MANAGEMENT IN ORGANIZATION

LESSON 1
THE ENTERPRISE
What is an enterprise?
It is specially created,
to produce goods / services for the community
The output of the enterprise yields
Profits for owners
Dividends for share-holders
Generates employment
Generates revenue for the State
Features of an Organization:
Statement of purpose
Values on which the organization will run
Translates objectives into action
Staffs to produce output
The purpose of an enterprise
Generate wealth

Success of an enterprise:
Efficiency of operations
Forms of business enterprise
Proprietary
Partnerships
Companies
Multinational Corporations
Who is an entrepreneur?
Undertakes an economic venture,
own, organizes, promotes & manages it
assumes the risk of business
& determines the end
The attributes of entrepreneurs
Identifies oopportunities
Influencing others to perform
A result oriented person
A strong desire to succeed
Understanding the feelings of others
The following are the types of entrepreneurs:
Small scale
The first generation of industrialist
Sons of industrialist
The children of first generation industrialist
Professional managers
Individuals with professional qualification, who head a private
enterprise
They run such enterprise as an entrepreneur
Public sector executives
Individuals with professional qualification, who head a public
enterprise
They run such enterprise as an entrepreneur
Structure of an enterprise
Board of Directors
They provide direction to an organization
Management
Consists of CEO & his team
Managers
Members who contribute based on their functional expertize
Role of money:
Motivation
An exchange for the efforts
A means for raising the standard of living
LESSON 2
THE MANAGEMENT
What is Management?
Optimum utilization of resources,
to accomplish the organization goals
It is both an art & science.
Study of management knowledge is a science,
the application of this knowledge is an art
Functional areas of management
To accomplish the goals of the organization,
different types of activities have to be performed
like marketing, production, finance, purchase, human resources etc.
These activities are called as functions of management
Management Process
A sequential activity performed
Conversion of an input into an output
It is where value addition takes place
It should be efficient,
Management Techniques
Techniques are essentially ways of doing things
Types of techniques
Value Engineering
Benchmarking
Partnering
Business Process Re-engineering
Value Engineering
Balance between cost, reliability & performance of product
Aims to reduce unnecessary cost
Focus is on task
Benchmarking
identifying the best practice in the industry
Compares self performance with the benchmark,
Formulates an action plan to reach that state.
Aim is to improve performance
Partnering
Two or more organizations join together
To achieve specific business objectives
By maximizing the effectiveness of each participant’s resources
Business Process Re-engineering
Traditionally the businesses were focused on
Tasks, jobs, structure, but not on processes.
A business process is a value addition to an inputs to create an output
Re-engineering means focusing on core activities
& outsourcing the non-core activities
LESSON 3
DEVELOPMENT OF MANAGEMENT THOUGHT
Introduction
Management has been built upon
the concepts, theory, & knowledge
mostly drawn from
behavioural sciences, economics & industrial engineering
Management is entrenched in the culture of persons who practice it.
Scientific Management Theory [Fredrick Taylor]
According to him there is no inherent conflict between labour & employers.
Labour wanted more income, employers wanted more profit, & the
consumers wanted a better price
All of them could be benefited, only if the plant produced more..
Taylor felt that the real problem was in determining a fair day’s pay for a fair
day’s work. For this if a quantitative method could be evolved when a
worker could know the basis of his wages & in which his income is moved up
along with the increase of efforts put in.
Taylor said that the onus to devise such methods rested on employers.
Human Relations Theory [Elton Mayo]
Mayo proved through his Hawthorne Studies in GE plant that
If working conditions were improved, production goes up
Production goes up, if workers participate in change management
Management should accept the role of informal groups & informal leaders’.
informal leaders should be identified, accepted & involved in the
management process.
Formal management group should be trained in human relations in order to
achieve better production
Theory X & Y [McGregor]
Theory X is based on the following premises:
People did not like to work basically
Therefore they have to be told what to do.
