An Organisation structure is the outcome of an organizing design and usually depends the objectives and strategy of an organization. It also determines the hierarchy within the organisation and the information flow between different levels of management.

An effective organization design will result in increased profitability of the enterprise.  The need for an adequate organisation design is felt by an enterprise whenever it grows in size or complexity. When an organisation grows, coordination becomes difficult due to the emergence of new functions and increase in structural hierarchies.  Thus for an organisation to function smoothly and face environmental changes, it becomes necessary to pay attention to its structure.

Organizational Design defines how various tasks that have to be carried out to achieve organizational objectives are to be divided and how the available resources are to be deployed.

Types of Organization Design

Line organization

Under such structure all managers have direct authority over their respective subordinates through a chain of command. Under such organizational design, authority flows downwards and responsibility flows upwards throughout the organization. Each employee knows who their superior is and who has authority to issue orders. Every superior has line authority i.e. the right to give orders and to have decisions implemented.

Advantages

• It is easy to understand and follow.
• Responsibility is fixed which facilitates fixation of accountability for non-performance.
• Direct line of authority enable a manager to take quick decisions.
• It is a flexible system. Therefore it enables managers to adjust policies and procedures according to the changing business needs.
• It is inexpensive and economical, as no specialists are needed and limited number of executives are employed.
• It facilitates easy supervision and control.

Disadvantages

• Lack of specialization
• Lack of coordination among different departments
• No participation of lower officials in decision making
• Dependence on performance of top management and scarce talent

Functional organization

Functional Organization Design involves grouping of similar jobs under functions and organizing these major functions as separate departments. Each functional unit has different set of duties and responsibilities and all departments report to a single coordinating head. Under such an organization design, line authority, staff authority and functional authority exist together.

Advantages

• Specialization – Each department is headed by a specialist.
• Division of labour up to managerial level brings order and clarity.
• It provides economies of scale within functions.
• It encourages skill development and provides scope for growth.
• Eases the burden on top management
• As each superior is an expert in his/her area it leads to effective and efficient planning and execution.

Disadvantages

• It is difficult to fix accountability for non-performance
• Division of authority may hinder discipline in an organization.
• Many experts increase overall costs
• Delayed decisions when more than one expert is responsible for decision making.
• Leads to conflict and lack of coordination. Managers may try to shift blame and disown responsibility.
• Conflict of interest between two or more department.
• Subordination of functional goals to organization’s overall goal.

Line and Staff Organization

Line and Staff Organizational Design is a modification of Line organization. Under Line and Staff Organizational Design, specialized and supportive activities are attached to the line of command by appointing staff superiors and specialists, who are attached to the line authority. The power of command remains with the line executives, while the staff supervisors guide, advice and counsel the line executives.

Divisional Organizational Design

Such an organizational design is usually found in large organizations, which have more than one product category or product line. Divisional organizational design involves grouping of all functions requires to produce a specific product or product line into one division or department. Each division is headed by a general manager or president, who is responsible for the working of that division and is also accountable for its success or failure. Each division is self-contained with a separate business or profit center.

Advantages

• Product specialization helps in development of varied skills in a division and prepares the divisional head for higher positions.
• Divisional heads gain experience in all functions related to a particular product or project.
• It promotes flexibility as each division works like an autonomous unit, which leads to efficiency in operations and faster decision making.
• Revenues and costs related to different departments can be easily identified and divisional heads can be held accountable for losses or low profits. Hence, it provides a proper basis for performance measurement.

Disadvantages

• It is costly as all facilities have to be setup for each division.
• It leads to conflict among different divisions regarding allocation of funds.
• It leads to increased costs and inefficient operations due to duplication of activities.
• There is no emphasis on functional specialization, which leads to job dis-satisfaction with respect to functional specialists.

Project Organization

A project organizational design is composed of core functional divisions which are formulated to achieve certain objectives related to a specific project. A project organization is formed for a specific project and may be dismantled after the project objectives have been achieved.

Advantages

• It allows maximum use of specialized resources available with an organization. Specialized Knowledge and skills can be transferred from one project to another.
• It enables an organization to cope up with the changing business environment.
• It provides flexibility with respect to utilization of resources by allocating specialized resources to the project where they are most needed.

