do and
where to do.
 Planning bridges the gap from where we are now to where we want be in future.

ORGANIZING:

Organizing is a part of management that involves in establishing an intentional

structure of roles for people to fill in an organization. To organize a business well, it is
required to provide all the useful things for its proper functioning. They are raw
materials, tools, capital and personnel. The purpose of an organization structure is to
help in creating an environment for human performance. This involves in:

> Determination of activities required to achieve goals.

> Grouping these activities into department.

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> Assigning such groups of activities to managers.
> Forming delegation of authority.
> Making provisions for coordination of activities.

STAFFING:

Staffing is considered as an important function which makes provision for man

power to fill different positions. It involves in building the human organization by
filling, and keep filling the staff. This is done by identifying work- force requirements,
taking inventory of people available, recruiting new staff, selecting, placing, promoting,
apprising, planning their career, training the staff to accomplish their tasks effectively and
efficiently. This involves in:

> Finding the right person for right job.

> Selecting the personnel.
> Placement, training and developing new skills required for present and future
jobs.
> Creating new positions.
> Apprising the staff and planning their growth and promotions etc.

DIRECTING/LEADING:

After planning, organizing and staffing, the next important function of

management is directing or leading the people towards the defined objectives. Directing
involves three sub-functions namely communication, leadership and motivation.
Communication is the process of passing information and understanding from one
person to another. Leadership is the process by which a manager guides and influences
the work of his subordinates. Motivation means arousing desire in the minds of
employees of an organization to perform their best. If properly motivated, the employees
will put their best efforts with dedication, loyalty and carry out the assigned task
effectively. There are two types of motivations viz., financial and non-financial.
Financial motivations are in the form of salary, bonus, profit-sharing, rewards etc.
The common non-financial motivations are job security, promotions, recognition,
praise, felicitation etc.

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CONTROLLING:

Controlling is measuring and correcting of activities of subordinates to make sure

that the work is going on as per the plans. It measures performance against goals and
plans, shows where short falls or deviations exist and takes necessary corrective actions
to achieve the goals. Controlling generally relates to the measurement of achievement.
This involves three elements.

> Establishing standards of performance.

> Measuring performance and comparing with established standards.
> Taking necessary corrective action to meet the set standards.

With accomplishment of this function, the "Management Cyele" is said to be

complete.

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 ROLES OF MANAGER

Manager in any organization plays variety of roles responding to a particular situation.

The three important roles played by a manager are Interpersonal roles, Decision roles and
Informational roles.

(i) Interpersonal roles: These includes figurehead, leader and liaison roles: In figurehead
role, the manager will perform some duties that are casual and informal ones like, receiving
and greeting visiting dignitaries, attending to social functions of employees, entertaining
customers by offering parties and lunches etc. As a leader, managers motivate, direct and
encourage his subordinates. He also reconciles the needs with the goals of the
organization. In the role of liaison, the manager works like a liaison officer between top
management and the subordinate staff. He also develops contacts with outside people
and collects useful information for the well-being of the organization.

(ii) Decision roles: There are four decision roles played by a manager. They are resource
provider, arbitrator, entrepreneur and negotiator. As a resource allocator, the manager
divides the work, provides required resources and facilities to carry out the allocated
work and delegates required authority among his subordinates. He decides who has to
do what and who gets what. As a arbitrator, a manager works like a problem solver. He
finds solutions of various un-anticipated problems both within and outside the
organization. As an entrepreneur, a manager continuously looks for new ideas and tries
to improve the organization by going along with changing work environment. He also
acts as a negotiator negotiates with the employees and tries to resolve any internal
problems like trade agreements, strikes and grievances of employees.

