INDUSTRIAL MANAGEMENT Definition of Management “Management is a distinct process, consisting of activities of planning, organizing, actuating and controlling performed to determine and accomplish stated objectives with the use of human being and other resources.” In simple words, management is defined as an art of getting things done through others and with people, efficiently and effectively to attain the desired goals.
Nature of Management The nature of management is defines in following points:1. Continuous Process: Management is a never ending process. It will remain the part
of organization till the organization itself exists. Management is an unending process as past decisions always carry their impact for the future course of action. 2. Universal in Nature: Management is universal in nature i.e. it exists everywhere in universe wherever there is a human activity. The basic principles of management can be applied any where whether they are business or non-business organization. 3. Multidisciplinary: Management is basically multidisciplinary. Though management has developed as a separate discipline it draws knowledge and concepts of various other streams like sociology, psychology, economics, statistics etc. Management links ideas and concepts of all these disciplines and uses them for good-self of the organization. 4. Management is a group activity. Management is a vital part of group activity. As no individual can satisfy all his needs himself, he unites with his co-workers and work together as an organized group to achieve what he cannot achieve individually. 5. Management is goal oriented: Management is a goal oriented activity. It works to achieve some predetermined objectives or goals which may be economic or social. 6. Dynamic: Management is dynamic in nature i.e. techniques to mange business changes itself over a period of time. 7. System of authority: Authority is power to get the work done by others and compel them to work systematically. Management cannot perform in absence of authority. Authority and responsibility depends upon position of manager in organization.
Functions of Management
The functi functions ons of manage managemen ment, t, viz. viz. planni planning, ng, organiz organizing ing,, staffi staffing, ng, direct directing ing and cont contro roll llin ing g have have alre alread ady y been been refe referr rred ed to in this this chap chapte ter, r, unde underr “Pro “Proce cess ss of Management”. More details of these functions are as follows: 1. Planning. Planning means looking ahead and deciding the future course of action.
It involves suggesting ways and means to achieve the objectives. There may be different ways of achieving the objectives and planning attempts to choose the best out of them. Planning includes forecasting, which is the process of assessing the future. R.C Davis, an early exponent of the management process, has defined planning as “the exercise of creative thinking in the solution of business problems. It involves the determination of the work is to be done, how and where it is to be done, and who shall be responsible.”
2. Organizing. After planning, the next step is to determine and identify the activities
needed to realize realize the plan. These activities activities are divided into different different departments. departments. Then the activities of different departments are undertaken by different groups of individuals. individuals. The relationship relationship of different different departments departments is also defined for effective effective performance by each department. Each of the above activities comes under the domain of organisation. Organisation is both a structure and an administrative process. It is a structure, for it lays down the functions functions and duties to be performed by a group of people for atta attain inin ing g the the obje object ctiv ivee of the the ente enterp rpri rise se.. It is an admi admini nist strat rativ ivee proce process ss,, as it describes describes every position position in the organisation organisation so that each incumbent knows exactly what duties he is to perform and where the boundaries of his activities are. It establishes relationships among different departments and also among different persons in the same department.
3. Staffing. After the organisation has been set up on paper and when the business is
ready to commence operations, staffing must be undertaken. Staffing or manning, as it is called sometimes, involves the regular provision of human resources needed for different positions in an enterprise. It consists of defining manpower needs, interviewing, recruiting, placing, transferring, etc. in a new organization, the top positions are filled first so that these persons can do their own staffing. In a going concern, the staffing function is continuous. The area of staffing as emerged as the area of ‘Personnel Management’.
4. Directing. Direction is a complex function that includes all those activities which
are designed designed to encourage subordinates subordinates to work effectively effectively and efficient efficiently ly in both the short and long run. In other words, “it consist of the process and techniques utilized in issuing instruction and making certain that operations are carried out as originally planned”.
5. Controlling. The technique or the process through which the managers know
whether things produced or actions taken by the subordinates are in conformity with the standards laid down in advance or not, is called control. When a manager exercises control, he observes some acts by means of a report or a chart. He compares that act with a standard and if there is a notable deviation, he instructs the incumbent to minimize future similar deviations. Control, therefore, refers to a syst system em whic which h enab enable less mana manage geme ment nt to know know if the the actu actual al perf perform orman ance ce is in conformity with the plan (Standards). Thus, under the control function, measuring standards or yardsticks are established and communicated to the managers who, in turn turn,, eval evalua uate te the the perf perfor orma manc ncee of the the empl employ oyee ees. s. Cont Contro roll sort sortss out out the the shortcomings in the outcome of any action, and suggests the need for remedial measures. The above functions of management have been described in sequence of its process. There is another important function which requires attention. It is coordination. The managers of all the levels attach equal importance to this function.
PLANNING Meaning of Planning The management of an enterprise determines its objectives and seeks to achieve them by various types of business activities. Before commencing these activities, the management considers various alternative course of action which may help it in achieving the desired objectives and choose the one which is likely to be most suitable for getting the desired results. The act of thinking and determining a course of action, spelt out in detail, is called planning. Let us examine some of the definitions of planning. “Planning is deciding in advance what to do, how to do it, when to do it and who is to do it. It makes possible for things to occur which would not otherwise happen.” “Planning is selecting information and making assumptions regarding the future to formulate activities necessary to achieve organizational objectives.” “Planning is the exercise of creative thinking in the solution of business problems. It involves the determination of what is to be done, how and where it is to be done, and who shall be responsible.
Features of Planning The meaning of planning and its definitions, as given above, reveal its features which may be stated as: 1.
The basic function. Planning is the first function of management. It precedes all other functions. viz., organizing, staffing, directing, and controlling planning determines the objectives and the course of action to be followed. Without objective and course of action, other functions are meaningless. As such planning is the basic function on which the structure of the functions stands.
2. An activity of cognitive domain. Planning relates to cognitive domain. It is a domain of contemplation and thinking. Under planning, the managers think and arrive at the consensus of laying down ways and means to achieve the goal. 3. A continuing activity. Plans need continuous review. With a view to take cognizance of the nature of economics, to keep an equilibrium in changing pattern of demand and supply, involving co-ordination of different function of management and thus to keep the business in perfect running conditions planning is a dynamic concept. 4. Objective-oriented activity. Planning gets inspiration from objective. Koontz and O’ Donnel have stated that “the purpose of every plan and all derivatives plans is to facilitate the accomplishment of enterprise purpose and objectives”. 5. Function of all Managers. Planning is a function which all the managers perform. In other words, it is a pervasive activity. Though the nature and extent of planning may vary from manager to manager. It is an established fact that all managers from general manager down to foreman plan. 6. Efficiency increasing activity. Planning increases efficiency. Planned actions are always better than the non-planned ones. Planning establishes a system which helps in doing the job smoothly and quickly. 7. Choice making activity. There may be different alternatives for finding a solution to a problem. Planning tends to choose the best course of action from the different alternatives. 8. Based on forecasting. Planning follows forecasting. Forecasting is a technique of anticipating facts relating to future. It is an intelligent guess of future. Planning is made on the basis of scientific prediction about the future.
Types of Plans Plans can be classified on the basis of the following categories:
Types of Plans
On the basis of
On the basis of
On the basis of
Corporat e Plans
Function al plans
Shortterm
Longterm
Standin g Plans
Single use
On the Basis of Levels 1.
Corporate Plans - These types of plans are generally made by the top level managers. They cover the whole organisation. These include the setting of objectives, policies and strategies. Corporate plans are based on various factors affecting the organisation and in the basis of availability of resources.
Argenti defines corporate planning as” “a systematic and disciplined study designed to help identify the objectives of any organisation or corporate body, determine and appropriate target, decide upon suitable constraints and devises a practical plan by which the objectives may be achieved.” 2.
Functional plans - These plans are made to cover a particular functional area of the business. These areas may pertain to production, finance, marketing, personnel, etc. a personnel plan, for example, may be that every manager will be attending a training programme, at least once in every three years. A marketing plan may be that goods will be sold only on cash basis.
On the basis of Duration/Time 1.
Long-term Plans - These plans include formulation of overall plans for the whole enterprise. These plans involve decision- making by the top management in solving business problems. Such plans are made for a long duration, i.e., 5 to 10 years or even more.
Long-terms planning are also known as strategic planning as it involves the effect of long-term changes. A long-term production plan may be to switch over to automation from manual production within 5 years. 2.
Short-term Plans - These plans are operational plans which help to accomplish the long-term plans. Such plans are made mainly at the lower levels of management. The duration of these plans is normally one year.
Short-term plans include formulation of programs, rules, methods, budgets, schedules, projects, etc. Short-terms planning are also called tactical planning. Tactical means tactics involving operations of local importance or of brief duration. A long-term plan may be to produce all the components of a product within the factory. Short-term plan may be to buy a component locally as the production of that part is still in process.
On the basis of Usage 1.
Standing Plans - These plans are also know as repeat use plans. Such types of plans are designed in a manner to be used in repetitive situations throughout the enterprise. They provide guidelines to management in solving the recurring problems. Standing plans include the formulation of objectives, goals, policies, procedures, methods, strategies and rules. Standing plans are used over and over again every year.
2.
Single Use Plans - These plans are also known as one time plans. These plans are devised to be used in a particular situation. They are specific plans and non-repetitive in nature. They are made to handle a particular or new situation. Single use plans include budgets, projects, programs and schedules.
Steps in Planning/Process of Planning It is difficult to generalize the planning steps. It is so because different organisations are of different sizes and are producing or dealing in different types of goods and services. The managers of different enterprises may also believe in different philosophies and they may have different value systems. Nevertheless, the following steps of planning may be preferred by much management: 1.
Establishing objective - The first step in planning is to determine ‘objectives’ for the entire enterprise and then for its different departments, sections and individuals. Objectives indicate the end-points of what is to be achieved. They also indicate the area where and how more emphasis should be laid. They make it clear how and where the strategies, policies, rules, etc, will be used.
Main objective of the enterprise gives direction to the sub-objectives of different departments. Departmental objectives give rise to subobjectives of the sections which, in turn, determine the objectives of the individual. Eventually, a hierarchy of objectives is developed. The main objective of the enterprise may be to increase profits. In this case, the objective of the purchases department will be to buy raw materials of desired quality at lower rates. The objective of the production department will be to ensure optimum production. The sales department will try to increase sales and personnel department will employ suitably qualified persons and make suitable arrangements for their training.
2.
Establishing planning Premises - The next step in planning is to establish planning premises. These premises are planning assumptions or the expected environment of plans in operation. They provide important facts and information relating to the future and thus, facilitate the work of planning.
Planning premises can either be tangible or intangible. Premises expressed in terms of quantity are tangible premises. When we say, process are expected to rise to the extent of 15% within the coming two years, this is a tangible premises. Intangible premises cannot be quantified, such as the enterprises’ reputation within the industry, or a possible loss of prestige. While planning a manager should not overlook the intangible premises also. Panning premises can also be differentiated on the basis of controllability. Some premises are controllable, others are semicontrollable, and still others are non-controllable. Policies, rules, programs, etc. are the examples of controllable premises. The firm’s share of market is semi-controllable, because competitors will try to capture the market. Business cycle and population trends are the examples of non-controllable premises. Still another distinction can be made among premises, on the basis of their being: external and internal. Some of the examples of external premises are about the general business climate, government influence, population, planning premises. External planning premises are related to the general business climate and the climate of the particular industry, while the internal planning premises are the firm’s own climate. Readers should be in a position to guess for themselves which premises can be more accurately estimated.
3.
Selecting from the Alternative Courses. As there may be several courses of action, another step of planning is to think of the different alternative courses of doing the task. These different courses are examined and the one which is the most suitable is included in our plan. For selecting the most suitable course of action. Different alternatives are analyzed and compared on the basis of different factors, viz., accessibility, smooth procedures, cost, risk, gain, etc. the techniques of decision-making are applied in order to have the best choice from amongst the different alternatives. There may be situations when it would be difficult to use the best course of action. Therefore, the manager should make a list of alternative plans in order of merit. If the best course is difficult to be applied, the second best should be picked up and so on. This is called ‘Contingency Planning’.
4.
Formulation of Derivative Plans. Once the basic plan is established, it requires some derivative plans for its support. Derivative plans are the supportive plans which are formulated for executing the basic plan. The basic plan may be to increase the sale by sending goods to different areas of city. The derivative plans would be to acquire vehicles, employing and training of different types of personnel, advertising, financing, etc.
5.
Scheduling of different activities. When the basic and derivative plans have been formulated, the next step is to take decisions in respect of scheduling, i.e. the time to be taken for performing the different activities. Before we estimate the time element, it is necessary to sequence the various activities. Sequencing and timing facilitate actual work to be undertaken. Priorities. Activities are fixed and starting and finishing times of all the activities are timings of different activities. Unscientific decisions on these elements are likely to result in the failure of planning.
6.
Budgeting. When the plans have been set, it is necessary to quantify and present them in the form of a budget. There is a budget for the entire enterprise, viz. the master budget which shows the expected profit calculated by deducting the expenses from the income. Further, each department may have its own budget, showing revenue and capital expenditures separately, which tie into the overall budget.
With the help of these budgets, control on actual performance can be exercised. Necessary steps may be taken if differences between budgeted levels and actual levels are material.
7.
Acceptance by the staff . Before the actual process of planning is launched, it is worthwhile to take into confidence different persons who have to execute the plan. Each part of the plan should be shown to and discussed with concerned person. If it is finalized in consultation with him, he will try to implement it wholeheartedly, as he will psychologically feel committed to it, and try to do his best in complying with the obligation. There have been instances where the persons involved in this manner, have suggested valuable changes to make the plans more meaningful.
8.
Follow-up. Planning provides the future course of action. Future is uncertain. One cannot be always sure of getting the expected results. Therefore, there must be provision of follow-up in our system. Sometimes we may have to introduce modifications in our plans to suit the changing circumstances. We must be prepared with the alternative plans if the existing course of action is not working well.
The process of planning is shown in figure: PROCESS OF PLANNING SCHEDULING OBJECTIVES OR GOALS
(What we want to accomplish and
PLANNING PREMISES (What our planning assumptions would
(What would be the sequence of activities and how much time would
BUDGETING (What would be the overall expenditure and income and the expenses of different
SELECTING FROM THE ALTERANTIVE COURSES
TAKING STAFF TO CONFIDENCE
(What are the different courses and which one to select)
(How would the staff be taken into
DERIVATIVE PLANS
FOLLOW-UP
(What would be the supporting
(What would be the procedure to follow-
Planning Premises: A plan is based in certain assumptions called premises. The assumptions or premises are for a future setting or happenings. Premises are made about market conditions, price trends, tax policy, business cycles, government policies, etc. premises represent the plan environment in fact,
planning premises- their choice, evaluation and usefulness- depend upon the abilities of the planner. It may also be noted that all the assumptions are not premises. Some forecasts or expectations are the results of planning process. They are not called premises then. Plans or the resulting forecasts, however, may become premises for other plans. Planning premises relevant to are industry may not be relevant to the other.
Plan Premises
•
Internal Eg: sale Forecast Capital Investment
Controllable
External Tangible Intangible eg: socio- (Quantifiable) (Non-Quantifiable) economic units of goodwill conditions outputs etc. -product Market
Semi-controllable
Uncontrollable
Limitations or Barriers of Planning Planning is a necessary management function. In spite of this fact, there are some limitations of planning. These may, broadly, be divided into two groups as shown in figure:-
Limitations of Barriers of
External Limitation
Internal Limitations
Political Climate
Human Psychology
Labour Unions
Prompt Action Difficult
Technological Changes
Time Constraints
Policies of the Competitors
Rigidity of Policies and Procedures
Natural Calamities
Capital Investment Subordinates’ initiative Expenses involved
External Limitations
External limitations are the results of the external environment. Managers have little or no control over such limitations. Some external limitations have been described below: 1.
Political climate. Political climate, sometimes, puts obstacles in the way of successful planning. When the government regulates the business practices of introduces certain new trade policies, the plans of many enterprises get upset. If the government bans the large-scale industries or restricts their activities in order to promote small-scale industries, the plans of big enterprises would get a setback. When the government decides to make a policy of procuring a certain percentage of sugar from sugar mills to be sold through fair price shops, it affects the plans of the sugar mills. Tax incentives, fair trade policies, etc. significantly affect the plans of various organisations. Managers should keep a watch on the political trends and try to give a flexible touch to their plans.
2.
Labour Unions. Many a time, there is instability in the attitude of the unions which put a limitation on managerial planning. Often, the change in their attitude cannot be foreseen. If they take a rigid stand, the whole planning structure may have to be changed. Even if their demands are fulfilled partially, planning is bound to be affected. The manager should assess the expected demand of the workers and keep in mind the alternatives which he may have to put to use if the circumstances so require.
3.
Technological changes. Technological changes may also upset the plan. Such changes bring about improvements in technology and quality of products and may reduce the cost of production. The costlier and outdated products lose their market. The plan of an enterprise using only technology and producing old-styled products will face a setback. As such, managers should keep their knowledge updated and they should be conscious of the new technologies that are being developed in the field of their business activities.
4.