Disadvantages  

• Due to ad-hoc arrangement and limited life, it creates a feeling of insecurity and uncertainty among employees.
• There is lack of clarity among employees as project relationships are not based on authority and responsibility.
• Employees tend to be less loyal as they do not have a permanent tenure with any project.

Matrix Organization Design

It is one of the latest organizational design which was formulated for very large organizations with complex undertakings, which require more flexibility and specialization. Matrix organizational design is a combination of functional departments and project specialists who focus on specific projects to enable better planning and control.

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Reasons why employees show resistance to change?

• Job security – Fear of losing job
• Change in working climate
• Obsolescence of skills
• Change in social interactions and relationships
• Change in role or status

Reasons why organizations show resistance to change?

• Lack of resources
• Difficulty in implementing structural or technological changes
• Lack of vision, Motivation, Knowledge
• Due to Sunk Costs associated with change

Levels of Resistance to Change

(1) Individual Level

At an individual Level, there is resistance to change due to the following reasons:

(2) Organizational Level

At an organizational level, there is resistance to change due to:

• Threat to existing power and influence in the organization
• A rigid organization structure favours stability more than innovation
• Unfavourable Organization Culture and Norms
• Resource constraints
• Sunk Costs associated with organizational change

Overcoming Resistance to change

Some approaches to overcome resistance to change at an individual level as well as organizational level are:

• Participation and Involvement – Encouraging participation and involvement of individuals who will be affected by the change in the change process, reduces uncertainty and clarifies any doubts that the individuals might have.
• Communicating and Educating – Educating the employees about the need and benefits for change and communicating with employees about their problems with change helps to gain acceptance from employees.
• Negotiating and obtaining commitment – Management can offer rewards to people who cooperate with the change and/or negotiate something of value to obtain commitment for support from participants to avoid resistance.
• Effective Leadership – A change agent can make supportive efforts and attempt to reduce the fear and anxieties of employees through sympathetic listening, job counselling and being compassionate about their problems.
• Manipulation – Management can choose to withhold information that they feel will lead to resistance from employees and manipulate them to gain their support.
• Coercion – Management can use their formal power (transfer, demotion, termination etc.) and force employees to be supportive of change.

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A decision is a choice made from various available alternatives.

Decision making involves commitment of the organization, its employees and its resources, towards a particular course of action among various alternatives available to achieve some predetermined objectives. Decision Making helps managers to identify organizational problems and attempt to solve it. It is carried out at all management levels in an organization. Decisions that are taken in an organization are usually related to –

• Goals and objectives of the organization
• Organizational structure
• Organizational design 
• Budgets
• Time period
• Staff – salaries, wages, working hours, promotion, demotion
• Marketing Mix – Product, Price, Place, Promotion
• Research and design

Decision Making Process

Types of decisions

Difference between Programmed and Unprogrammed Decisions

 Various Techniques of Decision Making

• Group Discussions
• Brainstorming
• Delphi technique
• Marginal Analysis
• Cost-Benefit Analysis
• Ratio Analysis
• Financial Analysis
• Break-even Analysis
• Operations research
• Pareto Analysis etc.

Importance of Decision Making

• Optimum and efficient utilization of resources
• Aids in Problem solving and facing business challenges
• Helps in business growth and achieving objectives
• Facilitates effective management and Innovation
• Motivates employees and improves overall business performance

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Control is simply making things happen in the way it was planned. Control refers to the comparison of actual performance of a task with the previously established standards or benchmarks, for the purpose of finding out deviations in performance and correcting them.

According to Bateman and Snell, ‘Control is any process that directs the activities of individuals, towards the achievement of organization goals’

Controlling refers to the process of regulating organizational activities and people carrying out those activities to ensure minimum deviations between actual performance to expected performance. It the process through which the management ensures that all resources of the organization are used effectively and efficiently to meet organizational objectives.

Process of Controlling

(1) Establishment of standards – The first task of controlling is establishment of performance standards or benchmarks against which the actual performance will be measured. While setting standards the main focus is on questions like:

• What standards should be set?
• How should the standards be set?
• In what terms should these standards be expressed?

Standards are generally set for key management tasks keeping in mind the past achievements, industry average, major competitors, capabilities of a firm, core competencies, risk bearing ability, strategic clarity, flexibility etc. Control standards may be quantitative (expressed in physical or monetary terms) or qualitative (expressed in intangible terms) in nature.  