(iii) Information roles: A manager plays as monitor, spokesman and disseminator. A

manager monitors his environment and collects information through his personal
contacts with colleagues and subordinates. As a spokesman, he communicates the
information/goals of organization to his staff and the progress of work to his superiors.
He also communicates the performance of company to shareholders and the rules and
responsibilities to his subordinates. As a disseminator, the manager passes some of
the information directly to his subordinates and to his bosses

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LEVELS OF MANAGEMENT

Although all managers perform almost the same functions of management -

planning, organizing, directing and controlling, there are levels among them. These are
top management, middle management and first line or supervisors. The top management
consists of Chairman, Directors, Company Presidents, Vice- Presidents, CEO's. These
are the people who make policies for the company, set goals and targets. They should
possess conceptual and design skills. Middle management is essentially a vast and diverse
group that include finance manager, sales manager, marketing manager, personnel
manager, departmental heads etc. The lower level managers are the supervisors and
foremen. They are basically one step above the workers The various levels and skilled
required at different management levels are shown below.

MANAGERIAL SKILLS

To be a successful manager, you’ll have to master a number of skills. To get an entry-

level position, you’ll have to be technically competent at the tasks you’re asked to
perform. To advance, you’ll need to develop strong interpersonal and conceptual skills. The
relative importance of different skills varies from job to job and organization to
organization, but to some extent, you’ll need them all to forge a managerial career.
Throughout your career, you’ll also be expected to communicate ideas clearly, use your
time efficiently, and reach sound decisions.

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 1. Technical Skills : You’ll probably be hired for your first job based on your technical
skills the ones you need to perform specific tasks and you’ll use them extensively during
your early career. If your college major is accounting, you’ll use what you’ve learned to
prepare financial statements. If you have a marketing degree and you join an ad agency,
you’ll use what you know about promotion to prepare ad campaigns. Technical skills will
come in handy when you move up to a first-line managerial job and oversee the task
performance of subordinates. Technical skills, though developed through job training
and work experience, are generally acquired during the course of your formal education.

2. Interpersonal Skills: As you move up the corporate ladder, you’ll find that you
can’t do everything yourself: you’ll have to rely on other people to help you achieve
the goals for which you’re responsible. That’s why interpersonal skills the ability to get
along with and motivate other people are critical for managers in mid- level positions.
These managers play a pivotal role because they report to top- level managers while
overseeing the activities of first-line managers. Thus, they need strong working relationships
with individuals at all levels and in all areas. More than most other managers, they must use
“people skills” to foster teamwork, build trust, manage conflict, and encourage
improvement.

3. Conceptual Skills: Managers at the top, who are responsible for deciding what’s
good for the organization from the broadest perspective, rely on conceptual skills the
ability to reason abstractly and analyze complex situations. Senior executives are often
called on to “think outside the box” to arrive at creative solutions to complex, sometimes
ambiguous problems. They need both strong analytical abilities and strong creative talents.

4. Communication Skills: Effective communication skills are crucial to just about

everyone. At all levels of an organization, you’ll often be judged on your ability to
communicate, both orally and in writing. Whether you’re talking informally or making a
formal presentation, you must express yourself clearly and briefly. Talking too loudly,
confused, and using poor grammar reduce your ability to influence others, as does poor
written communication. Confusing and error-riddled documents, and they will reflect
poorly on you.

5. Time-Management Skills: Managers face multiple demands on their time, and their
days are usually filled with interruptions. Ironically, some technologies that were

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supposed to save time, such as voicemail and e-mail, have actually increased workloads.
Unless you develop certain time-management skills, you risk reaching the end of the
day feeling that you’ve worked a lot but accomplished little. What can managers do to
ease the burden? Here are a few common-sense suggestions:

6. Decision-Making Skills: Every manager is expected to make decisions, whether

alone or as part of a team. Drawing on your decision-making skills is often a process in
which you must define a problem, analyze possible solutions, and select the best
outcomes.

MANAGEMENT AND ADMINISTRATION

There is lack of concurrence among management writers over the meaning and use
of the words management and administration. One group of management writers feels
that administration involves "thinking". It is a top level function that centers around the
preparation of plans, rules, policies and objectives of an organization. Whereas
management involves "doing" and is a lower level function, concerning with execution
and direction of policies and operations. Hence, administration is more important at lower
levels.

