Business Management-Material

                                                     BUSINESS MANAGEMENT

                                                                                                                                BY

                                                                                                            Dr.K.Chitra Chellam

Louis Allen defines management as “Management   is what a manager does”

According to Henry Fayol “Management  is to forecast and plan , organize , command , co- ordinate and to control.”

    Management is the art of getting things done through and with people. The main aim of  management is to achieve organization objectives.

Features or characteristics of management:

Management is a process:

                 Management is a systematic method of performing activities functions to achieve organizational objectives. Management is the art of getting things done through people. Objectives are achieved through and with the help of people who work in the organisation.

Management is universal:

                Wherever there is human activity there is management. Management co-ordinates  material and human resources to achieve organization objectives. It is required in every form of organization, club, trust, trade union etc.,

Management is goal oriented :

Most important goal of the organization is to achieve objectives which may be economic, social , socio- economic. The objectives may be achieved by using men, money, materials and machines.

Management is a group activity :

            Group of people manage the organization. Objectives can be achieved only if all the individual departments are efficient.

Management is a social science:

             Management is an art of getting things done through and with the help of  the people . Objectives cannot be achieved without the help of employees.

Management is a system of authority :

              To achieve objectives, management is given the authority to plan, organize , coordinate, direct and control . There must be proper balance between authority and responsibility.

Multi- disciplinary :

      Management acquires knowledge and concepts from various disciplines like psychology, sociology, economics, statistics, history etc. Management integrates the ideas and concepts taken from these disciplines and presents new concepts for managing organization 

.

Management is both an art and science :

            It is science because it develops certain principles which are universally applicable. It is also an art because management depends upon the personal skills of managers. To be a successful manager, a person requires the knowledge of management principles and also skills to use the knowledge. Management uses both scientific know-how and art in management and organization.

Management is a profession:

            Profession requires specialized knowledge, skill and training. Management uses the factors of production to achieve organizational objectives. To achieve objectives successfully managers must possess managerial knowledge, skills and training. So, management is regarded as a profession. 

Functions of management:

 Functions are classified into two categories:

 Main functions

Subsidiary function

Main functions:

           

Planning :

Planning is the process of thinking before doing. Planning is deciding in advance what to do, how to do it, when to do it and who is to do it. Planning includes setting of objectives formation of police, program and procedures to achieve objectives. Planning is the primary function. Other functions are performed only after planning has been done.

Organizing :

Organizing refers to identifying the activities to be performed, example, purchase, storage, sales, display, advertisement, accounting and so on. Similar activities are grouped under each group is placed under an individual department. Example, activities related to sales are put under sales department. After grouping various activities, suitable persons are selected and duties are assigned. Necessary authority is given to him to enable them to discharge their duties properly. For example, purchase manager must be given the authority to purchase for the goods and pay for them.

Staffing:

Staffing means selection of the right man for the right job. This function includes manpower planning , selection, training , placement, promotion , demotion, training, retirement, performance appraisal etc.,

Directing :

Directing refers to issuing order and instruction to subordinates, guiding ,leading and supervising them. Direction is a continuous function performed at all levels of management. Manager must know how to direct employees, how to issue orders without hurting the subordinates. 

Motivation:

Motivation is the process of stimulating people to work to accomplish the objectives. It is the psychological technique followed to improve the performance and efficiency of employees.

Controlling:

 Before control was used to find out the mistake and now control is used by manager to check the actual performance of employees. He compares the actual performance with the standard performance to find out the deviations and to take corrective measures to rectify deviations. 

Subsidiary functions:

Communication:

Communication means exchange of ideas, information and suggestions between 2 or more persons. Communication is a two way process. It flows from top level management to lower level management and vice-versa. The message transferred should be understandable by the receiver. There must be a continuous flow of information in the management. Effective means of communication reduces misunderstanding between top management and employees.

Decision Making:

Decision making is the process of selecting the best course of action from various available alternatives.

Innovation:

Innovation refers to conducting research, to introduce new methods of production, new machines and new products. For the purpose of conducting research, organisations have separate department called Research and Development department.

Principles of Management

Henry Fayol has gives the following 14 principles of management:

Division of work:

Division of work can be applied to all levels of management. It is necessary to achieve specialization. A person acquires greater skill when he specializes in single operation. This avoids the waste of time and low output caused by change from one work to another. Division of work or specialization gives maximum productivity and efficiency.