Policies of the competitions. Sometimes the effective policies of the competitors make the plan ineffective. The planners might have kept in view the principle of demand and supply. They might have produced qualitative goods in accordance with the plans. But their rivals might have surpassed them in the marketing area. The rivals might have convinced the customers and succeeded in selling their products successfully. Therefore, the planners should keep themselves aware of the activities of their competitors to ensure the achievement of their objective.
5.
Natural Calamities. Sometimes plans do not come up to the expectations because of certain natural calamities. Heavy rains, storms, fire, etc. disrupt normal working and cause deviations. Such calamities cannot be avoided but, then, plans may be chalked out in order to minimize the risks.
Internal limitations
Internal limitations are mainly due to lack of expertise and experience on the part of the management, lack of resources and other human factors. Some important internal limitations have been discussed below: 1.
Human Psychology. Human psychology is one of the important internal limitations of planning. The members of an organisation may develop certain beliefs which they can hardly change. Many Indian businessmen would not sell anything on credit to the new customer, howsoever big the order may be.
There is a tendency among many businessmen to stick to the old rigid practices even when their business has considerable expanded. Such attitudes of the businessmen create bottlenecks in the way of effective planning. A manager should be dynamic and should change his outlook with the changing times.
2.
Prompt action difficult. Sometimes sudden emergencies necessitate prompt action. This prompt action may not have been envisaged in the plan. If the plan is to be followed, it would be difficult to take such an action and if it is taken, this may amount to violation of the plan. Whenever such an action is necessary the manager should act within the policies of the enterprise. Whenever possible, the manager should provide for such contingencies in his plan.
3.
Time constraints. Entire planning procedure requires a lot of time. Some businessmen prefer to utilize their time in some other constructive work. To them, planning is not that important that a lot of time should be spent on it. It is not a proper attitude. It has been proved that the time spent in planning is not a “futile exercise”. It is rather an investment, the fruits of which are reaped in future.
4.
Rigidity of policies and procedures. Policies and procedures, baryons doubt, regularize the working of an enterprise. But sometimes, their rigidity hinders smooth working. There should be some scope for deviations in the plan, i.e. the plan should be flexible. There should be some built-in device which may enable the management to adjust itself to changed circumstances.
5.
Capital investment. Capital investment is also an internal limitation. Once the capital is invested in some equipment, future planning is largely governed by the nature of equipment and it may restrict a change in the quality of the product or a change-over from one product to another.
6.
Subordinates’ Initiative Shifted . Workers and junior managers have to follow guidelines provided in the plan. Sometimes, they have the potentialities to show better performance, but in the face of the already laiddown principles and procedures, they do not readily come forward with suggestions. The executives should always encourage new ideas and innovations even if they are not provided for in the plan. Such initiatives are always in the interest of the organisation.
7.
Expenses Involved. Planning involves considerable expense. Lot of information has to be collected to give a final shape to the plan. Surveys are conducted, people are interviewed, investigations are undertaken and the date collected in order to prepare plans. Sometimes, expertise of technicians and other qualified persons is also needed who charge very heavily for their services. But management experts plead that the amount spent on planning should be regarded as investment because planning helps in maximising profits.
The intensity of the foregoing limitations can be reduced by the foresight of the managers. A planning climate should be infused in the organisation and every member should have a positive outlook towards it. Top-level managers should extend their maximum support for the success of the plans. They should involve the subordinates of all levels in the formulation and finalization of the plans. Besides, an input of flexibility should also be applied to planning.
Importance of Planning 1.
Planning provides Direction. Planning is concerned with predetermined course of action. It provides the directions to the efforts of employees. Planning makes clear what employees have to do, how to do etc.
By stating in advance how work has to be done, planning provides direction for action. Employees know in advance in which direction they have to work. This leads to unity of direction also. If there were no planning, employees would be working in different direction and organisation would not be able to achieve its desired goal.
2.
Planning Reduces the risk of uncertainties . Organisations have to face many uncertainties and unexpected situations every day. Planning helps the manager to face the uncertainty because planners try to force the future by making some assumptions regarding future keeping in mind their past experiences and scanning of business environments. The plans are made to overcome such uncertainties. The plans also include unexpected risks such as fire or some other calamities in the organisation. The resources are kept aside in the plan to meet such uncertainties.
3.
Planning reduces over lapping and wasteful activities. The organisational plans are made keeping in mind the requirements of all the departments. The departmental plans are derived from main organisation plan. As a result there will be co-ordination in different departments. On the other hand, if the managers, non-managers and all the employees are following course of action according to plan then there will be integration in the activities. Plans ensure clarity of thoughts and action and work can be carried out smoothly.
4.
Planning promotes innovative ideas. Planning requires high thinking and it is an intellectual process. So, there is a great scope of finding better ideas, better methods and procedures to perform a particular job planning process forces managers to think differently and assume the future conditions. So, it makes the managers innovative and creative.
5.
Planning facilitates decision making. Planning helps the managers to take various decisions. As in planning goals are set in advance and predictions are made for future. These predictions and goals help the manager to take fast decisions.
6.
Planning establishes standard for controlling. Controlling means comparison between planned and actual output and if there is variation between both then find out the reasons for such deviations and taking measures to match the actual output with the planned. But in case there is no planned output then controlling manager will have no base to compare whether the actual output is adequate or not. For example, if the planned output for a week is 100 units and actual output produced by employee is 80 units then the controlling manager must take measures to bring the 80 unit production upto 100 units but if the planned output i.e., 100 units is not given by the planners then finding out whether 80 units production is sufficient or not will be difficult to know. So, the base for comparison in controlling is given by planning function only.
7.
Focuses attention on objectives of the company. Planning function begins with the setting up of the objectives, policies, procedures methods and rules etc. which are made in planning to achieve these objectives only. When employees follow the plan they are leading towards the achievement
of objectives. Through planning, efforts of all the employees are directed towards the achievement of organisational goals and objectives.
8.
Improves efficiency and leads to economical operations. Planning results in systematic and smooth functioning of the company because planning is concerned with the predetermined course of action. The predetermination of action avoids confusion and clashes and wastage of resources. The employees also know in advance what procedures they have to follow. So, no time is wasted in selection. All the systematic working leads to economic and efficient operations.
Organising The word ‘organizing’ is derived from the word ‘organism’ which means an entity. An independent entity consists of many parts, well integrated and interrelated. Their interrelation is governed by their relation to the whole. An organisation is also an entity, its people being its parts, placed at various positions, playing their respective role to achieve the common objectives. In this way, when people in an organisation are placed at various positions according to their competence, each knowing about his/ her authority and responsibility-all this constituted the concept of organizing. Organizing means fuller and optimum utilisation of resources and coordination of human efforts for the attainment of specified objectives. ‘Organizing’ can be interpreted as a structure and as a process.
Delegation is necessary in every organisation but Decentralization is not necessary. Delegation is an essential part of every organisation. No organisation can work without using the concept of delegation as there is no individual who can do all the work himself only. Delegation is a tool to get the work done effectively and efficiently through others whereas decentralization is required when an organisation grows and expands and only top level cannot manage it. Specially, in the present era due to liberalization and globalisation fast decision is needed and quick decisions can be taken through decentralization only as it provides greater flexibility and freedom of action but still many organisations are working with little or no decentralization. It is a matter of choice and preference of top level management and not compulsory.
Principles of Organisation Structures Traditional organisation theorists developed certain principles of organization as guide to thinking in organizing. These principles are intended for universal application to all enterprises and cooperative efforts in different fields. The most important of these principles can be listed under the following heads:
1. Division of labour or Specialization The classicists viewed specialization as the basis of efficiency. A group of individuals can secure better results by having division of work. F.W. tailor applied by breaking down jobs into single repetitive tasks performed on specialized tools. At higher levels, however, grouping jobs into manageable units and their co-ordination can pose serious problems. The principle of specializations has been challenged by the behavioralists and others. Fatigue, monotony and boredom are inevitable the outcome of division of about. While specializations cause great function interdependency among operatives, it also depersonalizes their activities so that individuals find little meaning in the work. Moreover, functional interdependency among work activities causes strains and tensions. Specialization leaves to a different type of problems at the executive level. It tends to segment the organisation into enclaves of authority and influence. Often executives come to regard these domains as their own empires which receive their attention to the neglect of the organizational interest.
2. Consideration of objectives Organisation offers the structure that enables us to accomplish goals. Objectives are helpful in determining the activities and the structure itself. Once objectives are clearly defined, the organizer can conveniently proceed to group activities, delegate authority to individuals to whom activities have been assigned and coordinate their efforts for better results. Since objective have a direct bearing upon the organisation structure, one should take due cognizance of time, and develop and design the structures so as to facilitate accomplishment of objectives. The assumption underlying this principle is that the work firms and means adopted by the organisation are acceptable to the individuals and groups. However, in reality, there is often a divergence between individual needs and organizational goals.
3. The scalar principle The vertical dimension of organization structure consists of levels of authority arranged in a hierarchy from the chide executive at the top to the first-line supervisor at the bottom. Existence of these levels is always the characteristic of organized and
coordinated group efforts. Consider the members of a group formed spontaneously to help push a car out of mud. Someone sees it is desirable to call signals and gives the word at which every one exerts his effort in unison with the others. Clearly a leader has emerged producing a two-level group consisting of the leader at the top and the pushers as follows. In a complex business organisation, the number of levels may be substantially large. The scalar principle holds that organisation consists of two or more levels of authority. The bias idea of this scale is that of grading or distributing a characteristic over a series of demarcated units. In organisations, the levels represent gradations of distributed authority. Each successively lowers down the management hierarchy represents a decreasing amount of authority.
4. The principle of Departmentation Logical grouping of related jobs and functions is quite natural in developing the organisation structure. Departmentation requires analyzing everything that has to be done and determining the grouping in which it can be placed without violating the principle of homogeneity. Thus, financial aspects of the business can well be placed in one section. Departmentation is desirable because individuals vary considerably in the range of activities which their abilities will permit then to perform effectively. Another advantage is that is focuses executive skills on logical and interrelated problems and provides a basis for top management to coordinate and control the efforts of the departments. Departmentation breaks the work into manageable units. Gluck viewed four possible bases of Departmentation-purpose, process, product and place. Choice of basis is a recurring question and changes as the organisation grows, develops or employs a new technology.
5.
The principle of Unity of Command A business organisation must have a single head in whom all authority and responsibility is concentrated, but this has to be blended with the efforts of the organized people below. The single leader is the ultimate source of authority by which conflicts are minimized. Unity of effort, consistency of direction, high morale and effectiveness of coordination depend upon one executive as the locus of ultimate’s responsibility. To subject the person to the authority of more than one immediate superior tends to divide his loyalty and confuse his action.
6. The principle of span of Control The idea of span of control is related to the horizontal dimension of an organisation structure. Span of control (also referred to as the span of supervisions or span of management) refers to the number of subordinates reporting directly to the executive the principle holds that larger the number of subordinates reporting directly to the
executive, the more difficult it tends to be for him to supervise and coordinate them effectively. It is to be admitted that there is a limit to the number of subordinates a manager can effectively supervise, but what should be that limit is yet an open question. In addition to the numbers, two other variables are involved in this principle. The first is the capacity of the higher executive to do his work efficiently, and second is the capacity of the executives to supervise. Since these variables differ considerably from individual to individual, it is hardly justified to lay down any fixed number of subordinates to be supervised by the manager.
7. The principle of flexibility Organisation is created to accomplish certain goals. Both the environment and the individuals comprising the organisation are constantly in flux. To cope with these changes and get reach its objectives and organisation must be designed with sufficient amount of flexibility. A flexible organisation is able to withstand pressures, but gives way to the demand for genuine change without fundamentally altering the basic functions of the various segments of the structure.
8. The principle of balance This principle implies that each area and function of an enterprise should operate with equal effectiveness in making its allotted contribution to the total purpose. Problems of balance arise from the tendency to sub-divide the work into small units. If sub-division is carried too far, the problem of timing, coordination and integrating the work sequences becomes very complex. The idea of balance applies to organisation structures as well as to functions and processes. The growth of business, whether sudden or gradual produces pressures which upsets the organizational balance. And therefore, changes n organization structure should be made after giving full consideration to balance, and by avoiding over-reliance upon and single type of structure. Horizontal and vertical dimensions should be kept in blanked relationship to one another.
9. The exception principle The next very useful fundamental of organisation structure is the exception principle. This principle implies that only problems involving unusual matters should be referred upward and decided by higher level executives; and that reunite problems should be passed on to lower levels and resolved there it. It implies devising a method of control so that only exceptional results are flagged for management attention. This principle is based on the assumption that management at higher echelons of organisation structure has limited time and capacity. And they should devote a larger part of their time and abilities to important matters of planning and policy making.
Exception principle is also the principle underlying delegation of authority. If a subordinate does not make decision on problem falling within the limits of his authority and consumes disproportionate time than his senior, delegation applies at all levels in the organisation structure. By forcing a distinction between programmed decisions and the non-programmed decisions, the exception principle helps the manager to concentrate on un-programmed decisions involving new and unstructured elements.
10.
Principle of Decentralisation
This principle is of great significance in the organisation, especially to large enterprises. There is said to exits decentralization in an organisation if decision making authority is pushed down to its lower levels and near the source of information and action as possible. It is also frequently used to indicate either geographical dispersal or delegation. However, for ducker’s views on decentralization are quite penetrating and interesting. He terms geographical dispersal or delegation as mere “administrative reforms” intended to relieve pressure on top management. Rather, decentralization provides a new ordering principle in which both centre and parts discharge real top management functions. He calls this as the principle of federal decentralization’ which is based on organisation of activities into separate product business with separate markets and production and profits goals for each. These views are in the idea of profit centers as organizational unit consonance with.
11.
Principle of simplicity
The idea of simplicity in organizational structure may at first appear facetious in view of the large size and complex nature of many of our business organisations. Nevertheless, simplicity is an objective of organizational planning. Simplicity is an appealing objective because it implies economy of efforts. This principle in brief states: “it is desirable to consider simplicity of structure in developing and organisation, aiming for as clear-cut structure as will permit doing the necessary work efficiently”. As noted earlier organisation structure is a means, not an end in itself. Thus, the notion of simplicity is identifiable with the convenience with which people- perhaps many having face-to-face personal contracts are able to combine into performing groups.
12.
Combination of line and Staff Functions
Organisation structures are usually of line, staff and functional types. Line structure is part of every organisation. The staff and functional types are modifications of the line
structure. Staff functional structures seldom exeunt apart from a combination with line structure. Line structure consists of vertical relationships with power to command and execute. Staff functions are auxiliary to the line functions and are advisory in nature. On the basis of distinction like this, it is argued that line and staff functions should not be combined in one individual or department where separation of the functions is possible. The reason is that these are basic authority relations, combination of which will result in confusion. The above list of principles of organisation structure is not intended to be complex, nor are these principles meant for application as immutable laws. These principles should be used as mere fundamentals or guides to actions while designing the organisation structure.
Factors Leading to the Formation of a Structure The following factors lead to the formation of an organisation structure: 1.
Activities under a Job . Under this step, an assessment is made of the various activities required to accomplish the organisation objectivities. Then an estimate is made of transferring the various activities into different jobs. This gives an idea of the number of jobs required for the organisation. The activities included in each job are called the job-profits or job-design.
2.
Formation of Departments. After the jobs have been identified, the area place in different departments on the basis of their homogeneous nature. The process of placing different jobs in different departments is called Departmentation. The various departments, thus formed, may be purchased department, production department, marketing department, finance department, accounts department, exit.
3.
Span of control. Jobs of various departments are to be properly supervised. One single departmental head cannot supervise all the jobs in his/her department. Therefore, he/she divides those jobs into workable clusters and puts each cluster under the charge of a subordinate manager or a supervisor. While developing clusters within a department, it is seen how many persons can be supervised by a single senior. The number of persons, being supervised by a senior, is called his/her span of control or span of command or the hierarchy of positions.
4.
Delegation of authority. Once the organisation structure has been developed and the authority and responsibility of each individual has been identified, the smooth functioning of the organisation should take place. Sometimes due to the situational reasons, like increase in demand, the workload of different individuals increases. Under such situation, some of the work of the over burdened seniors may be
transferred to their respective subordinates without disturbing the structure. In doing this, the necessary authority is also passed on to the subordinates along with the additional work. The passing on of such authority along with the additional work is called delegation of authority. More details of such authority are given in the next chapter.
Spam of Management An organisation is characterised by the presence of a number of levels and departments. But more the levels are created, more will be the administrative cost due to additional staff required and more will be the difficulties to be encountered in communication and controlling. If this is so, why create departments and levels? Answer to this question is provided by the principle of span of management. This is basically the problem of deciding the number of subordinates to report directly to each manager. The principle states that there is a limit to the number of subordinates that each manager can effectively supervise. The term “span of management” is often referred to as span of control, span of supervisions, span of responsibility, or span of authority. But the term “span of management” should preferably be used since span is one of management and not merely or control which is just important function of management. The problem of span of management is not a new one. Ever since the dawn or organized co-operation, man has experienced and realized that no individual can deductively supervise and infinite number of subordinates. Because of biological and other limitations, an executive can supervise well only a limited number of subordinates. Time, for instance, sets a real limit to the number of minutes in an hour. It takes time to assign tasks, answer questions, direct subordinates, and coordinates the entire work. If the number of subordinates under the direct supervisions of a manager is continuously increased, he will finally reach a point of little or no time in discharging his duties effectively. Further, when the manager is asked to control a large number of subordinates keeping in view his time span, supervisions will lose much of its quality. Psychologists also point out span of attention as a factor affecting span of management. Similarly, individuals differ in their ability to get along with people and also in the physical and mental energy they possess. Such personality and energy limitations also affect the executive’s span of management, furthermore, no manager is expert in all the things and to that extent he must create limited subordinate positions.