Another group of management writers feels management as comprehensive general term

that includes administration. Management is regarded as comprehensive general function
covering entire process of planning, organizing, directing and controlling. Administration is
regarded as a branch of management that comprises of two functions - planning and
controlling. According to them, the function of management is divided into two categories -
the upper level management usually called as administrative management and the lower
level management which is termed as operative management.

According to Peter Drucker, the basic difference between management and

administration lies in use of these terms in different fields. According to him, managing
of business enterprises is called management and managing non business organizations
is called administration. Hence financial performance plays key role in management. But
in managing non business organizations like educational institutions, government
offices, military etc., administration is more priority than financial decisions.
Administration is the function in industry concerned with determination of the corporate

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policy, the coordination of finance, production and distribution, the settlement of compass
of the organization under the ultimate control of the executives".

"Management is the function in industry concerned with the execution of polity within
the limits setup by the administration and the employment of the organization for the
particular objects set before it". (Oliver Sheldon). "Administration is primarily the process
and the agency used to establish the object or purpose which an undertaking and its staff are
to achieve, secondarily, administration has to plan and stabilize the broad lines of principles
which will govern action. These broad lines are in turn called policies. Management is the
process and the agency through which the execution of policy is planned and supervised".
(G.E. Milward)

"Administration is that phase of business enterprise that concerns with overall

determination of institutional objectives and the policies necessary to be followed in
achieving those objectives. Administration predetermines the specific goals and lays
down the broad areas within which those goals are to be attained. Administration is a
determinative function, management on the other hand is an executive function - which is
primarily concerned with the carrying out of the broad policies laid down by the
administration. (William R. Spriegal)

Thus administration is a "thinking" function and management is a "doing" function.

According this concept, managers get salary and administration staff gets dividends.
Administration determines the policies upon which the enterprise is to be conducted while
the function of management is to carry out the policies that are laid down by the
administrative group.

The differences between administration and management are listed below:

Characteristic Administration Management

1. Main functions Planning, Organizing Leading, motivating and

and Staffing Controlling.

2. Status Acts as owner Acts as an agency
3. Skills Requires good Requires more technical

administrative skills skills.

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 4. Level in the Top level Lower level
organization

5. Position Managing Director, Managers, Supervisors,

Owner, CEO, etc., Foremen etc.,

6. Objectives Makes the policies, objectives Implements the plans and
and g o a l s t o b e achieved. policies
7. Involvement No direct involvement Directly involves in the
execution of plans and
in production or services
achieving goals.

MANAGEMENT AS A SCIENCE, ART OR PROFESSION

Managing, like any other practice - whether medicine, music composition, engineering,
accounting or even cricket - is an art. It is know-how. It is doing things in the light of the
realities of a situation. Under 'art' one normally learns the "how" of a phenomenon. It is
the art of getting things done through others in dynamic and mostly non-repetitive
situations.

Science is an organized knowledge. A discipline can be called scientific if its methods

of inquiry are systematic and practical, information can be accumulated and analysed
and results are commutative and communicable. The essential feature of any science
is the application of scientific methods to the development of knowledge. Being
systematic means being orderly and unbiased. All the scientific information collected first
as raw data is finally arranged in order and analyzed with the help of statistical tools.
Science is also cumulative in that what is discovered is added to that which has been
found before. We learn from past mistakes and go in right direction in future. On the
basis of the above discussions of science, it can be accepted that management is also
a science.

It is seen that management is partly an art and partly a science. Management

does not possess the characteristics of a profession. A profession is expected to have
organized and systematic knowledge, formalized methods of acquiring training and
experience, ethical code to regulate the behavior of the members of the profession,
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 charging of fees based on service etc. Unlike medicine and law, the management does
not have any fixed norms of managerial behavior. There is no uniform code of conduct
or licensing of managers. Lawyers and doctors take up profession after obtaining a valid
academic qualification where as a manager job is not restricted to individuals with a
special academic degree only. Based on this, it can be concluded that management is not a
profession. However, the present trend is towards the professionalization of management.