(2) Measurement of performance – The next step in controlling is the measurement of actual performance. This may be done through traditional or modern techniques of control. Measurement may be done simply through personal observation or through an elaborate system of accounting, reporting and communicating. However, before choosing a technique of control on must keep in mind the Difficulty, Timing and Periodicity in measurement.

(3) Analyzing deviations – The third step involves finding out the deviations in performance and the cause of those deviations.  

• When actual performance is equal to the expected performance tolerance limits must be set.
• When actual performance is greater than expected performance one must check the validity of standards and efficiency of management.
• When actual performance is less than budgeted performance one must pinpoint the areas where performance is low and take corrective actions accordingly.

The cause of deviations may be – External or internal, Random or expected, Temporary or permanent.

(4) Taking corrective actions – The last step involves taking necessary actions to correct the deviations in performance. It includes –

• In-depth analysis and diagnosis of the factors that might be responsible for poor performance.
• Lowering or elevation of standards according to the actual conditions.
• Reformulating strategies, plans, objectives.

Techniques of Controlling

Importance of Controlling

Importance of controlling lies in – 

• Achievement of organization goals
• Efficient execution and implementation of plans
• Maintaining order and discipline in an organization
• Facilitating de-centralization of authority and responsibility
• Promoting coordination by providing unity of direction
• Coping up with changes and uncertainty

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The term ‘Johari Window’ was coined by Joe Luft and Harry Jugham, researchers at University of California in the 1950`s. They studied how a person expresses himself to others and observed that there are some aspects of an individual`s personality that he/she is not aware of and there are some aspects that he/she does not openly share with others, while there are some traits that he/she keeps to himself and some traits that no one is aware of.

On the basis of the above observation, a four block grid was formed, each block representing the manner in which an individual expresses himself to others.

The Johari Window

Block (1) – Public Self or Arena – It is the self that one chooses to share with others. It contains all the traits of a person that he openly shares with others. In this arena, both the communicator and the receiver have all the necessary information about each other to communicate effectively. Arena is the area of common understanding and the larger the arena the more effective is the communication. A large arena improves the possibility of effective communication.

Block (2) – Blind Spots – It refers to the traits of a person that he/she is unaware of but others around him are well aware of. Hence, other people have an advantage of knowing the feelings, perceptions and reactions of the person while he himself is unaware of them. Too many Blind Spots reduce the possibility of effective communication.

Block (3) – Hidden Self or Façade – It refers to those aspects of an individual`s personality that are known to him but are unknown to others. This block contains all such information that one hides from others out of fear, embarrassment, to gain power etc. and a façade i.e. false front that a person puts forward with others. A false front makes the arena smaller and reduces the possibility of effective communication.

Block (4) – Unconscious Self or Unknown – The unconscious self contains all information, hidden characteristics, drives and needs that no one is aware of. It refers to those aspects of an individual`s personality that are not understood by anyone.

Feedback – In order to get an honest feedback, one must increase the size of arena by encouraging open interaction and providing information that is essential for effective communication. A large arena will lead to a healthy working relationship and effective communication while a small arena will lead to poor relationships and ineffective communication.

Exposure – The Johari Window is used to expand a person`s public self or arena and shrink the other three areas for the purpose of effective interpersonal communication. A regular and honest exchange of feedback and willingness to share personal feelings will expand the arena. The process that one uses to increase the information known to others is called exposure.

Hence, one must share information openly and honestly and must avoid large blind or hidden area to improve interpersonal communication.

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A group is a collection of two or more individuals who interact with each other and are inter-dependent on each other for a common purpose, and hence perceive themselves as a group. 

Features of a group

• It consists of two or more people
• It involves interaction and communication between group members
• All members of a group have a collective identity
• All members share similar goals, interests and lifestyle

A group may be defined as two or more individuals, interacting and inter-dependent, who come together to achieve particular objectives.

Group Dynamics is concerned with interactions and forces among group members in a social situation. It refers to the social process by which people interact face to face in small groups. The Three major functions performed by a group in an organization are:

• Socialization of new employees
• Getting the job done – teaching new employees to cope up with the job
• Decision making

Reasons for Group Formation

• Warmth & support
• Power (bargaining strength)
• Security
• Recognition (opportunities for praise)
• Exchange ideas, thoughts, attitude
• Goal accomplishment
• Group activities

Types of Groups

Formal Groups

A group created by formal authority to accomplish a specific task.  A formal authority structure governs the behaviour and roles of members.  Rules, incentives, regulations & sanctions guide the action of members.