Versus Narrow Spam Spam of management directly affects the number of levels in the organisation. Wider spam of management leads to flat organisation whereas narrow spans of management result in tall organisation structure. The principle of span of management does not by itself resolve the conflict between the advantages to tall organisation and that of a flat one.
Narrow spans lead to many levels in the organisation and thus required a larger number of managers. This, in turn, leads to larger expenses in the form of executive remuneration. Expenses are further increased on account of additional clerical and office staff needed as a result of there being large number of managers. The process of control also gets complicated when there are narrow spans and too many levels in the organisation structure. Another serious problem in having too many levels in the organisation is posed by the practice that communication must flow through proper channels only. The more the levels in the organisation through which the communication must passes, the greater will be the danger of its being misunderstood, misinterpreted or distorted. Since the number of levels through which orders, plans and policies must pass increases, there is also the real damager of subordinates away from the top leadership losing even their desire to understand them properly. If subordinates are allowed to communicate directly, the immediate superior will find himself in the most precarious position of the matter being disposed of without his knowledge or having come to know of the information after being communicated to others. However, the effective solution to thus practical problem lies in encouraging lower level managers to develop cross relationships. Narrow spans also adversely affect employee morale. A subordinated who finds himself submerged at the bottom of the organisation pyramid feels sensitive about the fact that he hears nothing from the top leadership. Moreover, due to such placement he gets very few opportunities to develop self-reliance and initiative and enjoys hardly any feeling of belongingness. All these factors market the employees less enthusiastic in their jobs and greatly reduce their morale. Narrow spans also reduce opportunities for management development. Too many levels hardly allow for delegation of any real authority and greatly limit the supervision to a very few activities at lower levels. The result is that the subordinate is deprived of the benefit of managing a larger number of related activities. Supervision of too many people on the other hand, can also lead to trouble, supervision will become less effective because the manager will not have sufficient time and energy to attend to each of his subordinates. Large number of contacts required may also distract him to the extent of neglecting important questions of policy. The above considerations of narrow and wide spans of management point to the imperative need for a balance. Advantages and disadvantages of these two situations should be carefully examined in terms of tangible as well as intangible factors; and actual span of management should be determined keeping in view the entire pertinent factor in a particular situation and at a given time.
Factor Determining the Spam of Management Theoretical and practical variations in span of management are so wide that one needs help in deciding the number of subordinates to be supervised effectively at each position in the organisation structure. Time and attention required; and personal abilities and influences are some of the factors having a bearing on the number of subordinates that can be effectively supervised by a manager. But a host of the factors go a long way in determining what spans are feasible in a given situation.
1. Time Required to be Spent on Supervision Every manager spends part of his time in doing the job personally. Thus, the sales manger must devote part of his time in contacting customers. Besides, every manager must also be busy for part of his time with administrative job of planning and policy-making not directly related to guiding the subordinates. Evidently the time left can be spent on supervising the work of subordinates. The more is the time required to be devoted to processes other than supervision, the narrower should be the span of management for such an administrative position.
2. Subordinate Training A well trained subordinate is able to do his job quite successfully. Consequently the frequency and severity of superior-subordinate relation stands greatly reduced. Thus, a manager dealing with trained subordinates can afford to supervise a large number of them and operate with a wider span. But training becomes more and more difficult as one goes up the echelons of management hierarchy. At lower levels, it is much easier to identify the areas of training and develop suitable techniques for imparting it. At higher levels, on the other hand, it is difficult to discover what to teach and how to teach. Moreover, while relying upon ability and training of the subordinates as a factor influencing span of management, it should be remembered that training is a continuous process.
3. Delegation of Authority In an enterprise which is effectively organized and structured, management is able to influence and minimize the frequency and severity of superior-subordinate relationships and thus increase its span. An organisation poorly conceived consumer disproportionate time of the manager in counseling and guiding the subordinates. An important symptom of inefficient organisation influencing span of management is to be found in ambiguous or inadequate delegation of authority. If a subordinate is not clear what he is expected to do or is called upon to do something beyond the scope of his authority, he will make more demand on the senior manager and hence operate to reduce his span. Where subordinates are delegated with authority sufficient to carry out the assigned duties and their authorities are clearly defined, i.e., well-trained subordinates would considerably reduce the time and attention of the senior and thus help to increase his span.
4. Degree of Decentralization If a manger is to make many of the decisions himself, he will have less time to spare for supervising the work of his subordinates and hence operate with a narrow span. On the other hand, an executive operating under decentralized set-up is relieved of much of the burden of making programmed decisions and can afforded to supervise relatively a larger number of subordinates.
5. Similarity of functions Supervised Similarity or variety of function to be supervised by the manager also influences his span of supervisions. Here the executive manages similar functions (which are perhaps repetitive also). He becomes well versed with jobs and can handle a larger number of subordinates. On the contrary, activities and functions with a degree of variability and probably more complex in nature, increase inter-relationships and consumer more time of the executive to dispose them of and thus, warrant a fewer number of persons to be handled by the supervisor. The top level manager needs to work linger with each of his subordinates than the first line supervisor whim largely handles the routine problems.
6. Planning required of the supervisor. This factor refers to the importance, complexity and time to be spent by the executive in reviewing the objectives, programming the actions and deciding number of policy matters. As the importance, complexity and time required of the manager in performing his planning function increases, it will be more prudent to reduce the number of subordinates reporting to him. However, availability of staff assistance and requirement to plan periodically and not on continuing basis will alter the position.
7. Use of objective standards Supervising the subordinates requires that management must know how far plans are being followed and to what extent their performance tends to deviate from plans. He can know the deviations either by personal observation or through use of objective standards. In the latter case manager is saved of may time-consuming relationships and can concentrate on points of strategic importance, thus widening his span of supervision.
8. Territorial contiguity of functions Supervised Where functions are geographically separated, supervision of components and personnel becomes more difficult and time-consuming. The manager must spend considerable time in visiting the separate units and make use of more time consuming formal means of communication. Geographic contiguity of functions supervises by the manager, therefore, operates to reduce his span of control.
9. Availability of Staff Assistance Staff activities are not uncommon in business enterprises. When an organizations equipped with staff services, subordinates as a result, gain much of their guidance on methods, schedules and personnel problems from staff experts and thus, require fewer contracts with line managers, it is only when the staff fails to turn the show smoothly that
the manager normally gets involved. Provision of staff assistance thus helps the executive to supervise a large number subordinates.
Authority and Responsibility An important principle of management is that authority should match responsibility, i.e. authority should be equal to responsibility. For example, if a man is made responsible for the performance of a particular task, he should be given sufficient authority to carry out his duties. The ideal situation will be that where authority and responsibility are equal, because inequality between the two may produce undesirable results. Where authority exceeds responsibility, the former may be misused by the person concerned. On the other hand, the person, who accepts responsibility without being provided with adequate authority to carry out his duties, may be placed in a very embarrassing situation. Hodge and Johnson have rightly remarked-“if organisational efficiency and morale are to be optimal, responsibility and authority must be in balance; no individual should be given more authority that is necessary to discharge his responsibilities and, on the other hand, no individual should be asked to assume an obligation without receiving a commensurate amount of authority to discharge that obligation.”
Accountability According to Oxford English Dictionary, the word ‘responsibility’ has the synonym ‘accountability’ but the word ‘accountability’ has been used in the sense of a condition in which a person is bound to report or render an account to another. Different writers on management have supported this meaning. In the words of McFarland, “accountability refers to the fact that each performer who is given authority and responsibility must recognize that the executive above him will judge the quality of his performance.” In simple words, accountability means the obligation of an individual to report formally to his superior about the work he has done to discharge his responsibility. It should be remembered here that responsibility and accountability go hand in hand because the latter arises out of the former. Accountability will be discharged in hand because the latter arises out of the former. Accountability will be discharged if the subordinate gives a full report to his senior about his performance in relation to the work assigned to him. It is immaterial whether he reports success of failure in the work attempted by him.
Difference between Authority, Responsibility and Accountability Basis
1.Concept
Authority
Responsibility
Accountability
It is a right to take It is an obligation to It is answerability decision and given perform the on account of command. assigned task. performance.
2.Origin
It arises from contract or from formal position.
3.Delegatio It can be delegated. n
4.Flow
It always downward superior subordinate.
flows from to
It can be withdrawn by a notice. 5.Withdraw al
It arises from the It arises from the responsibility. delegation of authority. It cannot be delegated at all. It cannot be fully delegated. It flows upward from It flows upward subordinated to from subordinate to superior. superior. It cannot be withdrawn. It cannot be so withdrawn.
Delegation of Authority The following features emerge from the meaning of delegation of authority given above: 1. Parting with Part of the Authority. Under delegation of authority, the delegator
gives pat of his own authority to a delegate selected by him. The delegate acts within the limits laid down by his senior.
2. Delegator Retains the Authority. Even after the authority has been passed on to a
delegate, the delegator still retains it. It is so, because he continues to be responsible for the authority he has given to the delegate.
3. Not a permanent Phenomenon. Delegator may not part with his authority forever. In
fact, he keeps a watch on the performance of the delegate. Authority can be taken back from him if he does not use it properly.
4. Delegator’s Accountability Continues. The delegator continued to be accountable to
his seniors for the authority he has delegated to the subordinates.
5. Specific or general delegation. Delegation of authority is specific when guidelines
for accomplishing the objectives have been explicitly prescribed. It is general, when only broad instructions have been given to do the work.
ELEMENTS OF PROCESS OF DELEGATION Following are the four elements in the process of delegation of authority: 1. Determination of the Outcomes. The delegator, before deciding whom to delegate
the authority, should determine the expected outcome he is interested in. then he should examine who is the suitable subordinate for doing that work. Thus, under the first step the desired outcome should be matched with the required competence of subordinate.
2. Assignment of Duties. After determining the outcomes and identifying a suitable
subordinate, duties are assigned to him. In order to make that delegation effective, it is necessary that the expected outcomes and procedures of doing the work are thoroughly discussed with the delegate.
3. Granting of Authority. The person, to whom duties assigned, should be granted
matching authority to carry them out. In other words, he should be given complete freedom to take all such actions which are necessary to perform the duties assigned to him.
4. Accountability. Once the duties are assigned to the subordinate, he becomes
answerable to his superior for the satisfactory performance of those duties. By accepting the assigned tasks, the subordinate is under and obligation to report back t his superior (the person who delegated authority) that the task has been accomplished satisfactorily. It should however, be remembered that delegator is also accountable to his seniors for the compliance of the task given to his subordinate.
Process of Determination of the
Assignment of Duties
Granting of Authority
Accountability
Centralization Centralisation refers to concentration of power or authority in few hands i.e., top level. An organisation is centralized when the decision-making authority is in the hands of top level management only.
Decentralisation of Authority The term ‘decentralisation of authority’ is closely related to delegation of authority. By decentralisation we mean dispersal of decision-making authority at various levels in the organisation. In a centralized set-up, decision-making authority is concentrated at the top-level of the management, whereas in the decentralized set-up, many important decisions are made at the lower level also. The most significant feature of decentralisation of authority is that most of the decisions made at the lower level do not need approval of the seniors. This means greater freedom is given in decision-making to lower level managers and supervisors in the organisation.
Factors Determining the Degree of Decentralisation Although the extent of authority delegation largely depends on the attitude and temperament of individual managers, yet many other factors also affect it. Some such factors of overwhelming preponderance may be explained as following: 1.
Importance and significance of the decision: Once of the important factors determining the degree of decentralisation of authority is costliness of the decision. Normally, decisions which are costly in terms of money value involved or in terms of factors like goodwill and image of the establishment, employee morale or motivation tend to be centralized at the upper levels of management. In other words, it is very rare that authority for crucial decisions is delegated. Of course, the practice is not based on the assumption that people at the higher level in the managerial hierarchy do not make mistakes. It is believed, however, that higher level executives commit fewer mistakes since they are well-trained and experienced; and in possession of adequate information necessary to arrive at the decision. In fact, it is observed from the mode of managerial behavior that the determining factor to centralisation of authority with regard to specific area or areas is the weight of responsibility since authority delegation does not implicate responsibility delegation.
2.
Size of the enterprise: another pertinent factor determining of decentralisation is largely the size of the organisation. There is no denying the fact that larger the firm, the more the decisions to be made inviting number of departments and levels, the harder it is to coordinate them. Moreover, a number of executives and specialists need to be consulted in big establishments. In essence, decisions are often being delayed though delayed decisions cost much.
Diseconomies of larger size may be greatly reduced by organising the enterprises into a number of decentralized units resulting in economy and efficiency. Of course, exactness of the size, till now, is a controversial matter, nothing in particular or the categorically can be prescribed. But it is to be appreciated in all circumstance that the size of each individual unit should be so determined that departments or units are easily manageable with authority considerably decentralized.
3.
Management attitude and philosophy: decentralisation is largely a question of character of top executives and their attitude. It may be noted that outlook and attitude of top management is, undoubtedly, a significant determinant of the extent and mode of authority dispersal. It is certain that an executive with traditional rigid outlook hardly contemplates delegating substantial authority. On the other hand, people with rational managerial temperament believe and want to rely upon participative approach of doing the work and are anxious to take maximum opportunity of individual initiative in the organisation, opt for decentralisation.
4.
Control techniques: another related factor determining the degree of decentralisation is the magnitude of desire to obtain uniform policy with regard to such vital factors as price of a product, service, delivery, credit, etc., which can best be practiced by centralized authority. And there is no denying the fact that such a standing belief deters them from delegating authority to others-even to executives of regional offices.
Of course, the internal advantage of uniform policy cannot be undermined altogether. But, in the same event, costs involved to centralize decisions must also be taken into account. It is further to be appreciated that centralisation is likely to arrest individual initiative, dampening future growth of managerial personnel from within the organisation.
5.
Availability of capable executive: nevertheless, availability of capable executive substantially determines the nature and extent of dispersal of authority. It is not uncommon that top executives willing to delegate authority and themselves handicapped in that respect for want of capable and qualified subordinates. Obviously, the key to safe decentralisation is adequate training of subordinates and make them able to shoulder higher responsibility effectively. And perhaps it would be interesting to note that decentralisation provides possible opportunities to impart the training required.
6.
Environment Influences: so far the determinants of the extent of decentralisation that have been analyzed belong to the interior of the firm. But certain external forces are also significant in demining to mode of decentralizing authority. There should not be any controversy over the fact that forces like government controls, national unions, fiscal policy of the government, government purchases, etc., to a considerable length determine and mould the extent and nature of decentralisation of an organisation.
In fact, these forces on many occasions deter the management of an enterprise to delegate authority down the echelon since many aspects of the functioning are virtually controlled by such echelon since many aspects of the functioning are virtually controlled by such external forces. Say for example, when raw material is subject to government allocation, the extent of authority that can be given to purchasing and factory managers is really a point of argument. Likewise, if pricing of any product is subject to regulation, hardly any authority could be given to sales manager to exercise and assert.
Basis 1. Concept
2. Purpose
Delegation
Decentralisation
Delegation of authority means to Decentralisation of authority pass on decision-makingmeans to disperse the decisionauthority and freedom to a making authority at various levels subordinate to do some specific in the organisation. task. The purpose of decentralization of The purpose of delegation of authority is to disperse the authority is to share the burden authority to different managers of a senior or to pass on some working at the same level so that authority to a subordinate to they can do the work
make his work wholesome.
3. Number Persons Involved.
of
4. Nature Control.
of
5. Withdrawal Authority.
of
independently reference to seniors for guidance.
without any their immediate instruction and
In delegation of authority only In decentralisation of authority two persons are involved, viz, two groups are involved-top level the senior and the subordinate. management and the lower level managers of a particular level. In delegation of authority, the delegator keeps a watch on the activities of his delegate and sees that the latter does the work as per instruction.
Under decentralisation, the toplevel management keeps a general watch on the activities of the subordinates to whom the authority has been given.
The authority delegated can be The authority, once decentralized, taken back if delegate is not is generally not withdrawn. doing the work properly.
6. Dependence. Delegation of authority can take Decentralisation cannot take place place without decentralisation of without delegation of authority. authority. 7. Status. Delegation is just an act or a process through which a senior shares his authority with a subordinate.
Decentralisation is a philosophy under which top management disperses the authority at lower management levels so that they assume higher management responsibilities.
8. Scope. Delegation has narrow scope, as It has wider scope, as it is it is between a superior and his/ extension of delegation to the low her subordinates. level of management.