Nowadays, it has become essential to acquire management degrees or training in

management to be called as good manager. There is increased demand for qualified
managers with M.B.A degree after graduation. This gave scope for establishment of
large number of business schools in India. Managing a business is no longer just a
matter of a family or institution. In this contest, one should remember Peter Drucker's
opinion on management. "A degree in management does not by itself make an
individual a professional manager any more than does a degree in philosophy make an
individual a philosopher". By insisting on holding a degree, we are over emphasizing
knowledge and completely overlooking skill. This leads to loosing of good and skilled
managers who do not have required degree. There have been good examples of efficient
managers without any professional managerial degree. Some of them are, Ford of Ford
Motors, Bill Gates of Microsoft, Jemshedji Tata, Birla, Dhiru Bhai Ambani of
Reliance group etc. But nowadays, management has become a profession than art or
science.

REVIEW QUESTIONS

1. Define Management. List and explain the functions of Management?

2. What are nature and characteristics of Management?
3. Explain the scope of Management?
4. Differentiate between administration and management?
5. Write about roles of management?
6. What are different levels of management? Explain them?
7. Is management a science, art or profession? Explain.
8. Explain top Management. What are its roles and functions?
9. Discuss in brief the nature of management.
10. Explain early management approaches.
11. Explain the modern management approaches.

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12. Explain briefly the contingency approach of management.
13. What are the objectives of scientific management?

PLANNING

Planning is the most basic function of management. It is referred to as "deciding in

advance" as to what to do, how to do, when to do and who has to do it etc. It is an
intellectual process, which requires a manager to think before acting. It is nothing but
thinking in advance. As regarded by Koontz and O'Donnell, planning is a continuous
process. A manager should continuously watch the progress of the plans like a navigator
who constantly checks where his ship is going in the vast ocean. Planning involves
selection of objectives and goals and determines the ways and means of achieving them.
Thus planning bridges the gap from where we are to where we want to be. A plan is to
be rigid in the sense that it should not be modified or altered under the influence of local
disturbances.

A plan should be flexible to change to adapt to the changing situating without undue
cost. This calls for flexibility in the areas like technology, market, finance, personnel and
organization. Planning is vital at all levels of an organization. Top level managers are
concerned with long range planning involving 2 to 5 years, middle level managers are
concerned with medium range planning involving few months to one year and lower
level managers are concerned with planning the activities of daily or week or up to a
month, where as a worker plans his day's work.

Nature of planning indicates essential quality or general characteristics of planning.

Any planning involves four essential qualities:

(i) It must contribute to accomplish purpose and objectives.

(ii) It must be considered as parent exercise in all processes.
(iii) It must spread through all management functions and
(iv) It must be efficient in such a manner so as to achieve the designed goals at the least
cost.

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 Planning is non-static and is basically a discrete exercise. It is dynamic in nature.
It is a blue print to which the accomplishment must confirm.

IMPORTANCE OF PLANNING

Without planning, business decisions would become difficult. Planning is the

beginning of all other functions of management. Planning is important because:

(i) It overcomes uncertainty and change and minimizes risk.

(ii) It facilitates effective control.
(iii) It focuses attention and concentration only on the objectives of enterprise.
(iv) It makes economic operation and leads to success.
(v) It forms the bridge between the present and the future.

(i) Uncertainty and minimize risk: In the today's complex organizations, decision making cannot
be relied only upon intuition, planning plays a vital role in decision making in such complex
situations. Planning provides logical facts and procedure to managers for making decisions. This
logical decision making based on plans to organization minimizes uncertainty and risk. In a
developing country like India, with rapidly changing social and economic conditions, planning
helps the managers to cope up with uncertainty and risk.
(ii) Effective Control: Planning sets goals, targets and means to accomplish these goals. These
goals and plans become standards or bench marks against which performance can be
measured. Thus good plans help effective control on the activities.
(iii) Focuses attention and concentration on the objectives of the enterprise: Planning helps
the manager to focus their attention on the goals and activities of organization. This
makes the entire organization to walk towards the goals and create coordination in
accomplishing the goals.
(iv) Economic operation and leads to success: Mere planning does not ensure success, but
planning leads to success. This is because if the work is planned in advance, there will be no
confusions arising and things will happen as per plan and achieve goals. This results in
economical operation and reduces uncoated expenditure.
(v) Bridge between present and future: Plans bridge gap between present and future. There is a
vast gap between what we are today and what we want to be in future. A proper and systematic
plan forms the bridge between these two. Without plans, it is very difficult to accomplish goals.
Hence planning is very important for success of any organization.