(1) Command Group – It consists of a supervisor and his/her subordinates.  Subordinates report to a common superior.  These groups form a permanent part of the organisational structure and remains intact even if a member leaves.

(2) Task Group – It consists of employees who work together to complete a particular task on project. Individuals from different divisions and departments come together and work on a particular task. A task group can be often called a committee – task force or project group

• Committee – It is a group of employees whose purpose is to exchange info, advice manager, making decisions.
• Task force – A group created to tackle a certain problem, it is action oriented.

(3) Project group – It consists of individual from many different backgrounds who come together to achieve predetermined objectives within predetermined time, cost & quality limits.  It consists of personnel from different areas of expertise who help to attain project goal.

(4) Committees – There are ad-hoc groups formed to examine, analyse and evaluate particular areas of organisational operations.  They usually have only advisory authority.  There are also standing committees like Board of Directors which exist indefinitely.

Informal Groups

Groups in which membership is voluntary are informal groups.  These groups evolve gradually among employees with common interests.

Informal Groups can be categorised into –

(1) Friendship group – People with common interests, social activities, political beliefs, religious values, opinions etc. form an association and extend their interaction to off the job activities.

(2) Interest group – Individuals who may or may not be members of similar task or command group may come together to achieve some mutual benefit.  Objectives of such a group are not related to the organisation’s objectives but are specific to each group.

(3) Reference group – It refers to a group of people, a person refers to while taking decisions and uses reference group’s opinion to evaluate himself.  It is a group that serves as a reference point for the individuals to evaluate and make decision regarding his/her belief, attitude and behaviour.

Difference between Formal Groups and Informal Groups

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Organizational Change refers to any modification or alternation in people, structure, job design or technology of an existing organization. An organization must make changes continuously in order to cope up with changes in —

• Customer needs
• Technological breakthrough
• Economic shocks
• Government regulations etc.

Organizational Change is required to maintain equilibrium between various external and internal forces, to achieve organization objectives. It helps an organization to be more effective and efficient for the purpose of achieving its objectives.

Types of Organizational Change

Anticipatory change – These are systematically planned changes intended to take advantage of expected future events or situations.

Relative change – Changes that become imperative due to changes in environment and unexpected events.

Incremental Change – It involves changes in the subsystem of an organization in order to keep it on the correct path / direction.

Strategic Change – These changes affect the overall working and direction of an organization.

Planned Change – It helps an organization to prepare and adapt to changes in organization goals and objectives. It seeks to –

• Improve the ability of an organization to adapt to changes in its environment
• Change employee behaviour
• Survive the competition

Proactive change – It takes place when forces for change lead an organization to make changes in its structure, technology or people as it is desirable.

Reactive Change – When forces for change make it necessary for a change to be implemented.

Process of Planned Change

Planned change is a deliberate and intentional change by the organization involving –

• structural innovation
• new philosophy, policy, goal
• change in operating philosophy
• change in climate and style

Kunt Lewin’s Force Field Analysis Model

According to Kurt Lewin, individual behaviour is the result of equilibrium between driving forces and restraining forces.

Driving forces – Tend to initiate change – Forces which affect a situation by pushing it in a particular direction.

Restraining forces – Forces acting to restrain or decrease driving forces.

An increase in the driving forces might improve productivity but it also might increase restraining forces. E.g. – Manager eliminating breaks for employees (Driving forces) Employees offering resistance (Restraining Forces)

Driving forces may also activate restraining forces therefore it is more effective to decrease the restraining forces to encourage change. To initiate planned changes managers have to remove restraining forces or make them weak and strengthen the driving forces.

Individuals experience two obstacles to change:

• They are unwilling to alter long established attitudes and behaviours
• They may try to do things differently but return to traditional ways in a short time.

Kurt Lewin introduced a three step sequential model of change process:

(1) Unfreezing – It is a process in which a person casts away his old behaviour which might be inappropriate or irrelevant to the changing demands of the situation.

Schien Hur suggested some measures for undertaking the unfreezing process –

• Physical removal of individuals from their accustomed routines, sources of information and social relationships.
• Undermining and destruction of social support
• Demeaning and humiliating experiences to help individuals see their old habits as unworthy and be motivated for change
• Linking reward with willingness to change and punishment with resistance to change

It involves discarding the orthodox and conventional ways of doing things and introducing new behaviour and accepting new alternatives.