Authority and Responsibility:

Authority means right to give orders and right to command. Responsibility is the obligation to achieve objectives. A manager’s authority may be official or personal. Official authority is derived from manager’s position or status. Personal authority is derived from his personal qualities like intelligence, moral values, experience, ability to lead etc. Both authority and responsibility should go hand in hand. Responsibility without authority will make a person inefficient. And authority without responsibility leads to irresponsible behaviour.

Discipline:

Discipline is obedience, energy, behaviour and respect shown by employees. It is essential for smooth running of any business. If the leaders are inefficient, they can’t enforce discipline. Discipline can be maintained only if the following conditions exist:

Good and efficient supervisors at all levels.

Fair and clear agreement between the organisation and its employees.

Penalties are judiciously applied.

Unity of command:

According to this principle, an employee should get orders and instructions from only one superior. Each subordinate should have only one superior. When there is a direct relationship between superior and subordinate, there is less problems of conflict and confusion.

Unity of direction:

According to this principle, each group of activities with same objectives must have one head and one plan. Unity of direction means that efforts of all the members of the organisation should be directed towards the achievement of organisational objectives. 

Subordination of individual interests to general interest:

Employees’ interest must be subordinate to the interest of the organisation. General interest may sometimes be ignored due to laziness, selfishness, weakness, ignorance and ambition of employees. To make the employees give importance to general interest, the following factors must exist:

Good superiors at all levels

Fair agreement between organisation and employees.

Constant supervision

Remuneration to personnel:

Remuneration to employees should be fair and provide maximum satisfaction to both employer and employees. Fayol did not favour profit sharing plan for workers. But he advocated profit sharing plan for managers. He was in favour of non-financial incentives.

Centralisation:

Centralisation means concentration of authority and decision making power in the hands of few. All the important decisions are taken by the higher level in the organisation. Centralisation reduces the importance of subordinates’ role, whereas, decentralisation increases the importance of subordinates’ role.

Scalar chain:

It is a chain of superiors ranging from highest level of authority to the lowest. It is also known as line of authority. This line of authority flows from top level to the bottom level. According to this scalar chain principle, communication must pass through each position in the line of authority.

Order:

This principle is related to the arrangement of things and people. Order includes material order and social order.

In material order, there should be a place for everything and everything should be in its place. In social order, there should be right man in the right job. 

Equity:

Equity means kindness and justice. Employees will work with dedication and loyalty only when they are given kind, fair and just treatment.

Stability of tenure:

 An employee should not be removed within a short period of time. There must be stability of tenure for all the employees to make them learn the details of the work, to gain enough confidence and to perform the work effectively. Job security must be provided to all the employees.

Initiative:

Managers should encourage their subordinates to take initiative. They must induce their subordinates to act on their own. Initiative increases the zeal and energy of the empolyees.

Espirit de corps ( Unity is strength):

According to this principle, there should be cooperation and team work among the members of an organisation. Team work and proper communication among the members are important for the success of an organisation.

Is management a science or an art?

Management as a science

Science is described as a systematised body of knowledge gathered by observation and experiments. Management is regarded as a science due to the following reasons:

Principles enjoying universal applicability:

Scientific principles are developed after a lot of testing, checking and cross-checking. So they can be applied in all situations and at all times. Example, _H2+ o will always result in water whether the experiment is carried out in India or in any other country of the world.In management also, there are some fundamental principles which can be universally applied. Examples, principles of unity of command and unity of direction. 

Scientific enquiry and observation:

Scientific principles are based on scientific investigation and reasoning. These principles can be scientifically proved at any time.Management principles are also based on scientific enquiry and investigation. They are derived from investigations and practical experience of a number of managers. Every manager must analyse each of the problems faced by him on scientific lines so as to provide a rational solution (reasonable solution).

Cause-Effect relationship:

Scientific principles lay down the cause-effect relationship between various factors. Example, when 2 particles of hydrogen gas are combined with 1 particle of oxygen gas, the result is water.

Similarly, management principles also establish cause-effect relationship between various factors. Example, productivity per worker will increase when workers are motivated.

Test of validity and predictability:

Validity of scientific principles can be tested at any time. Every test undertaken for this purpose will produce the same result. These principles also serve as a basis for predicting future events.

Similarly, validity of management principles can be tested at any time. Example, principle of unity of command can be tested by putting one group of workers under one superior and another group under two or more superiors. Through observation, we can find out that the performance of the first group is more efficient and effective than the second group.