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TYPES OF PLANS

Based on nature of planning, the planning is classified as strategic planning (long

range planning) and tactical planning (short range planning). The strategic plans are done
at top level of management and are generally long term plans, whereas tactical plans and
done at lower levels and are of short term in nature. The differences between strategic and
tactical planning are given below.

Strategic planning Tactical planning

1. It is long term. 1 It is short term.

2. Done at top management.

2. Done at lower levels of management.
3.
4.
5.
6.
3. It consists of major goals and Policies7.of
8.
an organization and resources and 9. It consists of use of facilities
resources.
facilities to accomplish the goals.

It is less detailed, focuses only on long

term goals. It is more detailed since it caters today-
to-day operations and activities of
organization.

It is based on long term goals. and is It is based on less uncertain.

more uncertain.

For example, Tatas idea of marketing a car at a price of Rs. 1 lakh is a strategic
plan. How to make that, what resources are required, how and where to manufacture,
how to assemble, etc., are tactical plans. Based on their use, plans are classified as
single use plans and standing plans. Single use plans are developed to achieve a specific
end. After reaching that target, that plan becomes useless. On the other hand, standing
plans are designed for situations that often repeat. These plans can be used again and
again.

Standing plans:

These are the policies, procedures, rules and methods of any organization.
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(i) Policies:

As defined by Terry, "Policy is a verbal, written or implied overall guide, setting up

boundaries that supply the general limits and direction in which managerial action will
take place". Thus a policy is a general guideline for decision-making. They deal with
"how to do" the work. They only provide a framework within which decisions must be
made by the management in different areas of organization. There are several policies in
different functions of any organization like personal policy, promotion policy, marketing
policy, purchase policy, pricing policy, training policy, recruitment policy, distribution
policy, payment policy, wages and incentives policy etc.

The policies are classified on the basis of sources like original policies, appealed
policies, implied policies and externally imposed policies, or are classified on the basis of
functions like personnel policy, promotion policy, pricing policy, distribution policy,
investment policy etc., or may be on the basis of level of organization like: top level policy,
departmental policy, shop level policy etc.

(ii) Procedures:

Procedures are the detailed guidelines that are used to carry out the policies. A
procedure provides a detailed set of instructions for performing a sequence of actions
involved in doing a certain piece of work. Procedures are to be followed every time when
that activity is performed. Procedures may also exist for conducting meetings of board of
directors, shareholders, issuing raw materials from stores, packaging of finished goods,
inspection etc.

The difference between policy and procedures are given below:

 Policy Procedure
1. General guidelines of the 1. General guidelines at the action level.
organization. 2.
2. Top level activity. 3. Departmental activity.
3. Policies fulfill the objectives4.of Procedures guide the way to implement
an organization. the policies.
4. Policies are often made without5. Procedures are always made after
any study or analysis. thorough study and analysis of work.

(iii) Rules: Rules are detailed and recorded instructions that a specific action must or must not be
done under the given instructions. Reporting time to office, lunch time, availing of leaves, use
of LTC facility etc., are some of the examples that follow rules. A rule is different from a
policy or procedure. Since it does not give a guide to thinking, it is not a policy. Since it is
not asequential procedure hence it is not a procedure.
(iv) Methods: A method is a prescribed way in which one step of a procedure is to be carried out.
Thus a method is a part of procedure. A procedure has a number of steps, each step may have
number of methods to do it. Methods help in increasing the effectiveness of a procedure.