(2) Changing – In this phase individuals learn new behaviour and learning process begins. Individuals start accepting change and learn to behave in a new way. The changing phase can be explained in terms of –

• Compliance or force – It occurs when individuals are forced to change either by rewards or punishment
• Internalization – It occurs when individuals are forced to encounter a situation that calls for a new behaviour.
• Identification – It occurs when individuals choose a particular behaviour model that suits his/her personality in the changed environment.

Guidelines for effective change

• Realize that the purpose of change is to improve performance results.
• Make individuals responsible for their own change
• Encourage improvisation, team performance, and coordinated activities.
• Encourage learning by doing, provide Just in Time (JIT) training
• Use positive energy, meaningful language, effective leadership

(3) Refreezing – It means what has been learned is integrated into actual practice. The individuals internalize the new beliefs, feelings and behaviour learned during changing phase. They accept and adopt these changes as a permanent part of their behaviour repertoire. There is a tendency that an individual might revert back to their old behaviour therefore reinforcement is necessary for the internalization of new behaviour.

Forces of Organizational Change

Internal forces

• Increased size
• Performance gap
• Employee needs & values
• Change in top management

External forces

• Technological changes
• Changing marketing conditions
• Social changes
• Political & legal changes

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A plan is a pre-determined course of action. Planning is essentially a process to determine and implement actions to achieve organizational objectives.

Planning involves the task of deciding in advance –

• What to do?
• How to do?
• When to do it?
• Who will do it?

A manager has to answer four basic questions while formulating a plan –

• Where are we now realistic assessment of current situation?
• Where do we want to be?
• Gap between where we are and where we want to be?
• How do we get there?

Nature of Planning

• Planning is goal oriented – Plans arise from objectives. Objectives provide guidelines for planning.
• It is a primary function – Planning provides the basis foundation from which all future management functions arise.
• It is persuasive – It is required at all levels of management. It is not an exclusive function of any management level or department.  Managers have to plan for every change that occurs in an organization.  However, the scope of planning differs at all levels and among different department.
• It is mental activity – Planning is a mental process involving – imagination, foresightedness and sound judgment. Plans are based on careful analysis of internal and external factors influencing business activities.  It is carried out in a logical and systematic manner.
• It is a continuous process – It is an ongoing process of adapting the organization with the changes in business environment. Since a business exist in a dynamic environment it is necessary to continuously plan based on changing business needs and situations.
• It involves choice – it is essentially a choice among various alternative course of action. A manager has to select the best alternative after careful analysis and evaluation.
• It is forward looking – Planning means looking ahead and preparing for the future. It involves analysis of the future needs and requirements of the business and preparing for it.
• It is flexible – Planning is based on future forecast of events and situations. Since future is uncertain, plans are flexible enough to adapt with future change of events.
• It is an integrated process – Plans are structured in a systematic and logical sequence where each plan or step is highly inter-dependent and mutually supportive.
• It includes effective and efficient dimensions – Plans aim at optimum utilization of resources to be efficient and are based on predetermined objectives to measure effectiveness of the plan.

Elements of a Plan

• Objectives – Objectives are goals established to guide the activities of the enterprise.
• Policies – A policy is a basic statement that guides action and decision making. It sets behavioral limits on managers.
• Procedures and Methods – A procedure is a well thought out course of action. It prescribes the specific way to do a particular job. Methods are sub units of procedure. They indicate the techniques to be used to make the procedure effective.
• Rules – A rule specified necessary course of action in respect of a situation. It prescribes restriction and a definite and rigid course of action.
• Strategy – It is a plan of action designed to achieve long term or overall aim.
• Programs – Programs are precise plans of action followed in proper sequence in accordance with objectives, policies and procedures.
• Budgets – A budget is an estimate of men, money, material and machine required for successful implementation of plans.
• Projects – A project is a particular job that needs to be done in connection with the general programme.

Planning Process

(1) Establishment of objectives

It involves identification of goals and objectives of the organization by carefully examining the internal and external environment affecting the business.

(2) Developing premises

Premises are assumptions about the environment in which plans are made and implemented.  Thus assumptions about market demand, cost of raw material, technology to be used, population growth, government policy etc. are to be made while formulating a plan.