Management as an art

Art is the skill or knowledge or knack of doing a thing. Management is considered as an art due to the following reasons:

Practical know-how:

Every art has both theoretical and practical aspects. A person should have both technical knowledge and skills to apply his knowledge in practice. Example, a person may have technical knowledge about music, but he will be called an artist only if he knows to sing.Similarly, a person may know all the principles and techniques of management, but he will be called a manager only if he has necessary skill to apply the principles in solving managerial problems. Thus, more emphasis is on application of knowledge in practice, than on the knowledge itself.

Personal skill:

Performance levels differ from manager to manager, even if all the managers possess equal technical qualifications. The difference in the performance levels of different managers is due to the fact that every individual has a different level of personal skill.

Result-oriented approach:

The ultimate aim of a person practising an art is to get absolute perfection in his art. A manager also follows a result-oriented applied. He performs each function such as planning, organising, directing, coordinating and controlling for the purpose of achieving maximum productivity and profitability at lower cost.

Creativity:

Every artist has creativity in him. He aims at producing something new. This requires intelligence and imagination and not mere mechanical skill.Similarly, a manager also requires creativity. Manager uses his creativity to coordinate the factors of production so as to derive maximum benefits from the factors.

From money, materials and machines, he derives the maximum productivity through proper arrangement, placement and timing. From the workforce, he obtains maximum productivity and efficiency, by providing effective motivation and leadership.

Improvement through practice:

Practice makes a man perfect. A musician or a dancer achieves greater proficiency in his art through constant practice. Similarly, manager acquires greater efficiency and effectiveness through practice.

Even a most intelligent and imaginative manager .may not be able to visualize and solve all the complex problems arising in the course of his work. But an experienced manager can convert a challenge into an opportunity to mobilise all the available resources so as to achieve maximum productivity. His experience will also serve as a guideline to other managers in future.

Management is both a science and an art

To be a successful manager, a person requires the knowledge of management principles and also skills to utilise the knowledge. The management uses both scientific knowledge and art in managing an organisation. There must be proper balance between science and art. Both science and art are necessary and the absence of either will lead to inefficiency.

Management as a profession

Profession is an occupation which requires specialised knowledge, skills and training. In a profession, skills are used not for self-satisfaction but for the interests of the society. The success of a profession is not measured in terms of money but in terms of services rendered to the public.

Management is considered as a profession due to the following reasons: (Characteristics of profession)

Existence of knowledge:

A profession is described as a body of knowledge which has to be studied for being a successful professional. To manage complex and large organisations in a better way, manager requires specialized knowledge. Thus, management satisfies the requirement of a profession in the form of existence of knowledge.

Acquiring knowledge:

An individual can become a professional only after acquiring knowledge and skills through formal training given by specialized institutions and universities. Management can be regarded as a profession because there are many institutes of management and universities which teach the principles and practice of management.

Professional association:

There is a separate association for each profession to regulate and develop the professional activities.In the field of management also, there are associations at various levels. Example, All India Management Association has been established with its offices in most of the cities, to help the members of the association in the field of research and other management activities.

Code of conduct:

Every professional must follow the code of conduct i.e., rules, regulations and ethical values prescribed by the professional association.In case of management also, All India Management Association has formulated the code of conduct. These ethical codes are not universally acceptable. These ethical values provide the behavioural pattern for managers. Generally, managers are supposed to be socially responsible. That is, it is the duty of the managers to protect the interests of all the parties associated with the organisation like customers, suppliers, employees, creditors, financiers, government and general public.

Service motive:

Professionals should consider the interest of the society while charging fees for their services. Success of a profession cannot be measured in terms of money. It depends upon the quality of the service rendered by the professional.This is true in case of management also. The primary aim of a manager is to work for the success of the organization, to enable the organisation to produce high quality products and services, cheap and useful goods so as to maintain the stability of the society.

                                               

                                                   PLANNING

            Planning is the function that determines in advance what should be done? , how it should be done?, when it should be done?, and by whom it should be done?. Planning bridges the gap from where we are to where we want to go. It is an intellectual process. It is a process of thinking before doing. Planning is the primary function and the manager must do planning before he performs any other functions.

Loius A.Allen – Management planning involves the development of forecasts, objectives, policies, programmes, procedures, schedules and budgets. 