STEPS IN PLANNING AND PLANNING PREMISES

The main steps involved in planning are as follows:

1. Being aware of opportunities: This is very first step and starting point for planning. Once we
are aware of opportunities, we can think of setting realistic objectives.
2. Establishing objectives: It is very important to establish objectives for the entire enterprise
and the objectives for each subordinate work units. That is, the major objectives are
broken down into departmental and individual objectives. It is a very crucial step in
planning.
3. Developing planning premises: The third step in planning is to establish planning
premises. It is the process of creating assumptions about the future on the basis of which
the plan will be ultimately formulated. Planning premises are important for the success of
 planning as they reveal facts and information relating to the future such as economic
conditions, production costs competition, availability of material, resources and capital,
government policies, population trends etc. This tells about which plan is to be carried out.
There three types of planning premises:
(i) Internal and external premises: Internal premises are premises within the organization.
Some of the examples are: policies, forecasts, investment, availability of equipment,
capability of work force, funds flow etc. External premises are premises outside the
organization. They include: Government policies, technological changes, business
environment, economic conditions, population, buying power, political stability,
sociological factors, demand etc.
(ii) Tangible and intangible premises: Tangible premises are the measurable premises. For
example, population, investment, demand etc., are tangible premises. Intangible
premises are those which cannot be quantitatively measurable. Examples of this are:
business environment, economic conditions, technological change etc.
(iii) Controllable and uncontrollable premises: Some of the premises are controllable
like, technical man power, input technology, machinery, financial investment etc. Some
other premises like, strikes, non-availability of raw material, change in government policies,
socioeconomic changes, phase-shift in technology, wars etc., are uncontrollable by the
organization.
4. Determination of alternative course: Next step is to search and identify some alternative
courses of action. It is very rare that for a plan there will be no alternatives. In this step
alternatives are listed.
5. Evaluating the alternatives and selecting the best course of action: Once the alternatives are
found, then the next step is to evaluate them with respect to the premises and goals. A desired and best
suitable alternative is selected by comparative analysis with reference to cost, risk, and gain etc.,
keeping in mind the goals and objectives.
6. Formulating derivative plan: In order to complete the task, the selected plan must be
translated into programs, working plans and financial requirements in the sub-units.
These sub-derived plans from main plan are termed as derivative plans.
7. Monitoring and controlling the plan: This is the last step in planning. Each activity of plan is
monitored on a continuous basis and if any deviation or shortfall is noticed, then the
manager will initiate suitable corrective action.

HIERARCHY OF PLANS (STEPS)

The plans are generally arranged in a hierarchy within any organization. It starts at
the top with objectives and goals of an organization. The second level is strategies. As
discussed earlier, there are two types of strategies namely single use plans and standing
plans. The third level is action plans. The hierarchy of plans is shown below.

The top management sets the goals and objectives. These occupy the top priority.
The goals or objectives include long-term plans and strategies of an organization. For
example, a company aims to improve their production by 20% during next 2 years. Such
objectives are very broad ideas and are achieved by strategies. Strategies are carried out
by means of two types of plans known as single-use-plans and standing plans. Single use
plans are developed to achieve a specific goal after reaching the goal, the plan is
dissolved. Examples of single use plans are budgets, construction of a bridge, dam or a
shopping complex etc. Whereas standing plans are developed for projects that happen
 again and again. Admission procedure in a college, overhauling procedure of an aircraft,
recruitment procedure of an organization etc., are some of the examples of standing plans.
Action plans are the plans executed by the lower level organization. These are routine
plans executed by the foreman and supervisors of the shop.

LIMITATIONS OF PLANNING

The limitations of the planning process is mentioned below.