STAFFING DEFINITION OF STAFFING After planning & organising the next function of management is to perform staffing function. Through staffing function managers fill the jobs created by organising function. Staffing consist of manpower planning, recruitment, selection, training, compensation, promotion & maintenance of managerial personnel “The managerial function of staffing involves manning the organisational structure through proper & effective selection, appraisal & development of personnel to fill the roles designed into the structure”: - Koontz and O’Donnell
NEED AND IMPORTANCE OF STAFFING How can the enterprise objectives be achieved if competent persons are not appointed in the organisation? What would be the fate of an organisation that is indifferent to the training requirements of its personnel? How will the managers and operators feel if they are not duly compensated for their sacrifices for the organisation? Will the morals of the people not come down, if nobody in the organisation looks after their welfare? The answers to these questions reveal the need and importance of staffing. The need and importance of staffing as a function of management can be assessed by the following benefits that this function provides; 1.
Providing Suitable Personnel. Staffing involves manning the organisation structure through proper recruitment and selection processes. The staffing team develops employment tests and tools and holds different types of interviews. It arranges to reject the unsuitable candidates and helps in selecting the suitable ones for various posts in the organisation. Thus shows that a goods and strong staffing team is a necessary requirement of enterprise, as a weak staffing department may allow the infiltration of incompetent persons in the organisation.
2.
Keeping pace with New Developments. It is necessary for an organisation to keep in touch with the technological developments and innovations. Any enterprise indifferent to such developments will lag behind and never be able to catch up with competitors. Staffing department ensures that through the processor of training and retraining all personnel in the organisation keep themselves abreast of the latest techniques of doing the management and operational work.
3.
Compensation. People working in an organization will feel satisfied if they are duly compensated for the efforts they put in their organisation. The staffing applies the various appraisal and job evaluation techniques and measures the competence of individuals and the worth of different jobs. Thus, an attempt is made to recognize the competence of individuals so that they may be compensated appropriately.
4.
Maintaining Human Resources. The persons selected for an organisation should be willing to work for a pretty long period. Many organisations fail because of rapid turnovers problems. It is, therefore, necessary that the morale of people remains high throughout their stay in the organisation. They feel satisfied if their housing, transport, health and other requirements are properly taken care of. People feel attached to organisation where such facilities are given.
5.
Job satisfaction. The staffing department should look after the job satisfaction of the people of its organisation. Job satisfaction may be provided by involving people in formulating the objectives and decisionmaking, by placing suitable parsons at suitable jobs, by the techniques of job enlargement and job enrichment. Job enlargement means adding more activities to the existing jobs. Job enrichment means given more autonomy to the jobholders to do the job as they deem fit.
6.
Utilisation of human Resources. Staffing function tries to optimise the utilisation of human resources. It avoids both the over and under manning. It properly finds out the requirement of human resources in the organisation and utilizes it to the fullest.
7.
Sharpening other functions. Staffing function is instrumental in improving the effectiveness of other managerial functions. It fills up all the posts and the people selected through this function keep the organisation going. If the people selected through staffing are competent, they do the other manger function effectively.
STAFFING VS HUMAN RESOURCE MANAGEMENT (HRM) The term staffing is being gradually subsumed in the broader concept of HRM. The later thinking is that staffing function continuers till the suitable candidates have been selected and placed in the organisation. The remaining functions Viz., training and development, salary-administration, retention of employees, etc. along with staffing are undertaken in HRM.
STAFFING AS PART OF RESOURCE MANAGEMENT
HUMAN
Human resource Management (HRM) is a broad concept, whereas staffing is a part of it. HRM is the art of procuring, developing and maintaining suitable persons to achieve the goals of an organisation in an effective way. It is the way of optimizing human competence at the workplace so that the goals of an organisation are accomplished effectively. According to Ivancevich and Glueck, “HRM is convened with the most effective use of people to achieve organisational and individual goals. It is a way of managing people at work, so that they give their best to the organisation.” According to Decenzo and Robbins, HRM consists of four basic functions: (i) Staffing, (ii) training and development, (iii) motivation and (iv) maintenance. This clearly shows that staffing is a part of HRM. Meaning of staffing has already been discussed in this chapter. Staffing mainly includes an estimate of completed, the staffing function will be considered to have been completed, though it tends to be of continuous nature. The second has of HRM, viz. training and development includes employee training, employee development, career development and organisational development. Under employee training, an attempt is made to improve the competence at the current job of the employee. Employee development aims at improving the competence of an employee for the future position that the employee is likely to get within the organisation. Career
development takes place by employee’s own initiative. For this, organisation provides opportunities so that employees may develop themselves for their career goals. The purpose of organisation development is to change the attitudes and values of employees according to new organisational strategic directions. The third component of HRM is ‘Motivation’. Employees feel motivated if they are placed at job limited with their attitude and aptitude. They will further feel motivated if HRM looks after their welfare. The maintenance function is the last component of HRM. The purpose of this function is to assign such activities to the employees that will inspire them to continue working in the same organisation. To enable the employees to continue in the same organisation with contentment, Micco writes-“HRM must work to ensure that the working environment is safe and healthy; caring for employees’ well-being has a major effect on their commitment. HRM must also realize that any problem, an employee faces in his or her personal life will ultimately be brought into the workplace. Employee’s assistance programs, such as programs that help individuals deal with successful life situations, are needed. Such programs provide many benefits to the organisation while simultaneously helping the affected employee.” Besides protecting employees’ welfare, a sound system of communication also keeps the employees in good stead.
Evolution of HRM
Personnel management has been transformed into HRM. The history of personnel management begins around the end of the 19th century, when welfare officers came into being. Their creation was a reaction to the harshness of industrial conditions, the influence of trade unions and the labour movement. The importance of personnel management increased during the World wars-first and the second. HRM write-ups started appearing in American and British journals during 1970s. But the modern view of HRM gained prominence in 1981 when it was introduced in the MBA COURSE AT Harvard Business School. Today, the HRM approach is being taught and practiced in many parts of the world, including India. HRM, mow is being substituted with a new concept-Human Capital Management. HCM is considered superior to HRM. It attaches more
importance to individuals as assets of the organisation. It deals with motivational factors, like system and culture, values and behaviors, etc., while HRM deals with ‘hygiene factors;. Like fair pay, reasonable benefits, clean and safe working conditions.
STAFFING PROCESS Staffing means manning of an organisation, Staffing process involves determination of manpower requirements, recruitment, selection, placement, training, development, job transfer and appraisal of personnel to fill the various positions in an organisation. Let us discuss these steps briefly:
Staffing Process
Manpower Planning Recruitment Selection Placement and Training and
1. Manpower Planning. The staffing function starts with the manpower planning. This
means to assess precisely how many persons are required for the various positions in the organisation, how many persons does the organisation already haves and how many more will have to be appointed. The staffing also ensures that the right kind of people is to be placed at the right job. Manpower planning is also known as Human Resource Planning. Beach has defined it as “ a process of determining and assuring that the organisation will have an adequate number of qualified persons, at the proper times, performing jobs which meet the needs of the enterprise and which provide satisfaction for the individuals involved.”
2. Recruitment. The second step in the process of staffing is recruitment. After the
manpower requirements have been assessed, the function of recruitment starts. It means to search the prospective candidates to be considered for employment. “Recruitment”, according to Fippo, “is the process of searching for prospective
employees and stimulating them to apply for jobs in the organisation.” This implies that recruitment examines the different sources of manpower supply, assesses their suitability, chooses the proper source or sources and invites applications from the prospective candidate for different jobs in the enterprises.
3. Selection. After the job-application of the prospective candidate has been received, the
next step is to select from among them the most suitable ones. Selection is the process through which unsuitable candidate are rejected and the suitable ones are chosen. Koonlz and Weinrich write- “selection is the process of choosing from among candidates, from within the organisation pr from outside, the most suitable person for the current position or for future positions.”
4. Placement and induction. After the selection process is complete, the selected
candidates are placed at jobs for which they are most suitable. Placement is the actual posting of an employee to a particular job. The implied that specific position or rank is assigned at that stage. Placement taken place along with induction, Induction means to orientate the newly appointed employee to his job in particular and to the whole organisation in general. It here means, to introduce the newly selected employee to his hob, other jobs, nature of products, policies, rules, etc. of the organisation. The purpose of induction or orientation of the newly appointed employee should be to: (i)
Give him a bird’s eye view of the organisation;
(ii)
Familiarize him with the important spots of the organisation;
(iii)
Apprise him of the expectations from him; and
(iv)
Ensure him that he will get full support for the constructive purposes.
5. Training and Development. In the narrow sense, training and development lie
outside the purview of ‘staffing, but some authors prefer to include it in the steps of staffing. The Term ‘Training’ connotes a systematic procedure of imparting technical knowledge and skill for specific jobs. It enables employees to take up the desired jobs effectively. Training is given manly on three occasions. These are; •
When the new employees are hired;
•
When employees are put on new jobs; and
•
When some innovations have emerged and it is though worthwhile to use new techniques for doing a job.
The nature of some jobs is such that it does not require reorientation, viz., and blacksmithing. On the other hand, there are jobs which require constant training. Engineering graduated in varied fields, for example, need refresher courses in view of new developments taking place frequently. The term ‘training’ is usually used for improving the skills of rank and file. Development, on the other hand, is an educational process aimed at growth and maturity of managerial personnel. Development enables the managers to acquire and strengthen their administrative competencies.
Sources of Recruitment It has already been stead that “Recruitment is the process of searching prospective candidate for the organisation”. These candidates are searched through the internal and external sources. These have been explained below: Sources of
Internal
External
Promotion
Recommendations of the Present and Ex-employees
Transfer
Advertisements
Demotion
Employment Exchanges Direct Applicants at the gate or by Mail Badli Workers or Temporary Workers Educational and Training Institutes Labour Contractors and Jobbers Consultancy Firms Union and Provincial Public Service Commission Job websites
Internal Sources These are the sources through which recruitment takes place from within the organisation. When a post falls vacant or a new post is created, someone from the existing employees is promoted or selected or transferred or even demoted.
Thus, promotions, transfers and demotions are internal sources recruitment. A promotion is the transfer of an employee to a higher post carrying a better status and higher wages. Transfers may take place on the following three occasions. 1.
When a post falls vacant, that suitable person from within the organisation is transferred or posted at the place.
2. Sometimes there are mutual transfers. Such transfers take place for the mutual convenience of the employees. 3. When a person feels mal-adjusted at his post, he is transferred to a post for which he may prove more useful for the organisation and another suitable person is posted in his place. A demotion is the transfer of an employee to a junior post. It takes place when the employee is either inefficient or some charge of misconduct or corruption are established against him.
Merits of internal Sources Recruitment from within the organisation has the following advantages: 1.
Familiarity with the Policies. Many companies feel that filling the jobs from its internal sources is the best practice because the internal candidates are well familiar with the policies of the enterprise. Management does not have to exert in familiarizing then with the rules. Policies, etc. of the company.
2.
No need of References. The organisation knows the abilities and loyalties of its employees. It does not require anybody’s reference about their ability, integrity and moral character.
3.
Employees’ Morale. Promotion from with enhances employees’ morale. The policy of internal promotions makes then enthusiastic and optimistic. Claude S. George has rightly remarked, “filling of vacancies and promoting employees from within are also positive morale builders”.
4.
Upgrading of Several Employees. When a certain person promoted several other persons below his rank are automatically promoted. If, for example, a works manager is promoted as production manager, a foreman will get a chance to become the works manager and a qualified worker may be promoted as the foreman. In this way, one vacancy filled from within results in upgrading several employees. In such a case, only an unskilled worker will be taken from outside for the opening left at the bottom.
5.
Economical. Recruitment from within the organisation is economical in the sense that employers do not have to spend on the external sources of recruitment like incurring expenses on advertisements, contractors, etc. internal recruitment is economical from the viewpoint of the time also. If a requisition is sent to the employment exchange for supplying proper names of intending candidates, it will take a prettily long time. Again time will be required in administering various tests and interviews of the candidates. The time consuming process can be avoided if the recruitment is made from within the organisation.
6.
Departmental Transfers. There may be some departments having surplus staff and some others having shortage of staff. Transfer has the benefit of adjustment, i.e. the surplus staff may be transferred to the department which is under staffed.
Limitations of internal sources In spite of the above merits, recruitment from within the organisation suffers from the following defects: 1.
Outside deserving Candidate Deprived. The major drawback of this source is that the enterprise may be deprived of intelligent candidate from outside, with new ideas and initiative to take up challenging jobs.
2.
Unsuitable Persons may be promoted. Sometimes unsuitable persons are promoted simply because they are working in the organisation. They use their influence to get promotions. Sometimes their union persons are promoted simply because they are working in the organisation. They use their influence to get promotions. Sometimes their unions interfere and pressurize the employers to make promotions from within the orgainsation without giving any importance to merit of the candidates.
3.
Not a Complete Solution. Internal recruitment does not solve the problem there is a chain of promotions of his juniors, thus resulting in a vacant post at the bottom. For this post, the management will have to knock the doors of external sources.
4.
Not Suitable for New Enterprises. A new organisation cannot use internal sources of recruitment. So it has limited scope.
5.
Spirit of Competition Hampered . Internal candidate do not have to face the outside competition. Therefore, they do not put in the desired efforts for updating their knowledge, necessary for the new jobs.
External Sources Recruitment may be made from external sources also. These source provide the prospective candidate from outside the organisation. Some important external sources are: 1.
Recommendations of the Present and Ex-employees. Sometimes the existing and ex-employees are requested to recommend suitable candidate for various posts in the organisation. This practice is usually followed in private near relatives of the employees would be given preference in appointments if they possess the necessary qualifications.
The employees feel elevated when they are contracted for recommending the names for recruitment. They find and opportunity to please their relatives and friends who are looking for a job. The trouble arises where the employees recommend less qualified or inefficient persons. Such persons not only prove harmful for the enterprise but they also bring down the reputation of the employees on whose recommendation they are recruited. When many persons infiltrate through the like-minded employees of an organisation, they become birds of the same flock and may revolt against the management. 2.
Advertisements. Advertising is an important external source of recruitment. The employers get their requirements published in the newspapers. The Employment News’, a weekly, is solely meant for this purpose. The prospective candidates go through such advertisements and apply for the posts which suit their requirements. This is a convenient method and the employers do not have to spend huge amounts on advertisements. Through this medium, the employers may get many applications to make selection of suitable candidate of their choice. Some people do not favor this source. They feel that it is time consuming source. Moreover, sorting out suitable candidate from a large number of applicants is a big problem. Some applicants give wrong particulars of their qualification and experience and thus, manager to get interview calls. In this way, they waste the time of management as well as their own.
3.
Employment Exchanges. These enroll those persons who are in need of jobs. Employers may approach these exchanges for the purpose of recruitment. The unemployed or those who are not satisfied with their existing jobs may get their names, along with their bio-data, registered with the employment exchange. Their named are recommended by the exchange whenever there is a requisition from an employer, recruitment through
employment exchange is economical. Employers are required to send a latter only to the employment exchange and on the basis of this letter the names of the job sealers are sent to them. Employment exchanges, generally, have the names of many persons with varied qualifications. It is easy for them to supply the candidate according to the employers’ requirements. When the names are invited from the employment exchanges, there are less chances of favoritism or nepotism. However, this source suffers from a few drawbacks also. It is difficult to get meritorious people through this source because such people find it quite inconvenient to get themselves registered with the employment exchange. Long queues at the exchange are very troublesome. Those on rolls of employment exchange have to visit it visit it after specified periods regularly for deleted from the list of prospective candidates. 4.
Direct Applicants at the gate or by Mail. Sometimes the employers put up a notice board at the factory’s gate showing the details of persons required by them. The candidates, after reading such notices, contact the personnel officer and may be appointed if they are found suitable for the job. Sometimes, the job seekers contact the personnel officer on their own and enquire if they could get a change in the enterprise. In some cases, the candidates just take a chance and send applications without waiting for an advertisement. The employers may invite them for tests and interview, if there is a vacancy, otherwise such applications may be preserved and as and when a post falls vacant or a new post is created, the use of such applications may be made.
This type of external source is most economical. Under this source, employees are recruited without any exertion on the part of management. At the same time, the workers recruited through this source, do not demand high wages. This source can be advantageously used whenever there is more work in the factory or when some employees are on leave. Such ad hoc appointments are not a permanent charge on the organisation. This source is employee-sponsored. The employer cannot always depend upon this source. Moreover, efficient workers are seldom procured through this source. 5.
Badly Workers or Temporary Workers. Closely related to the above source is another source know as badly workers or temporary workers. Such workers are given temporary jobs when the regular employees go on leave or when they are deputed somewhere else. Some concerns keep a list of such workers. Whenever need arises, such persons can be called. The employers keep a watch on the skills of such temporary employees. Those,
who are suitable, may be absorbed on regular basis whenever it is possible to do so. Badli workers prove useful in the hour of need. With their help and cooperation, the work of the enterprise is not disrupted. They are also not a fixed charge on the organisation and prove very economical for it. The disadvantage of this source is the uncertainty of the availability of workers. Moreover, their performance is also not upto the mark. 6.
Educational and Training Institutes . Some employers contract colleges and technical institutes for recruiting qualified and trained personnel. Such contracts are either made by personal visits or through correspondence. The company requiring employees sends the specification to the concerned institutions and interested candidates may apply, if they possess the necessary qualifications.