Nature or characteristics of planning

Planning is based on objectives:

Planning involves setting of objectives and determining policies, programmes, and procedures for achieving them.

Planning is a thinking process:

Planning is an intellectual process. It is a mental work and involves thinking creatively. It involves decisions as to:

What is to be done?

How it is to be done?

When it is to be done?

By whom it is to be done?

Planning is concerned with future activities:

Planning is looking ahead and is concerned with deciding in the present what has to be done in the future. Planning is based on facts. Planning is not a guess work. It involves selecting the best course of action to achieve the objectives on the basis of past experience, present facts and future estimates.

Planning includes all managerial activities:

All the  managers, whether belonging to the top level management, middle level management or lower management are involved in the process of planning.

Planning is the primary function of management:

Planning is the primary function of management. A manager can perform other functions only after planning.

Planning is a dynamic process:

Planning is a continuous process of a management. A manager does planning on the basis of assumptions which may not come true in future. Therefore, the manager has to change or modify or revise the plans according to the circumstances prevailing in the organisation. 

Precision is pre-requisite of planning:

The quality of planning depends upon the quality of the intellectual activity and the precise goals and objectives. Precision in planning is necessary to put the plan into action. Absence of precision in planning will result in drafting faulty plans.

Flexibility:

Planning cannot be rigid. It should be flexible and adaptable to the changing business environment.

Planning must be communicated:

Planning should be communicated to all the persons in order to facilitate successful implementation and achievement of organizational objectives.

Planning is essentially decision making:

Planning involves identification of alternatives, evaluation of alternatives and selection of the best alternative among the various available alternatives.

Planning has close relationship with time:

Top level managers are concerned with long term planning. Middle level managers set short term plans. Low level managers formulate plans for a period of few days or weeks.

Planning involves ethical consideration:

Managers must consider the interests of consumers, employees and society while formulating plans.

PLANNING PROCESS (or) STEPS IN PLANNING

Setting the objectives:

Establishment of objectives is the first step in the planning process. Objectives may be accomplished by means of suitable policies, procedures, rules, programmes and strategies to achieve them. The objective of an organization is split into departmental objectives. Example, if the overall objective is to maximize profits, then the production department’s objective shall be to increase the output, the sales department’s objective will be to increase the sales, the personnel department’s objective shall be to create employee morale and so on. 

Determining the planning premises:

Planning premises are planning assumptions. Planning is based on certain assumptions which may not come true in future.Planning premises are external and internal. Internal premises include factors which exist in an organisation such as men, machine, money and materials.External premises include factors which are external to the organization such as government policies, technological changes, competitor’s plans and actions.

Collecting and analyzing information:

The next step is to gather all available information and data related to planning from internal and external premises. All relevant information must be analysed to study the cause-effect relationship between various factors. Example,between increase in price and fall in demand, between increase in wages and improvement in productivity and so on.

Identification of alternatives:

Based on the organizational objectives and planning premises, various alternatives can be identified. Often there will be more than one alternative to achieve a desired objective.Example, if the objective of an organization is to grow further, then it can be achieved in several ways like expanding the business, diversifying in other areas, taking over another organization, joining hands with other organization and so on.

All these alternatives cannot be considered for further analysis, the planner must choose only most important alternatives for evaluation.

Evaluation of alternatives:

Each alternative has both negative and positive aspects. It is necessary to evaluate these aspects to determine the best alternative. Each alternative is evaluated by considering factors like profitability, capital investment, risk involved, gestation period etc.Since planning is based on future activities, evaluation of alternatives becomes more difficult. Various statistical and mathematical techniques are used for evaluating alternatives.

Choice of alternative:

After the evaluation of various alternatives, the best alternative is selected. If more than one alternative is equally good, then the planner can choose more than one alternative. 

Formulation of supporting plans (secondary plans / derivative plans):

After formulating the basic plan, various plans are derived to support the basic plan. Example, once the basic production plan is formulated, a number of derivative plans dealing with purchase of raw materials, purchase of plant and machinery, recruitment, selection and training of workers etc. are to be formulated to facilitate the execution of the basic production plan.

Establishing sequence of activities:

After formulating the basic plan and derivative plans, the sequence of activities is determined in order to execute the plans. Based on plans at various levels, it can be decided who will do what and at what time.