1. Time Consuming: Planning involves the collection of data, analysis of data, forecasting, etc. All
this consumes a lot of precious time. Therefore, planning is a time-consuming activity.
2. Costly: Planning is the work of experts. They get paid very high salaries to make good plans.
Companies spend an enormous amount of money in collecting and analyzing data. Therefore,
planning is a costly affair.
3. Rigid: Most plans are very rigid. They don't change as per the changing environment. They neither
get revised nor modified. The non-flexibility of plans creates many problems for the organisation.
4. Gap between Plans and Achievement: The workers do not make any plans. The managers make
plans. The workers only execute these plans. So the workers are not entirely interested in achieving
these plans. Therefore, there is a gap between plans and achievement.
5. Problem for Technical Staff: The technical or creative staff do not like planning. They feel it is only
paperwork. It is so, since, it limits their creativity.
6. Resistance to Change: Planning brings many changes in the organisation. However, people do not
like changes. So, they do not give full cooperation. Without their cooperation, the plans cannot
succeed.
7. Paperwork: Planning requires a lot of paperwork. The plans are made and again remade. Copies
of finalised plans are given to the top management and subordinates. There is also a need to prepare
many reports.
8. Causes Frustration: Sometimes managers fail to achieve the planned targets despite putting their
best efforts. This failure can frustrate them and lower their level of motivation. It can cause the
managers to lose their initiative.
9. Dangers of Over-Targeting: Some managers do over-targeting. That is, they fix very high targets
that arealmost impossible to achieve. Such over expectations cause many problems.
10. Dangers of Under-Targeting: Some managers do under-targeting. That is, they fix lower targets
that are easy to achieve. Such under expectations hinders the growth and performance of the
organisation. The under targeting happens in the government institutions.
11. Danger of Human Error: Plans depend on forecasts. Forecasting requires a lot of experience and
judgment.If the manager has less experience and is poor in judgment, then the predictions will be
wrong. If the forecasts are wrong, it is obvious that the plans will fail. Even experienced
managers make errors while forecasting and planning. So, there is a danger of human error.
12. Inter-Departmental Rivalries: Planning requires coordination and cooperation of all the
departments. If there exist any inter-departmental rivalries and disputes, then the plans will fail.
For example, Production Department wants to produce Product A, but the Marketing Department
insists on selling Product B

DECISION MAKING

Planning is an intellectual process, which requires a manager to think before acting.

Through planning, managers of any organization decide what to do, when to do, how to
demand who has to do. Hence decision-making is an integral part of planning. It is
defined as "the process of choosing among alternatives". Decision-making occurs at many
stages of planning process. Decision-making and choosing the best alternative is probably
the most important activity of the planning process.

Decision-making is part of all the functions of the management. In planning, through

decision-making, objectives and goals are prepared. In organizing, the managers decide
upon the choice of structure, type of organization, work allocation, delegation of authority
and responsibility etc. In directing, managers decide the course of action, the instructions
to be given, providing directions etc. In controlling the managers decide on fixing the
standards, how to control, what to control etc.
 TYPES OF DECISIONS

Decisions are classified as follows:

(i) Pragmatic and non-pragmatic decisions

(ii) Individual and collective decisions
(iii) Minor and major decisions
(iv) Strategic and routine decisions
(v) Simple and complex decisions
(vi) Temporary (Adhoc) and permanent decisions etc.

(i) Pragmatic decisions are those decisions taken within the purview of the policies, rules
or procedures. These are also called programmed or routine decisions or structured
decisions. These types of decisions are taken frequently and are repetitive in nature.
Sanctioning an hour's permission, placing purchase order etc., are some examples of
pragmatic decisions. Non-pragmatic decisions are otherwise called as strategic decisions or non
programmed decisions or policy decisions. These decisions involve heavy expenditure and are
generally taken by top management.
(ii) Individual and collective decisions: Decisions may be taken by an individual or a group of
individuals. If the decisions are taken by single person, they are called individual decisions and if
taken by a committee or group of people, than they are called collective decisions. Individual
decisions are taken where the problem is of routine nature, and definite rules and procedures
exist. Inter departmental decisions and important strategic decisions are generally taken by a
group. Group decision-making has advantages like increased acceptance, better communication
and better co-ordination. It has some disadvantages also like, delay in arriving at decision, groups
may be indecisive, and groups may compromise or dominate. To utilize the advantages of group
decisions and avoid its disadvantages, two new techniques are proposed known as 'Nominal group
techniques' and Delphi Techniques.