We have to use threat to make them work
Theory Y was based on the following premise
It is not that people do not or like work. They develop an attitude towards
work based on their past experience
People like to select goals for themselves if they see the possibility of some
kind of reward in it [material or psychological].
Management System Theory [Fayol]
He stated that out of all activities of an enterprise the managerial activities is
the most important
Managerial activities consists of:
Planning, Organization, Direction, Coordination & Control
which exists in any kind & size of businesses.
According to Fayol, person responsible for management must have the
following managerial qualities:
Physical / Mental / Attitude / Technical
Motivation Theory [Herzberg Theory]
He classified the factors that influenced their attitudes & performance &
whose intensity & duration affected their work behaviour
into
Hygiene factors included
Job / job security / work rules / promotions / incentives / leaves / service
conditions / employment practices / etc.
Motivation factors includes:
Attitudes / feelings about jobs / desire to excel / care & concern about
quality / etc
Motivation Theory [Herzberg Theory] continued
Hygiene factors are necessary to create motivation, but are
powerless by themselves. This means that if hygiene factors are
absent in a job, employees will not feel motivated. But the best
techniques of motivation will not work if pay & employment
conditions are not adequate.
The lesson for management is that if you do not provide hygiene
factors, you risk not having productivity & you do not expect
motivated workforce.
However if you provide hygiene factors, it can ensure you in certain
circumstances that a job gets done in the quantitative senses.
But if we are looking for looking for quality, desire to excel, concern
for economy, care of the materials & equipment, then you need to
create motivating environment
& this is what Herzberg called Management
NEEDS HIERARCHY THEORY [MASLOW]
Maslow in his study concluded that man was never contended,
He stated that needs of man motivated him to work & these needs arose in
hierarchical manner.
Needs were of following orders:
Physiological / Security / Social / Esteem / Self-Realization
It is pursuit of needs that people keep working & keep striving to get more &
more
Today’s motivators are likely to become tomorrow’s hygiene factors
MCKINSEY’S 7-S APPROACH
The seven S’s are:
Strategy / Structures / Systems / Style / Staff / Shared values / Skills
It supports & similar to the framework of the managerial functions [planning /
organizing / staffing / leading / controlling]
This approach has identified the following conditions for success in business
A bias for action
Closer to customers / clients
Productivity through people
Autonomy & entrepreneurship
Hands on, value driven
Stick to knitting, what you know
Simple form, lean staff
Simultaneous loose tight properties
LESSON 4
MANAGEMENT PROCESS: PLANNING
Introduction
Planning is the first step in the management process.
Planning & Control go hand in hand
Decisions are the core of planning.
It is rational approach to accomplish the objectives of the organization
Mission
It is the purpose of an organization.
Plan:
Projected course of action to accomplish the objectives
States in details the activities to be carried , resources to be deployed, &
time frame to accomplish the outputs
The following are the terms used in planning:
Objectives
States what has to be accomplished.
Strategy
Course of action with an intention to win.
Policy
Framework within which decisions can be taken
Procedure
Method of handling work in a chronological sequence
Rule
It allows no deviation
Applicable to all the employees
Program
Has an objective / strategies / procedure / rules
Is for an event [short-term]
Budget
Statement of expected performance results in numerical terms
It is a control device.
Levels of Planning
Following are the levels of planning in a construction firm
Corporate
Done by CEO & his team
Project
Undertaken to complete a project within the time, cost, & quality parameters
Site
Done on daily basis at site
The following are the types of planning
Strategic planning
It is long term planning
Done by Corporate Office
Tactical planning
It is short term.
Done to meet new demands
Rolling plan
Link between long & short term plan.
It fits into the long term plan
Contingency planning
Refers to stand by plan, incase the original plan does not go through
Steps in planning

Setting objectives
State the end results desired
Premising
Making assumptions
Creating alternatives
Identify various routes to reach the goal
Selecting a course
Select the best route by doing cost benefit analysis
Listing the activities to be performed
Estimating resource required & their allocation
Principles of Planning
The Commitment Principle:
The long range planning is planning for the future impact of today’s decision.