Providing for future evaluation:

The main objective of planning is to achieve some pre-determined objectives. A regular follow-up is necessary to know whether the plans are proceeding in the right direction. By means of continuous evaluation and appraisal of the plan, shortcomings can be identified in time and suitable corrective actions can also be taken in time.

                                   

                                    ORGANISATION

Organisation is a structure which consist of a group of individuals who work together to achieve a common goal. Organisation involves identifying and grouping of activities to be performed, assignment of these activities to appropriate departments and individuals and providing necessary authority and responsibility to perform the work effectively.

Loiua A.Allen – Organisation is the process of identifying and grouping of work to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of enabling people to work more effectively together in accomplishing objectives. 

Principles of organization

Objectives:

Every organization has certain objectives, Each and every part of the organization must work together to achieve the desired objectives.

Efficiency:

The organization should achieve the objectives at minimum cost. An organization, at the same time, must be socially responsible and work for the welfare of the society.

Span of management:

This principle indicates the number of people who can be efficiently managed by one superior. Authorities prescribe that a maximum of 6 subordinates can be put under a superior.

Division of work:

Division of work or specialization is the process of dividing the total work of an organization among various departments.

Functional definition:

According to this principle, the duties and authority relationship between people in an organization must be clearly defined.

Scalar principle:

There should be a scalar chain of authority and communication ranging from highest to lowest. According to this principle, communication must flow through each position in the line of authority.

Exception principle:

According to this principle, only complex problems are dealt by higher level management. Routine matters are dealt by lower level management.

Unity of command:

A subordinate should get orders and instructions from only one superior in order to avoid conflicts and confusion. 

Unity of direction:

There must be only one plan for a group of activities. And the group of activities must be directed towards the achievement of organizational goals.

Responsibility:

Superior is responsible for the activities of his subordinates. And the subordinate is responsible for the work assigned to him by his superior.

Authority and responsibility:

Each individual must know his area of authority. Also, he must know to whom he is responsible for his work performance.

Balance:

There must be a proper balance between centralization and decentralization. Centralisation is the concentration of decision making power in the hands of few. Whereas, in case of decentralization, the decision making power is distributed even to lower level of management also.

Flexibility:

The organization must be flexible so that it can adapt itself to changes taking place in the business environment.

Process of organization or steps in organization

Division of work:

The total work of an organization is identified. Then, the main work of the enterprise is divided into various functions, sub-functions and sub-sub functions. Example, the work of a trading concern may be divided into purchases, storage, shop display, advertising, sales accounting, correspondence and so on.

Grouping of activities:

The next step is grouping of identical activities. Then each group is placed under an individual or department. Example, activities relating to purchases and storage may be grouped and placed under purchase department and those activities related to sales, shop display and advertising under sales department.

Assignment of duties:

After grouping various activities, suitable persons are selected and duties are assigned to them. Example, the purchase manager is assigned with the duties related to purchase of goods, the sales manager relating to sale of goods, the accounts manager related to accounting and so on.

Defining of authority:

After assigning duties to an individual, necessary authority and power must be delegated to him to enable him to discharge his duties properly. Example, the purchase manager must be delegated the authority to purchase goods and to pay for them.

Defining relationships:

When two or persons work together for a common goal, it becomes necessary to define relationships among them. Thus, each person must know who is his superior, and from whom he has to get orders and instructions. Similarly, each superior must know who are his subordinates and the extent of his authority.

                                    DIRECTION

Direction is the process of instructing,  guiding, counseling, motivating and leading the human resources to achieve organizational objectives.

Koontz O’ Donnell – Direction is a complex function that includes all those activities which are designed to encourage subordinates to work effectively both in the short run and long run.

Nature of direction:

Direction is an important managerial function. Through direction, management initiates actions in the organization.This function is performed at every level of management. Every manager in the organization performs his duties both as a superior and a subordinate.Direction is a continuous process. A manager must give orders to his subordinates, motivate, lead and guide them continuously.

Direction flows from top to bottom in organizational hierarchy. A subordinate is directed by his own superior only.Direction has dual objectives. That is, direction aims at getting things done by subordinates and to develop superiors.

Principles of direction

Principles of direction can be studied under two categories. They are:

Principles relating to the purpose of direction

Principles relating to the direction process

A. Principles relating to the purpose of direction

Principle of maximum individual contribution:

Organisational objectives can be successfully achieved only when every individual in the organization contribute his maximum efforts. Thus, organization should adopt that direction technique which enables employees to contribute their maximum.