In nominal group technique, the members independently generate their idea and
give in writing. The ideas are summarized and discussed for clarity and evaluation. Finally
each member silently gives his rating and opinion about each idea through voting
system. The one with maximum vote is selected as the group's decision. In Delphi
technique, persons who are physically dispersed and anonymous to one another are
asked to send their opinion on a topic through mail. A carefully designed questionnaire is
circulated for this purpose. The responses are summarized into a feedback report and sent
back to them with a second questionnaire. A final summary is developed on the basis of
replies received second time.

(iii) Minor and major decisions: Minor decisions are those decisions related to day-to-day
and periodical occurrences. Purchase of stationary, granting leave and permissions etc.,
are some examples of minor decisions. Major decisions are those decisions generally
taken by top management. Some of them are purchasing new machinery, employing new
technology, hiring new people etc., are some of the major decisions.
(iv) Strategic and routine decisions: Strategic decisions are similar to major decisions
and are generally taken by top management. Some examples are price increase/discount,
change in product range etc. Routine decisions are decisions related to day-to-day
operations of an organization that are routine in nature.
(v) Simple and complex decisions: A simple decision is one that is related to a problem
with few numbers of variables. When there are many variables, the decisions making
will be complex.
(vi) Temporary and permanent decisions: Some decisions are to be taken depending on
situation till the solution is found. A decision is taken to meet an unexpected solutions
are temporary in nature. These are generally taken by shop managers. Permanent
decisions are taken on a permanent basis.
STEPS IN DECISION MAKING:

Recognition of problem:

(i) The first step in decision-making is the problem recognition. A problem may exist either
due to a deviation from the past experience, a deviation from the plan, people bringing
problems to the manager or problems arising from competition.

(ii) Deciding priorities among problem: The manager should identify the problems which
he can solve, the problems which he feels that his subordinates can solve and the problems
which are to be referred to the higher officers. With this decision, the manager is left with
very few problems to solve.
 (iv) Problem diagnosis: Correct diagnosis of the problem is very important for any
manager. Managers should follow systems approach in diagnosing a problem. He should
make a thorough study of all the sides of a problem coupled with organization before arriving
at solution. If the diagnosis is made correctly, then finding solution becomes easy.

(iv) Development of alternate solutions: After having diagnosed the problem, the next step is to find
alternate solutions. For every problem there will be some alternate solutions. It is very rare that
there is a problem with only unique solution. Alternatives do exist. Sometimes, in the absence of past
history of alternate solutions, the manager has to depend only on his own ability in finding
alternatives.
(v) Studying and comparing the effect of alternatives: The alternative solutions are measured and
compared for their consequences. This involves a comparison of the quality and acceptability of
these alternatives.
(vi) Implementation of the decision into action: The next step is to convert the decision into action.
This requires the communications of the decisions to the concerned employees in clear and simple
terms. If there is any opposition or non-acceptance from the employees, steps should be taken to
convince them to accept the same.
(vii) Study of result: After having implementing the decision, the manager has to carry out the follow up
action. If the result is not satisfactory, the manager has to take necessary corrective action or
modify his decision. During the process of decision-making, the managers face many difficulties.
Some of them are:
1. Incomplete information
2. Non-conducive environment
3. Opposition by subordinates
4. Improper communication
5. Wrong timing
6. Statutory regulations
7. Government policies
8. External influence
9. Lack of support.
 REVIEW QUESTIONS

1. What is planning? Explain the steps involved in planning.

2. State and explain importance and purpose of planning process.
3. What are the objectives of planning? Explain.
4. Briefly explain the types of planning.
5. What is nature and purpose of planning?

6. Differentiate between strategic and tactical planning.

7. Explain process of decision-making.
8. State and explain the steps in decision-making.
9. Explain the difficulties faced by manager in decision-making process.
10. What are planning premises?
11. Explain hierarchy of plans.
12. What are different decisions taken by a manager?