(3) Evaluating and selection of alternatives

Changes in the external environment pose different alternatives for organizations to carry out a particular task.  Different alternatives are evaluated against factors like costs, risks and benefits involved in following a specific course of action and the best alternative is chosen.

(4) Formulating derivative plans

Derivative plans are secondary plans formulated to support the basic plan.  E.g. Detailed plans formulated for various departments, units, activities etc. Derivative plans indicate the time schedule and sequence of performing various tasks.

(5) Securing cooperation and participation

Manager must involve people from various departments and take their suggestions and criticisms to rectify the defects in the plan if any.  Participation of employees in formulation of plans motivates them to carry out the plan with best of their abilities.

(6) Providing for follow up

Plans are constantly reviewed to ensure their relevance and effectiveness with the changing dynamics in the business environment.  It helps to develop sound plans for the future and avoiding mistakes that surface after or while implementing a plan.

Approaches to Planning

Top down approach

• Authority and responsibility is centralized at the top.
• The top management defines the mission and lays down strategies and plan of action required to achieve stated goals.
• The blueprint of the plan is passed on to the people working at lower levels who do not participate in the planning process.
• The success of this approach depends upon the qualification, experience and capabilities of top management.

Bottom up approach

Lower level managers are responsible for preparation and implementation of plans (make functional plans which are approved by top management)

Composite approach

In such a approach the lower and middle management is responsible of drafting out plans in accordance with guidelines and boundaries stated by the top management.  Every plan is up for a discussion and debate and a middle path is chosen to facilitate smooth implementation of plans.

Team approach

In such a approach a team of managers having relevant experience and skills in various functional areas are assigned the job of planning. The plans are then approved by the top management.

Types of Planning

Tactical or coordinated planning

• Less detailed than short term plans
• Concerned with implementation of strategic plans by coordinating the work of different departments
• Integrate all organizational units based on results obtained by implementing short term plans
• Ensures commitment to strategic plans

Formal & Informal Planning

• Formal – It is a well planned document with written record of what the organization intends to do within a given time frame.
• Informal – It is an unstructured, poorly designed plan which are orally communicated and not recorded.

Functional & corporate Planning

• Corporate – It is a comprehensive plan that outlines the broad objectives of a company.
• Functional – It involves planning for a particular unit. Deals with parts such as – marketing, finance, production, HR in a related manner.

Proactive & Reactive Planning

• Proactive – Managers anticipate the challenges and risks of the future and prepare alternative plans and take suitable steps in order to adapt with unforeseen changes.
• Reactive – Managers plan to react to an external event.

Importance of Planning

• It provides direction.
• It focuses on organizational objectives and goals
• It helps in optimum utilization of resources
• It reduces risks of uncertainty
• It facilitates decision making
• It encourages innovation and creativity
• It facilitates control
• Establishes a sound organization
• Improves standard of living of people
• Reduces costs

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Management refers to a set of activities (planning, organising, decision making, controlling etc.) directed towards an organisation’s resources (human, financial, physical and informational) with the aim of achieving organisation’s goals in an efficient and effective manner.

According to Henry Fayol – “To manage is to Forecast and plan, to organize, to command to control and to coordinate”

“Management is what a Manager does” – A manager utilizes scarce resources of the organization in an efficient manner in order to achieve goals of an organization.

Aims of Management

• To increase efficiency in business operations
• To achieve individual, organizational and social goals
• To cope with changes in the dynamic business environment
• To work with and through other people
• To achieve organizational objectives effectively and efficiently

Nature / Characteristics of Management

• Management is a human activity – It is performed by and through people.

• It is pervasive i.e. it is needed at all levels in an organisation (Top, Middle, Bottom) tough the nature and scope of tasks may vary.

• It is universal – It is applicable in business as well as other social and political organisations.

• It is a social process – It deals with people and aims at optimum utilization of resources for the benefit of society as a whole.

• It is intangible – It cannot be seen but can be felt in form of increase in production, sales or profit.

• It is goal oriented – Management aims at achieving various economic and non-economic goals.

• It is a group activity – Management involves getting things done through people in a formally organized group and aids in achieving individual as well as organisational goals.

• It is a system of authority – Authority is the right to give orders and the power to obtain obedience from employees. A manager gets things done by using authority over his/her subordinates.

• It is a distinct activity and dynamic activity – A manager visualizes the problems in a business and takes suitable steps to adapt the business with the changing internal and external environment.