Principles of harmony of objectives:

The objective of an individual working in an organization may be to satisfy his physiological needs and psychological needs. Whereas, the objective of an organization is to maximize profit. Management should choose that direction technique, which integrates both organizational and individual objectives.

Individual interest must be subordinate to general interest. Factors like ambition, laziness, weakness etc. reduce the importance of general interest. These factors can be minimized through direction.

Principle of efficiency of direction:

An effective direction technique makes the subordinates to work effectively without affecting their need satisfaction.

B. Principles relating to direction process

Principle of unity of command:

According to this principle, a subordinate should get orders and instructions from only one superior in order to avoid conflicts and confusion.

Principle of appropriateness of direction technique:

There are three direction techniques. They are authoritarian, consultative and free-rein. Each technique has its own advantages. And each technique can be used depending upon the nature of superior and subordinate relationship.

Principle of managerial communication:

There must be an effective flow of communication between superior and subordinates. A superior through downward communication, gives orders and instruction to his subordinates and he is able to know the performance of his subordinates through the upward communication from them. Thus, communication makes direction process effective.

Principle of comprehension:

Direction conveys to subordinates what they have to do, how to do, and when to do. Subordinates must understand and comprehend the instructions conveyed to him by his superior to avoid unnecessary queries.

Principle of use of informal organization:

Organisation can also use the informal group to communicate information very quickly and to make direction effective.

Principle of leadership:

Leadership is the process of influencing the activities of individuals to achieve the goals. Managers must choose the right leadership style to direct the subordinates in order to make them work efficiently.

Principle of follow through:

 Direction is a continuous managerial process. After giving orders and instructions, manager must find out whether the subordinates are working accordingly and whether they are facing any problems. If they face problems, then the order can be modified or replaced.

                                               

                                                   MOTIVATION

Motivation is to inspire people to work individually or in groups in a way as to produce best results It induces an individual to improve his performance so as to achieve the objectives..

Scott – Motivation means a process of stimulating people to action to accomplish desired goals.

Nature of motivation:

Motivation is a psychological concept. Even workers with extra-ordinary abilities will not be able to perform ad desired unless they are effectively motivated
Motivation fulfils all the motives, urges, and aspiration of employees.
Motivation induces individuals to achieve the organizational objectives.
Motivation may be financial or non-financial. Financial motivation may be in the form of increased wages, allowances, bonus etc. Non- financial motivation may be in the form of praise, recognition, greater responsibility, increased participation in decision making etc.
Motivation is a continuous process. A worker will perform his work so long as his needs are fulfilled. To keep the workers continuously engaged in the planned activities, they must be continuously motivated. 

THOERIES OF MOTIVATION

Maslow’s need hierarchy:

According to Maslow’s needs theory, there are 5 needs that force an individual to work. An individual fulfils these needs in the following order of priority:

Physiological   needs:

            These are the basic needs which are essential for a person to live. Physiological needs include need for food, shelter clothing etc. These basic needs are given top priority by an individual and he fulfils these needs first.

Safety needs:

            Once physiological needs are satisfied to a reasonable extent, an individual seeks to satisfy the other level of needs i.e., safety needs. Safety needs are needs for self-preservation and protection from physical and emotional danger. These safety needs include need for job security, physical security, pension for old age, compensation, insurance for accidents and death etc.

Social needs:

            After the first two needs are satisfied, social needs become important in the need hierarchy. Man is a social animal. An individual wants to live in a group which is affectionate towards him and accepts him. Need for love, affection, belongingness, acceptance and friendship are social needs. These social needs help an individual to develop good and meaningful relationship with others.

Esteem and Status needs:

            Esteem needs include self-confidence, self-respect, feeling of being unique, prestige, power and recognition from others. Frustration of the esteem needs has been the cause of many social problems.

Self-actualisation needs:

            Self- actuaslisation means full development of abilities, achievements and ambitions. Self-actualisation need is the desire to maximize one’s potentialities and to develop intrinsic (natural) capabilities. These needs also include competency in controlling environmental factors and the desire for achievement.

            Of these five needs, Maslow considers the first two needs as lower order needs. These lower order needs can be satisfied by extrinsic factors such as monetary and non-monetary benefits like salary, overtime pay, good working conditions etc.

            The remaining three needs are higher order needs. These higher order needs are satisfied by intrinsic factors such as opportunities for participation in decision making, greater freedom, and promotion and so on.