Through this source, the management gets qualified persons for the vacant posts. The young candidates do not have to wait for a long time for employment. The major defect of this source is that the qualified unemployed persons, who are not on rolls of the institutes. Do not get such a chance. 7.
Labour Contractors and jobbers. They are those persons who on the one hand’ have links with the establishments and the other, they have close contracts with workforce and supply the required number of workers on commission basis. Labour contractors and jobbers provide a large number of workers at a short notice. The workers, under this source, so not have a regular source of income. Sometimes they are exploited by contractors.
8.
Consultancy Firms. These days some specialised consultancy firm are coming up which provide technical and qualified personnel to the needy employers. They generally charge commission from both employer and the employees. There are some firms which help in recruiting persons for the enterprises situated in foreign countries. Enterprises get suitable persons though consultancy firm but recruitment through this source is quite costly.
9.
Union and Provincial Public Service Commissions. Some posts in public sector are filled at the recommendation of these commissions. The commissions administer competitive tests and select suitable persons. Some key posts are filled on the basis of interview only. These commissions help in recruiting and selecting people in an objective ways. websites. Jobs can be procured through internet. Job websites have become a common source for the job seekers and job providers. These are job providers and job seekers both approach the websites, the former
10. Job
submitting their requirements and the latter submitting their bio-dates. The websites. Like employment exchange, help both the parties. Some wellknown job websites are naulri.com, monster. Com shine. Com, jobsahead.com, jobstreet.com, clickjobs.com, Timesjobs.com, etc.
Merits of External Sources
External sources of recruitment extend the following advantages: 1.
Wide Choice. External sources can manage many applicants for recruitment. This much choice may not be able under internal sources. So, the likelihood is the better employees can be selected through external sources.
2.
Source of Livelihood. These sources are means of livelihood for many people. Newspapers publish advertisements for employers. Consultancy firms earn a good deal of money in doing the recruitment services. Similarly, may more people are employed in different external sources.
3.
Procuring Highly Qualified people. Sometimes, some organisations require highly qualified people for reaching greater heights. The required people may not be available internally. But they can succeed in getting the desired personnel through external sources.
4.
Meeting the increased Needs. Sometimes the internal sources are not adequate to meet the increasing needs of the enterprise due to the expansion and diversification of the business. In such a case, external sources provided the required manpower needs.
5.
Competitive Spirit . The existing employed of an organisation will keep their job knowledge updated if the know that the people can be recruited from outside also. Thus, external sources keep their competitive spirit alive.
Limitations of External sources
The following limitations may arise if the candidates are recruited form external sources: 1.
Resentment in Existing Staff. When employees are hired from outside, existing employees do not like it. They think that they should be given preference as they are part and parcel of the enterprise.
2.
Lengthy Process. Hiring people from outside consumes a lot of time. Notification of the vacant posts, receiving the applications, holding interviews, etc. need a pretty good time. Work may suffer due to this long process.
3.
Expensive Process. External sources, specially TV and newspaper advertisements, consultancy firms, etc. are very expensive. Sometimes, even after spending huge sums on these sources, suitable candidate are not found. Besides spending on these sources, a lot more is spent on the induction programs of the new employees.
Suitability of Different Recruitment Sources From the study of different recruitment sources, described in the foregoing pages, we can from an idea of suitability of different sources for different sources for different posts. For managerial posts, the enterprises may conveniently depend upon internal promotions, newspaper advertisements, consultancy firms, Union and Provincial Public Service Commissions. For technical and first level managerial jobs, training and technical institutes and newspaper advertisements are suitable. For manual and operative jobs, employment exchanges, direct applications at the gate or by mail, badli workers, and labour contractors are suitable recruitment source. Again employment exchanges and newspapers, and Department of Personnel and Administrative Reforms are useful for recruiting people for foreign enterprises.
SELECTION PROCESS As discussed earlier in this chapter, ‘selection’ is the process of eliminating the unsuitable candidates and choosing the suitable ones. In the words of David and Robbins, “Selection is a managerial decision-making process as to predict which job applicants will be successful if hired.” There is no hard and fast rule regarding the steps involved in the process of selection. The number of selection steps depends upon many factors. Like the size of the organisation, level of job, nature of job, philosophy of management, availability of time, number of applicants, etc. some organisations follow a long chain of steps, eliminating unsuitable candidates at every step, finally left with the candidates who are to be employed on the other hand, some organisations select their employees just in one go through ‘Wall-in-interviews’.
Large organisations, usually consider the following steps in the process of selection: 1.
Application Blank. An application blank is a columnar Performa which constrains information like address, physical characteristics, educational qualifications, exp0erience, necessary personal information, references, etc. on the basis of information collected from the application blank, should be simple and should not contain unnecessary questions.
2.
Preliminary Interview. This interview is a brief interview in which candidates’ external personality and speech skills are adjudged. Some employers would require the candidates to undergo the remaining selection formalities if they find that candidates have a good personality and that they can communicate well.
3.
Employment Tests. Candidates may have to undertake employment tests to establish their claim for the job. Different types of tests are administered according to the nature of jobs. Some important types of tests are: (a)
Achievement Tests: some establishments want that their employees must have certain level of achievement in some particular disciplines. They may, for example, decide that their supervisors must have proficiency in English language of graduation level and of numerical ability upto senior Secondary level. In such a case, they would administer achievement tests to ensure that only their achievement tests to ensure that only such candidates would be considered for interview who qualify their achievement tests in respect of English and Mathematics.
(b)
Intelligence Tests: these tests provide a measure of intelligence quotient (IQ) of the candidate showing his mental ability, reasoning, numerical calculated through the following formula:
A person’s mental age is a measurement of his ability to think when compared with the average person’s ability at that age. Different intelligence tests are developed for different age-groups. Some organisations would consider those candidates only who possess a particular level of IQ.
(c)
Aptitude Tests: these tests measure the candidates’ competence to learn a particular job. The employer wants to ensure that only such candidates are selected who have the ability and capacity to learn the jobs well for which they are being considered.
(d)
Attitude Tests: the administration of these tests reveals the extent of candidates’ inclination in the jobs for which the selection procedure has been launched. The candidates who manager to get selected without the proper attitude in the job, prove maladjusted and do not contribute much for the organisation.
(e)
Performance Tests: these tests are designed to measure the level of proficiency and skill of the candidates in performing the Job. For example, candidates’ skill in typing, driving, etc.
(f)
Personality Tests: these tests measure the temperament, value system maturity level, emotional balance, dominance-submission, extroversion-introversion, etc. of the candidates.
(g)
Dexterity Tests: these tastes enable the staffing officer to know the ability of the candidates to use the different parts of body in a coordinated manner.
(h)
Trade Tests: these tests measure the existing skills of the candidates. They measure the level of candidate’s knowledge in job he/ she has applied for
Trade tests should not be confused with aptitude tests. The former measures the existing knowledge in the job; the latter measures the potential for learning the job in question. It is not necessary for the staffing officer to give all the types of tests for selecting personnel for their organisation. The nature of job suggests as to which tests should be administered for selecting the suitable candidates. Test should be administered by trained persons only. Tests administered should be validated ones. Validated tests are those which have been tried out earlier and found suitable 4.
Employment interview. In an interview, the interviewer puts oral questions to the prospective employees in order to judge whether they are suitable for the job or not. There are no hard and fast rules of interviewing candidates interviews, in general, can be conducted in the following ways. (a)
Structured or Patterned Interview: in such an interview, different sets of questions, having the same pattern and with same different
level, are framed in advance. Different candidates are asked different series of questions. Each series, having the same pattern and same difficulty level brings about objectivity in the interview. (b)
Unstructured or Non- directive Interview: in this interview, questions to be asked are not planned in advance. Questions pertaining to the job are asked and candidates are expected to respond freely to show their ability for the job.
(c)
Stress Interview. This interview is held to note how thick skinned the candidate is. The candidates are asked awkward question and it is seen how they react to such questions and it is seen how they react to such questions. If they do not lose their balance of mind, they prove their worth as suitable candidates.
(d)
Group Interview. In this interview, a number of candidates face the interview committee together. The candidates are asked to opine on an issue or they are asked to discuss a topic. When the candidates respond and give reasons and counter-reasons, their ability to communicate, presence of mind, expression, etc, is judged by the interviewers.
5.
Reference. References are generally required to enquire about the conduct of these persons who have been found suitable in the interviews and tests. Reference can be collected from the previous employers, schools or colleges last attended or from any the reliable source. Before forming a balance opinion, it is necessary to enquire three to five persons about the conduct of the prospective employee.
6.
Physical Examination. A person should be physically fit for the job for which he she is being considered. Physical examination is arranged for candidates who have been placed in the selection list. A candidate suffering from serious diseases, like heart trouble or tuberculosis, is rejected. It is also seen that the candidate has a good state of health and that he possesses the general physical characteristics required for the job.
The task of physical examination may be handed over to some reliable medical agency- public or private. In many cases, the organisation employed a doctor who undertakes the work of medical examination. 7.
Job offer. The candidates who have been found medically fit are given the job offer, such an offer, generally, contains the date by which the candidates should join. It also contains other instructions about the agreement to take place between the candidates and the enterprise.
8.
Employment Contract. The selected candidates have to enter into an agreement with the employers, like the job-emoluments, earning of incre0ments, leave rules, work rules, etc.
The selection procedure described above has been illustrated in Figure 7.4 below: Process of
Not. Of applicants Candidates found eligible Candidates passing preliminary interview Candidates passing all tests Candidates approved by interviewers Candidates found of good moral character Candidates selected
found
medically
fit
and
finally
The above figure shows that thirteen candidates were enrolled. The selection process eliminated eleven candidates at different steps and ultimately two candidates were left who were selected and inducted into the organisation.
Distinction between selection and Recruitment Recruitment and selection are interrelated functions of the staffing department. Recruitment is inviting and procuring applications from one or more sources. Selection is processing and screening of applications. The function of selection starts where the function of recruitment ends. Recruitment is not an absolute step. Its ultimate aim is selection. Recruitment is a positive process as it seeks to persuade more and more people to apply for jobs. Selection is a negative process in the sense that it eliminated the unsuitable candidate at every stage of the selection process and only required number remains after the final step is over. Basis 1. Meaning
Recruitment Selection It is a process of searching suitable It is a process of choosing the eligible candidate and stimulating them to candidates having necessary apply for the vacant job. qualification and offers them jobs.
2. Process
It is a simple process as candidates It is a complex process as candidate to not have to pass any test. has to pass many tests.
3. Nature
It is a positive process as it seeks to It is a negative process as so many persuade more and more people to candidates are eliminated to select apply for the job. few eligible candidates.
4. Stage
Recruitment is not an absolute The function of selection starts where, step, its ultimate aim is selection. the function of recruitment ends.
5. Motive
Its motive is to induce more and Its motive is to eliminate all more candidates to apply for the unsuitable candidates to select the job. eligible ones.
Training and Development We have already discussed that training is the process of improving the attitudes, skills, performance and knowledge of the employees to make them enable for the job. Training is imparted in technical and mechanical process, and it is usually needed for the current requirements of the job.
Need/Benefits of Training It has already been mentioned that training is, primarily, meant for the rank and file or workers and clerical personnel. The need of their training is beneficial to the organisation and the employees in the following ways:
Benefits to the Organisation Training is beneficial to the organisation also in the following ways: 1. Organisational stability and Flexibility. Another important purpose of training is to
make the organisations more stable and flexible. “Stability” writes FLIPPO “is the ability of an organisation to sustain its effectiveness, despite the loss of key personnel. This can be developed only through creation of a reservoir of trained replacements. Flexibility, the ability to adjust to short-run variations in the volume of work, requires personnel with multiple skills to enable their transfer to jobs where the demand is the highest. There is no greater organisational asset than if trained and motivated personnel.
2. Adopting Modern Technology. Need of training is also felt due to the fact that
training is to replace the conventional methods of performance with modern technological developments that are taking place in areas of operation. This brings about an improvement in the work styles, resulting in improvement of quality, quantity of production in the workers’ congenial working conditions.
3. Better Quality and Productivity. Trained personnel produce more and better
products. Thus results in increased sales and more profits.
4. Enhances Goodwill. The organisations that organizes training prgrammes for their
employees are considered as good in the business world. Only good enterprises show the concern for the development of their employees.
5. Timeliness. The trained persons save a goods amount of time on many fronts. They
take less time in production; provides quick guidance to the customers; and do not taken much time in the maintenance of goods and machines.
Distinction between Training and Development Basis 1. Purpose
Training Development Training implies a systematic Development is an educational procedure of imparting knowledge process aimed at growth and and skill for specific jobs. maturity.
2. Duration
It is short-term process, like enabling It involves a broader education for the workers to handle machines and long-term purposes. tools properly.
3. Level of It is meant employees personnel.
for
non-managerial It improves the competence of managers.
4. Subjectmatter
Training is imparted in technical and Development mechanical processes. conceptual ideas.
focuses
on
5. Initiative
It is organised for non-managerial It takes place on the basis if self positions at the initiative of managers. initiatives.
6. Time of Training is usually needed for the Development seeks to meet the Utilisation current requirements of the jobs. future needs of the organisation, as also for the satisfaction of individual managers.
DIRECTING
Meaning and introduction Directing function of management is concerned with instructing, guiding, inspiring and motivating the employees in the organisation so that their efforts result in achievement of organisation goal. After the staffing function the right person is placed at the right position in the organisation. But actual work begins only when these only instruction but it also includes supervising the employees when they are performing the job, motivating them to perform more efficiently and leasing then towards the achievement of organisation goal.
Features/ characteristics of directing function 1. Directing initiates action. Other functions prepare a base or setting of action i.e., how
action has to be carried on the directing initiate of start action. By giving directions or instructions the managers get the work started in the organisation. 2. Continuing faction. Directing is a continuous process. A manager cannot just reset
after issuing orders and instruction. He has to continuously guide, supervise and motivate his subordinates. He must continuously take steps to me sure that orders and instructions are carried out properly. 3. Directing takes place at every level. Directing is a pervasive function as it is
performed by managers at all levels and in all locations. Every manager has to supervise, guide, motivate and communicate with his subordinate to get things done. However, the time spent in directing is comparatively more at operational level of management. Directing takes place wherever superior subordinate relation exists. 4. Directing flow from top to bottom. Direction are given by managers to their
subordinates. Ever manager can direct his immediate subordinate and take direction from immediate boss. Directing starts from top level and flows to lower level. 5. Performance oriented. Directing is a performance oriented function. The main
motive of directing is bringing efficiency in performance. Directing convert plans into performance. Performance is the essence of directing. Directing functions direct the performance of individuals towards achievement of organisational goal. 6. Human element. Directing function involves study and molding of human behaviour.
It improves interpersonal and intergroup relationship. It motivates employees to work with their best ability.
Importance of directing function
1. To initiate action. The employees in the orgnisation start working only when they get
instructions and directions from their superiors. In the directing function the superiors direct the actions of employees towards the predetermined goals of the orgnisation. If the directing function is executed successfully then it results in unity of direction and achievement of organisational goals. 2. To integrate employees’ efforts. In the orgnisation number of employees is working
at different levels and in different job positions. The employees may differ in their levels of authority and the type of job assigned. But all are interrelated to each other as they are the part of one organisation. When the employees are working at different levels then their efforts are integrated and they co-ordinate only with the help of directing function as while issuing instructions the continuity of the work can be maintained. 3. Means of motivation. Directing function does not mean giving orders only but
through directions and instruction the superiors true to motivate the employees to perform to their best ability. Motivation is a very important element of directing. Directing function develops the feeling of belongingness and encourages employees to perform to their best ability. 4. Balance in the organisation. The directing function tries to create balance in the
organisation. Generally when the employees are working at different levels they develop different attitudes and the balance between their attitudes is made by directing function. For example, the salesman may insist on reduction of price to get more orders whereas the high officials are against the reduction of price to get more orders whereas the high officials are against the reduction as it will being down or reduce the total revenue. The directing function tries to balance both the attitudes by instructing and guiding the salesperson to find out other means and ways of increasing sale. Sometimes there can be difference of attitude between the employee and the employer. Here also directing function creates balance by instructing the employees that their interests and organisation’s interests are in same direction. for example, employees want more earnings, organisation wants more production. The employees can earn more by producing more which will achieve the organisational goal also. 5. To facilitate change. Generally the employees hesitates in accepting the changes but
through directing function the changes can be implemented more easily as while giving directions the superiors guide the subordinates that the changes are better for them also. For example, when the company is planning to computerize its working generally the employees hesitate to accept it as they are not aware of the technology. But when in the directing function the employees are guided that through change they will also be updated as they will have change of learning new technology which will increase their value in the market. So through proper guidance the employees readily and happily accept changes.