• It is a science as well as an Art – It is a systematic body of knowledge based on general principles which are universally applicable therefore it is a science. But a manager also requires various skills and creativity to solve complex problems and achieve results and hence it is also an art.

• It is multi-disciplinary – It is borrows from psychology, sociology, anthropology, ecology, economics, statistics, operations research etc.

• It is a process which involves certain functions like planning, organising, staffing, directing and controlling.

Management – Science or Art ?

It can be considered as science as:

• It is a systematic body of knowledge
• It is a Social Science i.e. it deals with human beings
• Managers carry out experiments
• Principles of Scientific Management are widely used

It can be considered an Art as:

• Managers diagnose and solve problems using sound knowledge, experience and creativity.
• It involves combination of human and non-human resources in a creative way.
• Every manager manages differently based on his knowledge and experience.
• It requires constant practice to become a successful manager.

Therefore, Management is considered a science as well as an art.

Management Process / Functions

Management is dynamic process consisting of various elements and activities. The management process involves series of actions or operations that are performed in a sequence to achieve organizational goals and objectives.

The main functions of a management process are:

1. Planning – It is the process of forecasting future needs of the organisation and making decisions regarding future course of action required to accomplish goals. It is a thinking process concerned with determination of –

• what is to be done?
• how it must be done?
• when and where it must be done?
• who is to do it?
• how will results be evaluated?

It provides direction to the enterprise and helps in coping up with environmental changes.

2. Organizing – It is concerned with arrangement of an organisation’s resources i.e. people, labour, materials, technology, finance etc. in order to achieve organisation objectives.

A manager takes decisions about division of work, allocation of authority and responsibility and coordination of tasks with an organization. Organizing involves division of work into convenient tasks or duties, grouping such duties and delegating authority in the form of posts to employees. It contributes towards the efficiency of an organization.

3. Staffing – It is an activity where people are recruited, selected, trained, developed, motivated and compensated for managing various positions. It involves movement of individuals into an organisation and movement of people within organisation (transfer, promotion, job rotation) and movement of people outside the organization (termination, retirement). It is essentially selecting the right man for the right job.

It involves –

• Recruitment – It is the process of attracting maximum number of applicants for a particular job.
• Selection – Screening the candidates and choosing the best one out of them.
• Training & Development – Imparting necessary knowledge and skills required for the performance of a particular job.
• Compensation – Price paid to workers for services they render to the organisation.

4. Directing – It is the function of guiding and supervising the activities of the subordinates. It involves the following activities –

• Leading – It includes motivating and communicating with people individually and in groups for the purpose of stimulating people to be high performers.
• Influencing – Guiding the activities of members of an organization in an appropriate direction.
• Motivatiing – It is the process of stimulating people to take a desired courses of action.  A manager inspires and encourages employees to take required action.
• Communicating – It involves transfer of information from one person to another.

5. Controlling – It is the process of influencing actions of a person or group to attain desired objectives. It includes four activities –

• Setting standards of performance
• Measuring actual performance
• Comparing actual performance from planned performance on standards
• Taking corrective actions to ensure accomplishment of objectives

It is the process of visualizing deviations in the performance and taking corrective actions based on gap between actual and planned standards of performance.

IMPORTANCE OF MANAGEMENT

Its importance lies in:

• Optimum utilization of resources – A manager eliminates wastage which leads to efficiency in all business operations.

• Effective leadership and motivation – It helps the employees to work in harmony and achieve goals in a coordinated manner. It provides effective leadership and motivation to employees to work harder.

• Sound industrial relations – A Manager maintains balance between the demands of employees and organisational requirements, thereby helps to minimize industrial disputes.

• Achievement of goals – It helps in realizing goals with maximum efficiency by reducing unnecessary deviations, overlapping efforts and waste motions.

• Maintaining equilibrium – It helps an organisation to survive in a dynamic environment. A manager anticipates changes in the business environment and takes suitable steps in order to adapt the business constantly with the changing environment.

• Improves standard of living – It improves Standard of living of people by optimum utilization of scarce resources, ensuring survival of firm in the dynamic environment, exploiting new ideas for the benefit of the society, developing employees talents and capabilities.

• Establishing Sound Organisation – Managers help in establishing a sound organization through effective authority and responsibility relationships.

• Reduces costs – A manager uses cost effective techniques to reduce production costs and increase output.

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