Herzberg theory of needs

Frederick Herzberg conducted a survey on the experiences and feelings of 200 engineers and accountants in 9 different companies in Pittsburg area, U.S.A. From the survey, he found that there are two factors which influence the satisfaction level of employees. These factors are hygiene factors and motivational factors.

Hygiene/ Maintenance factors:

            According to Herzberg, there are 10 maintenance or hygiene factors. They are:

Company policy and administration

Technical supervision

Interpersonal relations with superiors

Interpersonal relation with peers

Interpersonal relations with subordinates

Salary

Job security

Personal life

Working conditions

Status 

The presence of hygiene factors will not increase the workers’ output, but they only prevent losses in workers’ performance. These factors are necessary to maintain the satisfaction of employees at a reasonable level.

Any increase in these factors will not increase the satisfaction level of employees. But any decrease in these factors will cause dissatisfaction. Example, An increase of Rs.100 in the salary of an employee will not increase his satisfaction level. But a reduction of Rs.10 from his salary will create dissatisfaction.

Motivational factors:

            According to Herzberg, there are 6 factors that motivate employees. These factors are:

Achievement

Recognition

Advancement

Work itself

Possibility of growth

Responsibilty

These factors are related to job. Any increase in these factors will increase the satisfaction of employees. However, any decrease in these factors will not cause dissatisfaction. Since these factors increase the satisfaction in the employees, they can be used to motivate the employees.

Mc Gregor’s theory of X and Y

            Mc Gregor divided the assumptions about human behavior into 2 parts – Theory X and Theory Y.

Theory X:

            This is the traditional theory of human behavior. In this theory, Mc Gregor gives the following assumptions about human behavior:

Management organizes resources such as money, materials, equipment and people.

Management should direct the efforts of employees, motivate them, control their actions and modify their behavior.

Employees must be persuaded, rewarded, punished and controlled. Otherwise, they would become passive and even resist organizational needs.

By nature, an average man is indolent i.e., lazy. So he as little as possible.

An individual wants to avoid responsibility, has little ambition and prefers to be directed.

An employee is self-centered and does not consider organization goals.

He resists changes.

He is gullible and not very bright.

Theory Y:

            Mc Gregor describes the assumptions of Theory y as follows:

An average man does not dislike work.

An individual has self-direction and self-control to complete the task to which he is assigned.

People are not passive or resistant to organizational needs.

An average human being accepts responsibility.

People have a high degree of imagination, ingenuity and creativity in solving organizational problems.

In modern industrial life, the potentialities of average human beings are only partially utilized.

                                                CO-ORDINATION

           

Coordination is the integration and synchronization of group efforts in an organization to achieve the objectives of the organization.

            Mooney and Railiy - Coordination as the orderly arrangement of group efforts to provide unity of action of a common purpose         .

Need for coordination:

Coordination is necessary to integrate individual goals and group goals.

Coordination is necessary to link the functions which are divided into different departments together to achieve the objectives.

Coordination is required to coordinate the efforts of various specialists in the organization.

Coordination increases the morale and job satisfaction of the employees.

It creates a balance between people of different capacities and abilities.

Coordination is essential to avoid laziness, incompetence, lack of loyalty, lack of initiative and subordination of general interest to individual interest.

Coordination is needed in big organization, where there are more number of employees. Because each employee has his own habits, behavior and background.

Techniques of effective coordination:

Coordination by chain of command:

            In an organization, the chain of command is the most important method of coordination. According to the chain of command, all subordinates are coordinated by one superior. A manager defines the authority of his subordinates, their functions and timing of performance of these functions. 

Coordination by leadership:

            If managers cannot achieve coordination by exercising authority, they can use their leadership to bring coordination among their coordinates.

Coordination by committees:

            Committee is a body of persons entrusted with discharge of some functions. The committee is given the authority to take decisions. The decisions of the committees are group decisions. These group decisions coordinate various functions of the department.

Coordination by effective communication:

            Good communication is required for effective coordination in all directions horizontal, upward and downward. Information needed for coordination can be provided by written reports, oral reports, records etc. from departments.

Coordination by special coordinators:

            In large organizations, special coordinators are appointed. There is also coordination cell in the organization. This cell collects relevant information and sends them to various heads of departments or sections in order to achieve inter-departmental coordination.