Directing is a complex process. To guide mangers to perform directing efficiently certain principles are developed. These are:
1. Maximum individual contribution. Directing function must help all the individuals
to perform to their best ability. The manager must try to find out the hidden talents of the employees, motivate then to use these talents in to the interest of the organisation. Performance of orgnisation becomes effective only when everyone makes a distinct and maximum possible contribution to the organisational objective. Managers must motivate the employees to contribute maximum. 2. Harmony of objective. According to his principle the objectives of individual and
organisation must be in harmony with each other. A manager must direct his subordinates in such a way that they feel that organisational objectives are in there own interest. Directing should create conditions where individuals can achieve their objectives by fulfilling productivity are complementary to each other. 3. Unity of command. According to this principle and employee should receive orders
from one boss only because if he is receiving orders from more than one boss then he will get confused and will not be able to understand that whose orders must be executed first and on the other hand, if employee is receiving orders form more bosses he gets chance to give excuses by saying that he was busy in executing the orders of other boss. To avoid confusion and to give no chance of excuse to employee, the orders must come from one boss only. If there are more bosses it can create problem of who-clash among the superiors as every superior will want his order must be executed by the employee. 4. Appropriate technique. According to this principle the technique selection for
guiding, instructing and motivating subordinate should be appropriate i.e., according to the attitude and need of the employees. Some or standard technique for all may not be suitable as some employees get motivate with monetary incentives whereas other get motivated with non-monetary incentives. So according to the need of employee’s direction technique should be selected. 5. Managerial communication. According to this principle communication is an
important element of directing. Communication is a two way process i.e. communication does not mean only giving of instruction by superior to subordinate but it also means clear feedback from subordinate to superior. Manager must explain the plans and policies to subordinate and ensure that they understand them properly by taking their feedback. Manager must allow the subordinates to express their view clearly and without any hesitation. of informal organisation. In every organisation an informal organisation structure exists within formal organisation structure so managers must make use of informal structure also for getting correct and real feedback. The effectiveness of direction increases by securing the cooperation of informal leaders.
6. Strategic use
7. Effective leadership. A manager must possess the qualities of a good leader. He must
guide and counsel his subordinates not only on work problems but also on their personal problems. This will help to win the cooperation of the employee. 8. Follow through. A manager must follow through the performance of his subordinates
as mere giving instructions is not directing but it is essential to ensure that work is done in the desired manner. Managers must review from time to time that orders are
implemented accordingly. Through follows up managers can inform the about their deficiency and it also helps in revising directions.
Elements of directing There are four main elements or components of directing which are: 1. Supervision; 2. Motivation; 3. Leadership; and 4. Communication
Supervisio n
+
Motivatio n
+
Leadershi p
Communication
+
=
Directing
The supervision means instructing, guiding, monitoring and observing the employees while they are performing jobs in the organisation. The words supervisions is the combination of two words i.e., supervision where super means over and above and vision means seeing. So, supervision means seeing the activities of employees from over &above. Managem ent
Supervi sor
Subordinat es
Role of supervisor Supervisor plays two important roles:
1. Role of mediator or linking pin. Supervisor plays the role of linking pin. Supervisor plays the role of linking pin as he communicates the plans, policies, decisions and strategies of management to subordinates and complaints, grievances and suggestions of subordinates to management.
2. Role of guide. Whenever subordinates are in doubt and need help the supervisor guides them to come out from their problem situations.
Importance of Supervisions/ Function of Supervisor 1. Ensures issuing of Instructions. The supervisor makes sure that all the instructions are communicated to each and every employee. The top level and middle level, plan out all the instructions but the instruction are issued only by supervisory level management. 2. Facilitates control. Control means match between actual and planned output. Whenever the workers are under constant supervision or monitoring then step check is kept and if they are deviating from constant monitoring, the supervision function ensures strict control over the activities of subordinates. 3. Optimum Utilisation of Resources. When the workers are constantly monitored or observed then they always use the resources in the best possible manner which leads to minimum wastage. But if there is no supervision or check on workers they may result in wastage of resources. 4. Discipline. The strict supervision and guidance of supervisor encourages the employees and workers to be more disciplined in their activities. Under the guidance of supervisor the workers follows a fixed or strict time table and execute the plans in right directions. 5. Feedback. The supervisors are directly dealing with the subordinates. So they are the best persons to give feedbacks of subordinates. They give the report regarding the working of every worker which becomes the base for the performance appraisal for the employees. The supervisor gives the feedback regarding complaints, grievances and problems of subordinates to superiors. 6. Improves Communication. Supervisors issue instructions and orders to all the subordinates and make sure that these instructions and orders are clear to all the members. While playing the role of the linking pin or mediator the supervisor tries to remove the communication gap between the superiors and subordinates as he passes on the complaints and problems of subordinates to superiors and instructions of superiors to subordinates. 7. Improves Motivation. The relationship with the supervisor is a very good incentive to
improve the motivation level of the employees. While guiding the employees the supervisors encourage the subordinates to perform to their best capacity.
8. Maintain group unity. Supervisor play a key role in maintaining group unity among workers working under him he maintains harmony among workers by solving their disputes.
Motivation Motivation can be defined as stimulating, inspiring and inducing the employees to perform to their best capacity. Motivation is a psychological term which means it cannot be forced on employees. It comes automatically from inside the employees as it is the willingness to do the work.
Few interrelated Terms 1. Motive. A motive is an inner states or desire which energizes and individual to move
or to behave to move or to behave towards achievement of goal. Motive arises out of needs of an individual. When a motive emerges in an individual. It causes restlessness as he wants to fulfill his motive. For example motive to earn induces an individual to search for job or work. Individual search for food to fulfill the motive of hunger. 2. Motivation. It is a process of inducing people to perform to the best ability to
accomplish the goal. 3. Motivators. Motivators are the incentives or techniques used to motivate the people in
an organisation. Common motivators used by the managers are increment, bonus, promotion, recognition, respect etc.
Features/ characteristics/ nature of motivation 1. Motivation is a psychological phenomenon . Motivation is an internal feeling which
means it cannot be forced on employees. The internal feelings such as need, desire, aspirations etc. influence human behaviour to behave in a particular manner. For example, desire to have a new house, respect and recognition etc. 2. Motivation produces goal directed behaviour. Motivation induces people to behave
in such a manner so that they can achieve their goal. Motivated person need no supervision or direction. He will always work in desired manner. For example of a person has a motive to get promotion so he will work efficiently to get promotion. 3. Motivators can be positive as well as negative. To motivate employees managers
use various motivators. Some motivators are positive and some are negative few examples of positive motivators are promotion, increment, bonus, respect, recognition etc. if employee does not improve his performance with positive motivators then manager uses negative motivators such as warning, issue o memo, demotion, stopping increments etc. sometimes fear of negative motivators also induces person to behave in a desired manner. 4. Motivation is a complex process . Motivation is a complex and difficult task. In order
to motivate people a manager must understand various types of human need. Human needs are mental feelings which can be measured accurately. If manager measures them accurately then also every person uses different approaches to satisfy his need.
Some get satisfied with monetary incentives, some with non-monetary, some with positive and some with negative motivators. So it is not possible to make generalization in motivation. 5. Motivation is a dynamic and continuous process . Human beings are ever-changing.
Human needs are unlimited and go on changing continuously. Satisfaction of one need gives rise to another so managers have to continuously perform the function of motivation.
Process of Motivation The Process of Motivation
Unsatisfie d Need
Reductio n of Tension
Tension
Satisfacti on of Need
Drives
Search Behavio ur
1. Unsatisfied need. Motivation process begins when there is an unsatisfied need in a human being. 2. Tension. The presence of unsatisfied need gives him tension. 3. Drive. This tension creates an urge of drive in the human being an he starts looking for various alternatives to satisfy the drive. 4. Search Behaviour. After searching for alternatives the human being starts behaving according to chosen option. 5. Satisfied need. After behaving in a particular manner for a long time then he evaluates that whether the need is satisfied or not. 6. Reduction of tension. After fulfilling the need the human being gets satisfied and his tension gets reduced. For example, if an employee develops a need to earn more, this need will make him restless and he will start thinking how to satisfy his need. To satisfy his need he may think of working hard in organisation and get promotion so he will start working hard. After sometime he will et incentives or increments or promotion which will satisfy his need. But motivation process does not end by satisfaction of one need. After fulfilling one need another need develops and the same process continues till needs keep emerging in human beings.
Importance of Motivation 1. Motivation helps change negative attitude to positive attached. Without motivation the employees try to perform minimum activities in the organisation. But the motivation fills in the desire to perform to their maximum level. All the resources of the organisation are of no use unless and until the employees use these resources. The motivated employees make best use of the resources. 2. Motivation improves performance level of employees. The motivation improves the
efficiency level of employees which means the employees start performing the job to the best of their ability with minimum wastage of time and resources because motivated employees always go for best utilisation of resources. The motivation bridges the gap between the ability to work and willingness always improves efficiency. 3. Help in achieving the Organisational Goal. The motivated employees always try to
achieve the organisational goal and contribute their best efforts for the realisation of organisational goal as they know with the achievement of organisational goal only they can achieve their personal goal. All the employees contribute their efforts in one direction of accomplishment of goal. 4. Motivation creates supportive work Environment. In motivation the relations between superior and subordinates are always improved. When the employees get their need satisfied or get the recognition and respect in the organisation then they always offer a supportive hand to superiors. There is more co-operation and co-ordination in the organisation and all the employees work with the team spirit. 5. Motivation helps the managers to introduce changer. The motivated employees show less resistance in accepting the changes according to changes in the business environment because they know if the changes are not implements in the organisation, not only the organisation will lose by this but the employees also will find it difficult to get their needs fulfilled. Motivated employees are always supportive and cooperative in accepting changes in the organisation. 6. Reduction in Employees’ Turnover. The motivation creates confidence in the employees to get their need satisfied in the organisation itself. They always select the alternative to remain in the organisation and increase their earning rather than leaving the organisation and increasing their earnings. With motivation the turnovers are less because the satisfied employees never leave the job.
Need Hierarchy Theory Motivation is psychological phenomenon and the needs of employees play very important role in motivation. To understand the needs of human being we must learn Maslow’s Need Hierarchy theory. Maslow’s Need Hierarchy Theory. Need or the desire is a very important element in motivation because the employees get motivated only for their need and if the needs are
fulfilled completely then it is not possible to motivate the employees. Maslow has given a sequence or hierarchy of need in the following way: 1. Physiological Need. These needs include basic requirements for survival and
maintenance of human life. The common physiological needs are food. Shelter and clothing. The employees develop these needs for their survival that is why they are at the top in the sequence. These needs can be satisfied when the monetary incentives are offered by the employers. 2. Safety and security needs. Once the present day physiological needs are fulfilled then the people start thinking about their future as they want to secure their future by making sure that in future also they continue to satisfy their physiological needs. Under safety and security there are two categories. (a) (b)
Physical security: Which means safety from illness, accident, fire, etc? Economic security: Which means having sufficient funds to meet the future physiological needs and to come out of physical security threat?
The people why have more of safety and security need active get motivated by monetary incentives. 3. Social needs assibilation/ belonging need. It means the need for love, affection, companionship, friendship etc. once the people satisfy their physiological and safety needs then the social need becomes more active and to fulfill the social needs the managers prefer team-work, arrange formal and informal get-togethers so that employees can develop social relationships. 4. Esteem needs. These needs are related to the respect and recognition. When the above three needs are satisfied then propel start demanding respect for themselves in a group. This need is more common in higher level employees. Esteem needs can be satisfied through no-monetary incentives.
EXAMPLES OF INDIVIDUAL
MASLOW’S NEED HIERARCHY THEORY
ORGANISATIONAL EXAMPLES Minimum/ Basic Salary
Food, shelter, clothing
Physiological Need
Savings for Physical & Economic Security
Safety & security need
Job confirmation, provident fund, pension etc.
Social Need
Cordial relations in informal organisation
Love, affection, friendship
Maintaining a status in Society
Achieving of Self as[aeration
Esteem Need
Promotion, special status or titles to employees
Self actualization Need
Achievement of goal
5. Self-Actualization Needs. This need refers to realizing or reaching to the aim of your
life. Once the employee becomes what he wants to become it means satisfaction of his actualization need. For example, when a soldier faces bravely the bullet of enemy he seems to realize the self-actualization need.
Assumptions of Maslow’s Need Hierarchy Theory: 1. Behaviour of people depends upon their need. Human behaviour can be changed or motivated by fulfilling their needs. 2. Generally the needs follow the hierarchy i.e., starting from physiological need.
Conclusion Generally the employees or all the human beings follow this sequence of needs. But sometimes there can be exceptions when sequence is not followed. For example, people may have social needs active without satisfaction of physiological and safety needs. Sometimes, there can be only self-actualization need present ignoring all other needs.
Financial/ non-financial incentives Incentive can be defined as monetary or no-monetary reward offered to the employees for contributing more efficiently. Incentive can be extra payment or something more than the regular salary or wage. Incentive acts as a very good stimulator or motivator because it encourages the employees to improve their efficiency level and reach the target. The two common types of incentives are: INCENTIVES Financial
Non-financial
Pay/allowance
status
Profit sharing climate
organisation
Co-partnership
career advancement
Bonus
job enrichment
Commission recognition
employee’s
Suggestion system
job security
Productivity linked participation With wage incentives Retirement benefits
employee’s
employee empowerment
Perks, fringe benefits
Monetary of financial incentives The reward or incentive which can be calculated in terms of money is known as monetary incentive. These incentives are offered to employees who have more physiological, social and security need active in them. The common monetary incentives are: 1. Pay and allowances . Regular increments in salary every year and grant of allowance
act as good motivators. In some organisations pay hikes and allowances are directly linked with the performance of the employee. To get increment and allowance employees perform to their best ability. 2. Profits sharing. The organisation offer share in the profits to the employees as a
common incentive for encouraging the employees for working efficiently. Under profits sharing schemes generally the companies fix a percentage of profits, and if the profits exceed that percentage then the surplus profits is distributed among the employees. It encourages the employees to work efficiently to increase the profits of the company so that they can get share in the profits. 3. Co-partnership/ stock option. Sharing the profit does not give ownership right to the
employees. Many companies offer share in management or participation in management along with share in profit to its employees as an incentive to get efficient working form the employees. The co-partnership is offered by issue of shares on exceeding a fixed target. 4. Bonus. Bonus is a onetime extra reward offered to the employee for sharing high
performance. Generally when the employees reach their target or exceed the target then they are paid extra amount called bonus. Bonus is also given in the form of free trips to foreign countries, paid vacations or gold etc. some companies have the scheme of offering bonus during the festival time (diwali, Christmas bonus, new year etc.)
5. Commission. Commission is the common incentive offered to employees working
under sales department. Generally the sales personal get the basic salary and also with this efforts put in by them. More orders mean more commission. 6. Suggestion system. Under suggestion system the employees are given reward if the
organisation gains with the suggestion offered by the employee. For example, if an employee suggests a cost saving technique of then extra payment is given to employee for giving that suggestion. The amount of reward or payment given to the employee under suggestion system depends on the gain or benefit which organisation gets with that suggestion it is a very good incentive to keep the initiative level of employees high. 7. Productivity linked with wage incentives . There is certain wage rate plan. Which
offer higher wage for more productivity, for example under differential piece wage system efficient workers are paid higher wages as compared to inefficient workers? To get higher wages workers perform efficiently. 8. Retirement benefits. Some organisations offer retirement benefits such as pension,
provident fund, gratuity etc. to motivate people. These incentives are suitable for employees who have security and safety need. 9. Perks/ fringe Benefits/ perquisites. If refers to special benefits such as medical
facility, free education for children, housing facility etc. these benefits are over and above salary. These extra benefits are related with the performance of the employees.
Non- Monetary/Non- Financial Incentives Money is not the only motivator, the employees who have more of esteem and self actualization need active in them get satisfied with the non-monetary incentives only. The incentives which cannot be calculated in terms of money are known as nonmonetary incentives. Generally people working at high job position or at high rank get satisfied with non-monetary incentives. The common means or ways of non-monetary incentives are: 1. Status. Status refers to rank, authority, responsibility, recognition and prestige related
to job. By offering higher status or rank in the organisation managers can motivate employees having esteem and self- actualization need active in them. 2. Organisational climate. It refers to relations between superior/ subordinates. These
are the characteristics which describe and organisation. These characteristics have direct influence over the behavior of a member. A positive approach adapted by manager creates better organisational climate whereas negative approach may spoil the climate, Employees are always motivated in the healthy organisational climate. advancement. Managers must provide promotional opportunities to employees. Whenever there are promotional opportunities employees improve their skill and efficiency with the hope that they will be promoted to high level. Promotion
3. Career
is a very big stimulator or motivator which induces people to perform to their best level. 4. Job enrichment/ assignment of challenging job. Employees get bored by performing
routine job. They enjoy doing jobs which offer them variety and opportunity to show their skill. By offering challenging jobs, autonomy to perform job, interesting jobs, employees get satisfied and they are motivated. Interesting, enriched and challenging job itself is a very good motivator or stimulator. 5. Employee’s recognition. Recognition means giving special regard or respect which
satisfies the ego of the subordinates. Ego-satisfaction is a very good motivator. Whenever the good efforts or the positive attitudes are show by the subordinates then it must be recognised by the superior in public or in presence of other employees. Whenever if there is any negative attitude or mistake is done by subordinate then it should be discussed in private by calling the employee in cabin. Examples of employee’s recognition are congratulating employee for good performance, displaying the achievement of employee, giving certificate of achievement, distributing mementos, gifts etc. 6. Job security. Job security means life time bonding between employees and
organisation. Job security means giving permanent or confirmation letter. Job security ensures safety and security need but it may have negative impact. Once the employees get job secured they lose interest in job. Of example government employees do not perform efficiently as they have no fare of losing job. Job security must be given with some terms and conditions. 7. Employee’s participation. It means involving employee in decision making
especially when decisions are related to workers. Employees follow the decision more sincerely when these are taken in consultation with them for example if target production is fixed by consulting employee then he will try to achieve the target more sincerely. 8. Autonomy/ employee empowerment. It means giving more freedom to subordinates.