Understand the impact of today’s decision on tomorrow.
Principle of flexibility
Building flexibility into plans will lessen the danger of losses incurred through
unexpected events, but the cost of flexibility should be weighed against its
advantages
Principle of navigational change
The more the planning decisions commit individuals to a future path, the
more important it is to check on events & expectations periodically & redraw
plans as necessary to maintain a course towards a desired goal.
Conclusion:
The success of any plan depends not on the techniques but on the correct
attitude of mind
Planning should always be associated with performance.
LESSON 5
MANAGEMENT PROCESS: ORGANIZING
Introduction
Bringing together the basic resources in an orderly manner
Done to accomplish organization objectives efficiently & effectively
The organizing process deals with creating structure
Creating a structure:
The following are the steps involved in creating a structure
The work is divisionized
Persons are assigned to perform this divisional work
Methods & procedures of handling work
as well as role relationship are laid down.
The organization structure has logic behind it.
It emphasizes
Efficiency
Written procedures of work
Number of subordinates reporting to a senior
A chain of command
A channel of communication
The structure should be flexible to achieve results
Assigning duties
It comprises of following steps
Determining the duties
Grouping duties
Assigning authority
Span of control
Departmentalization
The following are the approaches
By functions
By territory
By product
By customer:
Matrix organization
By functions
Organization structure is based on
functions of management
like finance, production, marketing, etc.
Has advantages & disadvantages
By territory
In this type of organization
territory & functions are grouped together.
Example: Railways
Has its own advantages & disadvantages
By product
Product & functions are grouped together.
Products should be of similar nature
Example: Tatas: Auto, Steel, Telecom, etc
Has its own advantages & disadvantages
By customer:
Customer & functions are grouped together.
Example: Bank.
We have separate sector for Corporate, agriculture, small scale industry, etc.
Has its won advantages & disadvantages
Matrix organization
Takes place in project work
An employee reports functionally to one senior, &
administratively to another senior
Organizational Chart
It is a pictorial presentation of the structure of the organization.
It shows
the organizational hierarchy,
reporting relationship,
status of various managers & various department
Span of control, Authority, & Delegation
Span of control
how many subordinates a senior can handle
Authority
decision making with respect to resources
Delegation
assigning certain tasks to subordinates.
It can be with or without authority
LESSON 6
MANAGEMENT PROCESS: STAFFING
Introduction
People are important resources to an organization
Goals of the organization are achieved through people.
Success of an organization depends upon it quality of people. This si done
through staffing
Staffing is having right people, with right skills at right time & at right places
It consists of the following:
Manpower planning / Recruitment / Selection / Placement
WE WILL BE SEEING IN THIS DETAIL PERSONNEL MANAGEMENT
LESSON 7
MANAGEMENT PROCESS: MONITORING & CONTROLLING
Introduction
Before control can be exercised it is necessary to have the following:
Quantifiable & variables objectives
Plans & programmes with milestones are identified
Cost & time frame for activities to be undertaken
The organization structure with fixed duties in the hierarchies
The basic control process involves the following stages
Establishing standards
Measuring actual performance against standard at intervals
Taking corrective actions in case of deviation
Standards
Yardsticks of expected performance
Have it for critical activities
It should be preferably quantifiable
Measure performance against standard on a forward looking basis,
so that deviation may be detected in advance
Deviations are corrected by
redrawing plans, modifying goals, reassigning or clarifying duties etc
Types of control
The following are the types:
Production & operations controls
Inventory controls
Quality controls
Financial controls
Production & operations controls
Includes:
Employees performance
Machine performance
Inventory controls
Governs the levels of materials & supplies, goods in process & finished goods
Standards are based on optimal levels
that balance
the cost of carrying inventory
with
the costs of running out of stock
Quality controls
Assures the acceptable quality of goods or services produced.