Self-coordination:

            Each department affects others and is affected by other departments. If one department modifies its actions  in such a way to create unfavourable effects on other departments, then self-coordination can help to avoid such unfavourable effects. 

Principles of Coordination:

Principle of direct contact:

            Coordination must be achieved by having direct contact with those persons whose activities are to be coordinated. This can be achieved by means of an effective communication system.

Coordination at early stage:

            Coordination should begin at early stage of work cycle, that is, at the planning stage. It should begin at the stage of objective setting and policy formulation. This may be done by making organizational members to participate in the decision making process.

Principle of continuity:

            Coordination should be a continuous process. It should be performed by all the managers on a regular basis.

Principle of dynamism:

            Coordination should not be rigid but should be dynamic. Dynamism is required because changes in external factors will create changes in the organization.

Principle of reciprocal relationship:

            There must be reciprocal relationship between departments. Example, the level of production may be decided by the production department in consultation with marketing department to decide the optimum level of production.

Barriers of coordination

Inadequate system of communication leads to misunderstanding.

Lack of well defined authority and responsibility.

Lack of well defined work procedures.

Ineffective organization structure.

Absence of adequate check and inspection. 

Ineffective leadership and supervision.

Lack of motivation.

Improper system of wage payment.

Lack of skills, knowledge ability on the part of managers.

Essentials for effective coordination

Authority and responsibility must be clearly defined.

Work procedure must be well defined and followed properly.

Communication performs different types of functions such as command, instruct, influence and persuasive. These functions improve work performance and also help in coordination.

There must be a provision of check and inspection to know what is happening in the organization and to identify the problems of coordination.

Suitable organizational structure must be designed to facilitate communication and coordination.

There must be an effective leadership and constant supervision. 

Employees must be made to participate in the decision making process and its implementation.

There must be interpersonal trust, amity and tolerance.

There must be good organizational climate and work environment.

                                                      CONTROLLING

            Controls means measurements, whereas controlling is the process of gathering and feeding back information about performance so that decision makers can compare actual results with planned results and decide what to do about any apparent discrepancies or problems.

Terry and Franklin – Controlling is determining what is being accomplished – that is, evaluating performance and, if necessary, applying corrective measures so that the performance takes place according to plans.

Nature of control:

Control is forward looking because one can control future events and not the past.

Control is both an executive process. As an executive process, a manager has to perform control function in the organization. The nature, scope and limit of a manager’s control function depend upon the level a manager is placed in the organization.

Control is a continuous process

A control system is a coordinated-integrated system. Control must be considered as a set of inter-locking systems.

Steps in controlling

Establishment of control standards:

First, standards are set which serve as criteria for measuring the actual results. Precision is necessary for these standards. After setting the standards, the level of achievement of performance must be decided. Following factors must be considered while determining any level of performance:

Output

Expense

Resources

The level of performance should be reasonable and flexible.

Measurement of performance:

At this step, the performance is measured with respect to control standards. Appraisal of performance becomes a easy task if standards are properly determined. Further, methods of measuring performance are expressed in physical and monetary terms such as production units, sales volume, profit, etc. These methods are easily and precisely measurable. To measure qualitative and intangible performance such as employee relations, morale, etc, techniques like psychological tests and opinion surveys are applied. 

Comparing actual and standard performance:

This is the third major step in control process. It involves two steps. They are:

    Finding out the extent of deviations

   Identifying the causes of such deviations

Written reports, data, charts, graphs and personal observation give information to the management about the work performance of the employees. Such performance is compared with the standard.

When the standards are achieved, no further managerial action is necessary and control process is complete. When there is a deviation between standard and actual performance beyond a specified limit, an analysis is made to find out the causes of such deviation.  Measurement of deviation, analysis of deviations and their causes must be communicated to the concerned person who takes corrective action. Reports are prepared showing details regarding the performance standard, actual performance, deviations between the two, tolerance limits, and causes for deviations.  This report is sent to the person whose performance was measured and controlled. This report may also be sent to

   Executives who are engaged in formulating new plans and

   Staff personnel

Correction of deviations:

An organization is not a self-regulating system in which an automatic control can’t be exercised due to the outcome of many factors that exist in the total environment. Additional actions are required to maintain control in the organization. Such control actions are:

Review of plans and goals

Change the plans and goals as per the review

Changes in the task assigned

Changes in the existing direction techniques

Change in the organization structure

Provision for new facilities etc.