This empowerment develops confidence in employees. They use positive skill to prove that they are performing to the best when freedom is given to them.
Leadership Leadership is a process of influencing the behavior of people at work towards the achievement of specified goal. The following elements must be present in the leadership: (a) It is the process of influence; (b) The influence is always for achievement of common goal; (c) There must be minimum two or more persons present; influencing your own behavior is not leadership.
(d)The influence should be to get the willing co-operation of the employees and not the forceful co-operation.
Features of Leadership 1. Leadership indicates the ability of an individual to influence others. 2. Leadership tries to bring change in behavior. 3. Leadership shows interpersonal relationship between leader and followers. 4. Leadership is to achieve common goal. 5. Leadership is a continuous process.
Difference between Manager/Leader or Manager ship/Leadership Manager
Leader
1. A manager is always a leader because A leader may not a manager because the he has to influence the behavior of people who are leading informal groups are subordinates working under him. not managers always. 2. The managers have formal authority to The leaders have informal authority only influence the behavior. That is why they that is the authority of trust and faith can use assertiveness and sanctions to shown by the group members. influence the behavior of employees. 3. The manager influences the behavior Leaders influence the behavior towards the towards the achievement of satisfaction of every member of the group organisational goal. and realisation of group goal. 4. A manager exists only in formal A leader may exist in formal as well as organisation informal organization. 5. Manager perform all the functions i.e., A leader performs only one function i.e., planning organizing, staffing, directing. directing.
Importance of leadership Leadership is an important element of directing. The significance of leadership can be understood by learning following points: 1. Helps in inspiring and guiding the employees . The leaders have direct contacts with
the subordinates and they always motivate the employees for higher perfume and achievement of goal. That is why leadership is considered as an important factor for
the success of the organisation. Leaders also act as guides as whenever the employees are in trouble, leaders guide them in the right direction of achievement of organisational goal. 2. Secures co-operation of the members of Organisation. Leaders try to secure the
willing cooperation of the employees as they develop feeling of initiative and enthusiasm in the employees. The leaders develop the spirit of teamwork and convince the subordinates that they can achieve their goal only when the team goal or group goal is achieved. 3. Creates confidence. The leaders try to recognize the hidden talent and qualities of the
employees and encourage them to highlight these hidden talents to boost up their confidence level. Generally employees fail to realize or recognize their abilities and capabilities. Leaders recognize their abilities which provide psychological support and confidence in the employee. 4. Improves productivity. The biggest challenge or problem of every organisation is
best utilisation of physical, financial and human resources. It is possible with the effective and efficient utilization of resources and efficiency depends upon the motivation, confidence and co-operation among the employees and leaders develop co-operation, confidence and motivation among the employees which results in maximum utilization of resources. 5. Improves job satisfaction. The satisfaction does not depend only on monetary
compensation. But it depends upon working conditions and behavior of managers towards their employees. The behavior of manager must be supportive and managers are considered good leaders only when they are able to motivate the employees and provide them psychological support. Leadership ensures that mangers follow such a pattern which is acceptable to all the subordinates and motivates the employees to consider themselves as a part of organisation. Leadership also helps the employees to take right decision at the time of stressful situation. The guidance at such situation brings job satisfaction to the employee. 6. Improves team-spirit or group cohesion . The group’s cohesion or the team sprit
depends upon mutual trust, friendliness, co-operation and liking of subordinates for each other. The leadership helps in creating team spirit by encouraging the employees to share common vision (goal and work collectively leaders always guide the subordinates to give importance to the group goal rather than individual goals.
Qualities of a good leader A person must possess the following qualities to be a good and effective leader. 1. Physical qualities. Good physical features attract people. Physical features like
height, weight, health and looks of person attract and individual. Healthy and smart leader can him also work hard and he can induce his subordinates also to work hard. 2. Knowledge, intelligence and Scholarship. A leader must be able to examine every
problem in the right perspective or direction. The leader must have superior judgment and abilities to take right decision in right situation. The leader must have complete
knowledge about the work performed by his group members. He should take decision on the basis of facts, figures and logic. He must have a mature mind. Then only he can be a successful leader. 3. Integrity and honesty. A leader must possess high level of integrity and honesty. He
must follow ethics and values then only he can expect his subordinates to be ethical and honest. 4. Self confidence and sense of responsibility. A leader can develop confidence in his
subordinates only when he is having faith and confidence in his own abilities. He must be confident that he will be able to tackle every situation successfully. A confident leader only can create confidence in his subordinates. The leader must have the sense of responsibility for achievement of goal or target of his group member. He must know clearly and readily accept the accountability for any mistake done by the subordinates as subordinates work under his guidance and direction. The leader must share or pass on the credit of success to his subordinates. 5. Initiative. A leader must take initiative to grab the opportunities. He must have
courage and initiative to take bold decisions. He must take risk for the advantage of organisation. 6. Motivation skill. A good leader must set an example for others as inspire the people.
He must be able to answer all the questions of subordinates regarding “why”. The leaser must be able to convince the employees that their willingness to do work will bring best result in their performance. The leader should not force the subordinates but develop voluntary contribution from the subordinate side. He must remain connected with the work and must lead all his subordinates in performing to their best ability. 7. Communication skill. A leader is the source of information for all the members of his
group. Generally all the instructions and information from the superiors are passed to subordinates by the leaders only. So they must have good communication skill so that information reaches each and every member. On the other hand, leaders pass all the problems and grievances of the subordinates to the top level and to inform the problems rightly the leader must have communication skill. To establish cordial relationship among the subordinates and the superiors, the leaders must have communication skill. 8. Decisiveness. A leader must take firm decisions. He should not get confused. Once he
is convinced about the facts and figures, he should take decision. He must be decisive while managing various activities and people. 9. Social skill. A leader must be friendly with his subordinates. He must provide
supportive environment to subordinates so that they do not hesitate to discuss their problems. He must understand people and try to maintain good relations with them. Although it is not possible for an individual to possess all the qualities but at least through training manager can make an effort to acquire as many as possible.
Communication Commun Communica icatio tion n can be define defined d as transm transmiss ission ion or exchan exchange ge of ideas, ideas, views, views, messag message, e, information or instructions between two or more persons by different means.
The common means and ways for transmission of ideas are: (a) Spoken words: (b) Written Written word; (c) Diagrams, Diagrams, pictures pictures or graphs; and (d)Gestures. The communication is a two way process as it begins with sender and ends when the feedback comes from receiver to sender. Minimum two parties are involved in the process of communication i.e., the sender and the receiver.
Communication process/ elements of communication process The communication process begins when sender thinks of an idea or message to be conveyed to other person. Then the sender encodes the message i.e., plans out the words or the language language in which the message must be sent to the other party. After encoding the message the sender transmits or transfers the message by using different ways and means. After tran transm smis issi sion on the the mess messag agee reach reached ed to rece receiv iver. er. The The rece receiv iver er deco decodes des the the mess messag agee to understand the message and give his response or feedback to the sender. When the feedback reach reaches es back back to send sender er then then only only the the comm commun unic icat atio ion n proc proces esss ends ends whic which h mean meanss the the communication is a circular process which starts with sender and ends with sender.
Communication Process Sender
Message
Encoding Nois e
Feedback
Receiver
Decoding
Media
1. Sender. Sender is the person who conveys the message. The communication process
begins immediately when the idea comes in the mind of sender. 2. Message. The contents of ideas or message or suggestion which sender wants to share
with receiver is called message. 3. Encoding. Receiver cannot read the mind of sender. So receiver converts the into a
language or other communication symbols such as pictures, gestures etc. This is known a encoding. 4. Media. It is the way or means through which encoded message has to be transmitted
to receiver. The common ways of transmission are phone, letter, internet, message etc. 5. Decoding. Decoding refers to converting the encoded message into language and
understanding the message. 6. Receiver. Receiver is the person who receives the communication and understands the
message. 7. Feedback after understanding the message receiver sends his response on that idea or
message to sender. When response reaches the sender then only communication process ends. 8. Noise. Noise is any element which results in disturbance, distraction or interruption in
the the flow flow of info inform rmat atio ion. n. The The nois noisee can can be a loud loud soun sound d made made by any any vehi vehicl cle, e, disturbance in the telephone line, disconnection of line. Losing of letter or documents on the way, poor connectivity in the e-mail or internet. Due to noise the message is not conveyed to receiver and receiver is not able to decode the message in the same manner as expected by the sender.
Importance of Communication The communication is an important element of directing because of following points: 1. Act as basis of coordination and cooperation. Generally the organisational objectives
are set set up at plan planni ning ng stag stagee and and thes thesee obje object ctiv ives es have have to be comm commun unic icat ated ed to management at all levels. That is why through communication only the objective and goals of the objectives and goals of the organisation are made clear to every employee. While setting up the personal targets and objective o employees the managers must get the the accu accurat ratee info inform rmat atio ion n whic which h reac reache hess mana manage gerr thro through ugh comm communi unica cati tion on only only.. Through communication the top level management is able to interact with lower level management and all the employees. This interaction helps in getting the commitment and co-operation and coordination of people. 2. Act as basis for Decision Making. For taking any major decision or solving any
problem in the organisation there is a need to get the most accurate information and inform informati ation on moves moves in organis organisati ation on throug through h commun communica icatio tion n only. only. Whenev Whenever er the managers managers are taking decisions decisions they keep in mind the ‘prose’ and ‘cons’ or positive or negative aspects. The accurate information regarding the positive and negative aspect comes only through communication.
3. Increase managerial efficiency. Every individual in the organisation is assigned a job
or task. He is made responsible for some activities. He is granted authority to carry on those those respons responsibi ibilit lities ies.. This This classi classific ficati ation on of task, task, respon responsib sibili ility ty and authori authority ty is pos possi sibl blee only only when when the the info informa rmati tion on reac reache hess accu accurat ratel ely y to the the empl employ oyee ees. s. The The employees employees must know clearly who has to export to whom, what part of total job they are expected to perform and what is their decision making powers. The clarity about these questions comes only with smooth flow of communication. 4. Establish effective leadership. If there is two way information flows between the
superiors and subordinates then there will be definitely positive reaction of employees. Generally rules are framed by the top level authority but these are applied on all the employees in the organisation. So it is always advisable to interact clearly with all the levels of employees before framing the rigid rules and regulation. The rules are more effective before framing the rigid rules and regulations. The rules are more effective when they are formed with the interaction of employees. 5. Helps in process of motivation and morale development. Motivation is a psychological
process of developing willingness to work. In the motivation process the superiors try to analyse the needs of subordinates and the needs can be recognized only when there is smooth flow of information and exchange of views between the superiors and subordinates. With the communication it becomes more convenient for the superiors to offer financial and non financial incentives. The job satisfaction and the moral of the employee depend on the communication between superior and subordinates. 6. Helps in smooth working of an Enterprise. All interactions in organisation depend
upon communication. Smooth working of an enterprise is possible only when there is no comm commun unic icat atio ion n gap. gap. Righ Rightt from from esta establ blis ishi hing ng of ente enterpr rpris isee till till its its surv surviv ival al commun communica icatio tion n is essent essential ial.. Throug Through h commun communica icatio tion n manage managers rs give give direct direction ionss to subordinates for smooth functioning of organisation. 7. Promotes Promotes cooperation cooperation and peace. Through two way communication communication process manager manager
try to develop mutual understanding between management and workers. Through smooth flow of communication subordinates and superior can discuss their problems, grievances and aspirations. Cooperation brings peace in the organisation.
Form of Organisational Communication. There are two forms of organisational communication: 1. Formal Formal commun communica icatio tion; n; and 2. Inform Informal al commun communica icatio tion. n.
FORMS OF ORGANISATIONAL COMMUNICATION
Organisational Communication Formal Communicati on
Informal Communicati on Gossip
Upward
Downwar d
Suggestion System Formal Grievance
Horizont al
Diagona l
Clusters
meetings
directives
Single strand Probabilit y
Task Force
1. Formal Communication Formal communication refers to official communication taking place in the organisation. Whenever there is exchange of views or message or information related to official matter such as assignment of task, fixing of responsibilities, granting authority or setting up of targets, objectives etc then it is known as formal communication. Formal communication generally takes place in the written form such as issue of notice, letter, memo, document etc. verbal or oral channels are avoided in formal communication as there is no record or proof of such communication. According to direction of flow formal communication can be divided into four types:
(a)
Downward communication. The flow of information from the top level or from the superiors to lower level of subordinates is know as downward communication. In this communication the manager passes instructions to his subordinates and the success of downward communication depends upon communication skill of the managers. The common ways of having downward communication are:
(b)
Upward Communication. When the subordinates inform or pass any information to superiors then it is known as upward communication. This communication flows from subordinates to superiors. Upward communication generally consists of work performance, opinion, grievances or problems of the employees. In the recent years upward communication is gaining more importance because the subordinates prefer to involve themselves in the decision making and they have started demanding a better working condition. The upward communication may take place in the following manner.
(c)
Horizontal Communication. Horizontal communication is the communication between the two or more persons working at the same level of authority. Generally different departmental heads discuss the policy of their department with each other. That will be considered as the horizontal communication. Discussion between two managers of same rank is also a Horizontal communication. For example, the marketing manager may discuss from time to time the quality and packing of product with the production manager. Purchas e Manage r
(d)
Productio n Manager
Diagonal Communications. Diagonal communication is a flow of information between the persons working in different departments and holding different levels of authority. For example, the salesman may request the production manager to modify the product design according to the requirement of the customer. The diagonal communication prevents delay in flow of information and helps in taking fast decisions as subordinates of one department can directly communicate with the managers of other department.
Production Manager
Advantages of Formal Communication:
Sales -Man
•
The formal communication is very systematic and ensures orderly flow of information.
•
The source of information can easily be located.
•
In formal communication it is easy to fix the responsibilities of different employees as there is proof for the information.
•
Through formal communication it is easy to exercise control over the work performance of different employees.
Disadvantages: •
The information is delayed as generally scalar chain is followed while passing of information.
•
In formal communication the information is conveyed or passed in impersonal manner.
•
The information may not be transmitted accurately to avoid the unfavorable effect of communication.
The common networks of formal communication are: •
Wheel pattern. It is the most centralized way of communication. Under wheel pattern all the information flow one person only who is generally leader of the group. The other members have no communication link with each other. It is a common pattern of centralized organisation. B
E
A
C
D
•
Chain Pattern. Under the chain pattern each person gets the information from one person that is their immediate boss and passes the information to one person who is their immediate subordinate. So, every member is attached to one person. A
•
B
C
D
E
Circle Pattern. In the circle pattern each person communicates with two more persons in a group. The person may receive or give information to two more
persons in the organisation. In this type of organisation every member participates equally in floe of information. That is why it is more decentralized. A B
E
C
•
D
All source (Channel) Pattern. Under all channel pattern there is no fixed pattern of communication. All the members in the organisation are linked to each other and information can flow anywhere in the organisation. It is most A decentralized organisation.
B
E
C
•
D
Inverted V. in this network a subordinate is allowed to communicate with his immediate superior and also with the superior of his superior. However in latter case only limited communication can take place. 2
1 A
B
2. Informal communication Informal communication between different members of organisation who are not officially attached to each other is known as informal communication. Generally the social interactions, Friendly talks and non-official matters are discussed in the informal communication.
There is no fixed direction or path for the flow of information under informal communication. The information moves in a very vague, confusing and zigzag manner. That is why the network of informal communication is known as Grape Vine. There is no fixed source of information under informal communication and information can move in any direction. There are several types of informal systems. But the common networks of informal communication are:
1.
Gossip. Under gossip pattern one person tells many which means information is with one member of organisation and 6 5 9
he shares the information with many other people
4
1
2
7
3
8
in his social group.
2.
Cluster. Under this pattern or method the information is shared between two persons who trust each other, then one of the persons from that group passes the information to members of other group and one person from other group may pass it to another and so on. So, under cluster method one person tells the information to select other persons. 1
3
5
1
4
2
7
9 8
6
3.
Single strand. In single strand pattern each individual communicates to the other in sequence. X
4.
Probability. In probability network the individual communicates randomly with other individuals.
X
The research studies have shown only 75% information of informal communication is accurate and 25% are remorse spread through various members in the organization.
Advantages of informal Communication
(Benefits from employees’ point of view): 1. The employees can develop friendly relationship and get social satisfaction. 2. Through normal communication the matters can be discussed which cannot be discussed through official channels. 3. It provides information to all the members cutting across the official channels.