A quality control standard specifies
how many complaints will be considered
as acceptable from customers
Financial controls
Focuses on the flow of money.
These controls regulate individual components of costs,like
materials personnel as well as total unit or average costs
for goods & services.
Critical control points
Set up standards & performance measurement
that really warn in advance of
important deviations
which strongly affect performance
The following questions helps in identifying critical points
What are the most important goals of the department?
Of all the things that could go wrong
among the people & activities,
which ones would be the most damaging
to the organization’s performance
Complexity of controls
In feedback the source of deviation is from output
In feedback loop system deviation occurs in process itself
In feed forward control system the deviation takes place in inputs
Features of a workable control system
Tailor make the controls
Control system should be quantitative, objective & verifiable
Flexibility should be built into the system
Should be economical, & cost effective & lead to corrective action
Controls should indicate the following critical points:
Physical standards / Cost standards /
Capital standards / Revenue standards /
Program standards / Selected intangible standards
Budget as a control system
It is statement of expenses.
Involved in accomplishing the objectives
Budgets are prepared based on past data

Zero base budgets

Budget is prepared with no past data
Human issues in control
Self-control
Value of good standards
Effective communication
Good control improves rather than punish
Self-control
Allow the subordinate to set performance standards
Hold him accountable for the outcome
Value of good standards
Employees readily accept the standards
that have been systematically developed &
that are demons ratable
Effective communication
The control system will work better,
if there is a two way communication
Good control improves rather than punish
The real goal of control system is
to improve performance & not punish
Instead of blaming
when standards are not accomplished
mutually explore what went wrong in the process
LESSON 8
MANAGING PEOPLE
Introduction
The process involved in managing people are:
Leadership
Communication
Authority
Delegation
Leadership
Process of influencing the activities of an individual or a group
towards goal accomplishment
A leaders is concerned about tasks & human relationships
A leader’s style
Autocratic : focus is on tasks,
Democratic: focuses on relationships
The leader does the following with respect to:
Goal:
Plans strategies & makes programmes
Secures facilities & infrastructure
Process
Shows how the goal can be accomplished
Environment:
Establishes friendly atmosphere within which
people can work together without fear, anxiety or insecurity
People:
Helps individuals to taste success, seek excellence, & accept
discipline
The following are the techniques of good leadership
Giving appreciation
Disbursing punishment
Communicating
Demonstrate [to subordinate that you can do it better]
Use of power
Knowledge of the organization
Work with consensus
Getting the work done
Practice general rather than close supervision
Delegate & know when to delegate & to whom
Characteristics of Communication
Effective & efficient to accomplish the organization goals
Have purpose.
Can be Formal or Informal
formal: vertical [upward / downward]
informal: grapevine
Types of Communication
Written
Verbal
Non-verbal
The communication process consists of
Input: Sender
Process: Medium [face to face [non-verbal, verbal] written
Output: Receiver
The following are the reasons why communication becomes ineffective:
Unclarified assumption
Language
Too many layers
Omission [both sender & receiver withholds information]
Untrustworthiness of the communicator
Poor retention
Inattention
Lack of feedback
Art of listening
We listen through our eyes, & hear through our ears
For good listening observe the following rules
Put the talker at ease
Show your interest
Be patient
Ask questions
Allow other to talk. You don’t talk
Authority
It is the legitimate right to direct & influence the performance of others
It is right to expect performance
It is power in position,
Authority relationship may be perpendicular or horizontal
Perpendicular relationships are the line authority. They are accountable for
accomplishing the objectives
While staff authority [horizontal] help the line authority to work most
effectively
Delegation
Is with or without authority
With authority Is empowerment
Without authority is only activity
One delegates non-core duties to subordinates.
The following are the guidelines of delegating:
To knowledgeable
Who shows initiative
Should set chain reaction
Builds mutual relationship
One is still accountable, for the outcomes of non-core duties one delegates
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