Benefits from management point of view: 1. The managers can fill up communication gap if there is any through informal communication. 2. Informal communication traces very fast. So urgent matters can be communicated informally. 3. The managers can get true and accurate response of subordinates on various policy matters. 4. Informal communication provides emotional relief to employees and results in reducing union and management problems.
Disadvantages of informal communication: 1. The information travels in a very unsystematic manner an duets distorted while passing through various channels. 2. Informal communication helps in spreading rumors and false facts. 3. Responsibilities cannot be fixed as the source of information cannot be known. 4. The confidential information may get leaked under informal communication.
Difference between Formal and informal communication Basis of Difference 1. Meaning
2. Relations
3. Nature
4. Channel
Formal Communication
Informal Communication
It refers to communication taking It refers to communication place within the official chain of between individual and groups command. which are not officially recognized. It establishes relation between the It establishes personal subordinates; superiors and relationship among individuals relations are highly impersonal. irrespective of the levels. It is more rigid in nature and It is flexible, dynamic and varies cannot be modified. from individual to individual It follows formal or established
It
is
based
on
informal
5. Expressi on 6. Need 7. Speed
8. Fixation of responsibili ty 9. Record
line of command.
relationship and no fixed line of command is followed.
It is mostly expressed in written form. It serves the need of organisation.
It mostly tends to be oral.
It serves the need of individuals working in organization. The speed of formal com- The speed of informal medication is generally slow communication is very fast as it because all information has to cuts across all the official pass through an established chain channels. of command. It is easy to fix the responsibility It is not possible to fix the in formal com- medication responsibility because source of because source of information is information is not known. known. The records of formal No records of information communication are main-tainted communication are for future reference. maintained.
Methods of communication There are two main methods of communication under formal as well as informal communication.
These methods are: 1.
Oral communication. It refers to exchange of message with the help of spoken words. It may take place through face to face conversation or through mechanical device such as telephone, mike etc.
2.
Written communication. Written communication refers to transmission of message, idea etc. through written words. It may take place through letters, circulars, memos, reports etc.
Difference between Oral communication and written communication
Point of Difference 1. Meaning
2. Speed
Oral
written
It refers to exchange of It refers to exchange of message verbally. message in written words. It travels slowly and takes long term. It takes less time and travels It is usually taken seriously
3. Seriously
4. Verifiability
5. Economy 6. Suitable 7. Precision 8. Personal touch
fast. It may not be taken seriously by parties involved. It cannot be verified afterwards since there is no evidence to verify. It is not economical for distant places. It is more suitable for informal communication. It may not be very precise.
It can be verified from the written records. It can be verified from the written records.
It is more economical for distant places. It is more suitable for formal communication. It can be expressed in precise terms. It transmits message with It tends to be more personal touch. impersonal.
Barriers to effective communication Some times the message sent by sender does not reach the receiver in the same manner as expected by the sender. This filtration, misrepresentation of communication may cause misunderstanding. Therefore it is important for a manager to identify these barriers and take measures to overcome these.
The barriers can be grouped in following categories: 1. Semantic Barriers 2. Psychological Barriers 3. Organisational Barriers 4. Personal Barriers
Semantic Barriers Sometimes the same words and sentences can be understood differently by different people in the organisation which means difference in the understanding levels of employees. For example, if the production manager announces in the meeting that there will be increase in budget of production department then employs may understand that their salary will increase but managers may understand it that expensive machinery will be purchased.
Main causes for semantic problem can be (i) Badly expressed message. Sometimes due to lack of vocabulary manger may use
wrong words. Due to this the manager may fail to convey the same meaning to his subordinates.
(ii) Symbols with different meanings. Sometimes a word may have different meaning.
Receiver may understand the other meaning for example: price, Prize, Principle, principal, right, write etc. or handle with care. Hold the handle of door carefully. (iii)Faulty translations. Sometimes the workers do not understand the language which is
used by manager so workers get it translated. If translator is not efficient he may make mistake in translation. Due to wrong translation there may be transfer of wrong message. (iv)
Unqualified assumptions. Sometimes the worker may misinterpret the assumptions. For example boss may instruct the subordinate to “take care of goods”. He may means that take care of quality of goods whereas workers may understand that he is instructing to keep the goods safely.
(v) Technical jargon. While explaining to subordinates many specialized experts use
technical words which may not be understood by the workers. (vi)
Body language and gesture decoding. Along with verbal communication another important mode of communication is body language and gestures shown by person who is talking. If the verbal communication is not matching with the body language, then workers may get confused and misunderstand the meaning. Example-if manager is telling a joke but there are signs of anger on his face then worker will get confused.
Psychological barriers Emotional or psychological factors also act as barriers to effective communication. The state of mind has great influence over the information and its reflection. As a frightened person may not communicate properly similarly an angry person may not receive the communication effectively. Some of the psychological barriers to effective communication are: (i) Premature Evaluation. It means deriving conclusions before completion of message.
Sometimes people evaluate the meaning of message before the sender completes the message. In such case the receiver may not have an ion mind. He may have some personal prejudice against the sender. He may resist change. He jumps to conclusions without logical deduction from the situation. (ii) Lack of attention. It means when receiver does not pay complete attention to the
message as a result communication becomes ineffective. The reason can be preoccupied mind of receiver. For example, when worker is giving suggestion regarding method of production, the manger is preoccupied with an important file. Sometimes managers do not give attention due to extreme emotions for example, depression or jubilation. This lack of attention may disappoint the employees. (iii)Loss by transmission and poor Retention. When communication passes through
various levels, this results in filtering or loss of information. Specially when is oral information sometimes manager may not be able to retain all information for a longer time. They may ignore or misinterpret some of the information when they are not interested.
(iv)
Distrust. Distrust bet wean communicator and receiver also acts as a barrier to effective communication. They may not understand each other’s message in the origin sense, secondly they do not give much importance to the information exchanged between them.
Organisational Barriers Factors related to organisational structure, authority relationship, rules, regulations may act as barriers to effective communication. Some of the organisational barriers are: (i)
Organisational policy. If organisational policy does not support free flow of information it may result in barriers. For example in centralized organisation most of the information remains at top level only. People at lower level may not be able to communicate freely in centralized organisation.
(ii)
Rules and regulations. Rigid rules, regulations may also create barriers as following rules may lead to red tapes, delay of action and delay in movement of information.
(iii)
Status difference. Sometimes the people working at higher level do not believe in the information supplied by the lower level employees as they feel how would he know about my job and who is he to give me suggestions
(iv)
Compels organisation. When the information passes through various levels then there can be screening or filtering of information at different levels. For example, while giving the feedback the subordinates filter all their negative points and highlight only their positive side.
(v)
Organisational facilities. In large organisation free and effective flow of communication is possible only when some facilities like social get together, complaint box, task force etc. exist. In absence of such facilities there can be delay and barrier to effective communication.
Personal barriers Certain personal factors of sender and receiver may influence the free flow of information. Some of the personal barriers are: (i) Latch of confidence of superior in his subordinates. If superiors have no confidence
and trust in their subordinates then they pay no attention to their advice, opinion or suggestions. (ii) Lack of incentives. If there is no incentive for communication then subordinates may
not take initiatives to give suggestions. For example if there is no rewards given for giving some good suggestion the employees will take no initiative to give goods suggestions. (iii)Fear of authority. Sometimes superiors conceal and hide information if they have
fear of losing their authority over the subordinates.
Improving communication effectiveness All organizational face barriers to effective communication. By using following measures they can overcome such barriers: 1. Clarify the idea before communication. In the first place we must be clear about
what we want to communicate. The message can be conveyed properly only if it is clearly formulated in the mind of the communicator. The message should be encoded in direct and simple language so that the receiver is able to understand it without much difficulty. 2. Communication according to the need of the receiver. Whenever we communicate
we must keep in mind the needs of the receiver of the message or it should be our effort to see that whatever message or information we send across must be o value to receiver. This will make receiver more receptive. Sender must select the words according to the education level of receiver. 3. Consult others before communication. Before communicating the message it is
advisable to consult others. Effective communication is the responsibility of all persons in the organisation as all have to work towards a common goal. If plans are developed with consultation and involvement of subordinates, they will accept it with full cooperation. 4. Use of proper language, tone and contents of message. For an effective
communication the words, tone and symbol used in message must be selected very carefully. The language used should not offend the sentiments of listener. The symbols used in message must be known to the listener. 5. Proper feedback. Feedback helps to know the effect or success of communication
given by sender. Communication is complete only when the message is understood by the receiver. We can never know whether receiver has understood the message or not unless we get the feedback. Feedback also provides opportunity for suggestions and criticism. 6. Communication for the present as well as for future. Communication must meet
the need of present organisation as weak as for future organisation. There must be consistency in the past, present and future communication. 7. Follow up communication. There should be proper follow up of the information
given by manger to subordinate. This follow up helps to remove hurdles, misunderstanding of instructions given by manager to subordinates. 8. Good listener. The sender must listen to receiver’s words alternatively; on the other
hand receiver must also listen with due attention. Patient and attentive listening solve many problems. 9. Open mind. The parties to communication must have open mind they should not try
to withhold information for their personal interest. The should not react before receiving and listening the full message.
10. Completeness of message. A message is effective only when it is given completely.
The receiver should not be left guessing. It may lead to misunderstanding. A complete message carries all necessary facts and figures.
CONTROLLING MEANING Controlling function can be defined as comparison of actual performance with the planned performance. If there is any difference or deviation then finding the reasons for such difference and taking corrective measures or action to stop those reasons so that future thee is match between actual and planned performance.
Definitions by different authors: 1. “Controlling is determining what is being accomplished, that is, evaluating the performance and, if necessary, applies corrective measures so that performance takes place according to plans. 2. “Controlling consists of verifying whether everything occurs in conformity with the plans adopted, the instructions issued and the principles established. It has for its object to point out weaknesses and errors in order to rectify them and prevent recurrence”. 3. “Controlling is measurement and correction of the performance of the subordinates to make sure that enterprise objective and plans devised to attain them are being accomplished”. 4. “Controlling function leads to goal achievement; an organisation without effective control is not likely to reach its goal”. Controlling is not last function of management but it is the function which being back the management cycle to planning. Scope:- Controlling is very wide in scope as it does not end only by comparing the actual performance with planned performance but it tries t o find the reasons and solutions for such problems also. For example, if the planned output is 1,000 units and actual output is 800 units, then controlling function will look for
reasons of this deviation. If the reason is fault in machinery or inefficiency of workers then the corrective measures are taken by instructing the maintenance department to keep regular check of machinery and if it is due to inefficiency of workers then they are sent of training so that their efficiency can be improved. There are two aspects of controlling function. These are: strategic control and operational control. Strategic control refers to check hoe effective the strategies and the plans are because sometimes there can be deviation in actual performance and planned performance due to plans and strategies. The operational aspect refers to focus on managerial and other activities of the organisation. It is to find out whether the mismatch is due to fault in the actions or activities. In both the aspects the managers try to finds out the reasons for mismatch and take corrective measures.
IMPORTANCE OF CONTROLLING 1.
Helps in achieving organisational goals. When the plans are made in the organisations these are directed towards achievement of organisational goals and the controlling function ensures that all the activities in the organizational take place according to plan and if there is any deviation, timely action is taken to bring back the activities on the path of planning. When all the activities are going according to plan then automatically these will direct towards achievement of organisational goal.
2.
Judging accuracy of standards. Through strategic controlling we can easily judge whether the standard or target set are accurate or not. An accurate control system revises standards from time to time to match them with environmental changes.
3.
Making efficient use of resources. Like traffic signal control guides the organisation and keeps it on the right track. Each activity is performed according to predetermined standards. As a result there is most and effective use of resources.
4.
Improving employee motivation. An effective control system communicates the goals and standards of appraisal for employees to subordinates well in advance.
A good control system also guides employees to come out from their problems. This free communication and care motivate the employees to give better performance.
5.
Ensures order and discipline. Control creates an atmosphere of order and discipline in the organisation. Effective controlling system keeps the subordinates under check and makes sure they perform their function efficiently. Sharp control can have a check over dishonesty and fraud of employees. Strikes control monitor, employees work on computer monitor which bring more order and discipline in work environment.
6.
Facilitate coordination in action . Control helps to maintain equilibrium between means and ends. Controlling makes sure that proper direction is taken and that various factors are maintained properly. All the departments are controlled according to predetermined standards which are well coordinated with one another. Control provides unity of direction.
7.
Controlling helps in improving the performance of the employees. Controlling insists on continuous check on the employees and control helps in creating an atmosphere of order and discipline. Under controlling function it is made sure that employees are aware of their duties and responsibilities very clearly. They must know clearly the standards against which their performance will be judged. These standards help the employees to work efficiently.
Control can be exercised on employees’ performance through following measures: (a) Self-appraisal report. The employees are asked to prepare a report of their performance and to explain whether their performance is in accordance with plan or not. In this report employees specify their achievements. (b) Performance appraisal report by supervisors. The superiors continuously monitor and observe the employees when they are performing the job and comparison between the standard and actual performance is done. On the basis of this observation the managers prepare performance appraisal report. These reports become the base for giving promotions, increments bonus etc. to the employees. To have good report the employees perform efficiently and effectively. 8.
Controlling helps in minimizing the errors. Small errors or small mistakes may not seriously affect the organisation. But if these ramrods are repeated gains and again it will become a serious matter and can bring disaster for the organisation. An effective controlling system helps in minimizing the errors by continuous monitoring and check. The managers
try to detect the error on time and take remedial steps to minimize the effect of error. Limitations of controlling 1.
Difficulty in setting quantitative standards . Control system loses its effectiveness when standard of performance cannot be defined in quantitative terms and it is very difficult to set quantitative standard for human behavior, efficiency level, job satisfaction, employee’s morale etc. in such cases judgment depends upon the discretion of manager.
2.
No control on external factors . An enterprise cannot control the external factors such as government policy, technological changes, change in fashion, change in competitor’s policy etc.
3.
Resistance from employees. Employees often resist control and as a result effectiveness of control reduces. Employees feel control reduces or curtails their freedom. Employees may resist and go against the use of cameras, to observe them minutely.
4.
Costly affair. Control is an expensive process. It involves lot of time and effort as sufficient attention has to be paid to observe the performance of the employees. To install an expensive control system organisations have to spend large amount. Management must compare the benefits of controlling system with the cost involved in installing them. The benefits must be more than the cost involved then only controlling will be effective otherwise it will lead to inefficiency.
Relationship between planning and controlling
The planning and controlling functions of management are very closely related. The relation between both the functions is explained below. 1. Meaning. Planning is the basic function of every enterprise as in planning we decide what is to be done, when it is to be done and by whom it must be done. Planning bridges the gap between where are standing today and where we want to reach. Controlling means keeping a check that everything is in accordance with plan and if there is any deviation, taking preventive measures to stop that deviation. The meaning of controlling makes it clear that controlling function is undertaken for right and timely implementation of plans.
2. Planning and controlling are interdependent and interlinked. Planning and controlling functions always co-exist or have to exit together as one depends on the other. The controlling function compares actual performance with the planned performance and it there is no planned performance then controlling manager will not be able to know whether the actual performance is O.K. or not. The base for comparison or the yardstick to check is given by planning to controlling function. On the other hand, the planning function is also dependent on controlling function as plans are not organisation. The controlling function makes sure that everyone follows the plan strictly. Continuous monitoring and check in controlling function make it possible that everyone follows the plan. So both the functions are interlinked and interdependent as for successful execution of both the functions planning and controlling must support each other. For example, if the workers have produced 800 units the manager can know whether it is adequate or not only when there is a standard production set up b planners. So base of comparison come from planning only. On the other hand, if the standard target is 1,000 units then controlling managers make sure that there is improvement in the performance and the employees achieve the set target.
3. Planning and controlling are forward looking functions. Planning is a futuristic function as it involves looking in advance and making policies for the maximum utilisation of resources in future. In planning plans are made for future that is why it is considered as forward looking function. Generally people believe that controlling is a backward looking function because in controlling we look back to the performance which is already achieved by the employees and compare it with plan. But controlling does not get ended here only. It involves finding the reasons for deviation and suggesting preventive measures to bring back the actual performance in relation to planned performance. The controlling function makes sure that in future actual performance. The controlling function makes sure that in future actual performance and output match with the planned performance or output. Therefore controlling is also a forward looking function like planning.
Controlling process
Controlling process Analysing the deviations
Establishi ng
Measuring of
Comparing performance with Standards
Fig.8.1 1.
Taking Corrective
Setting up of (target) standards :- Standards mean target or the yardstick against which the actual performance is measured. The standards. The standards must be achievable, high or very high standards which cannot be achieved are of no use. Standards must be set up keeping in mind the resources of the organisation and as far as possible standards must be set up in numerical or measurable terms.
For example, •
Standard sale- Rs. 20 lac per annum.
•
Standard profit- 4 lac
•
Reduction in cost by 5%.
Sometimes it is not possible to express the standards in numerical terms. For example, setting up of quality standards or standards for managerial work etc. The standards must specify the time limit within which they have to be achieved and as far as possible the standards must be set up for short term. If long term standards are set up they must be divided into short term. For example, standard sale p.a. is 12, 00,000, then per month 1, 00,000 target can be taken for comparison. With short term targets or standards the errors can be detected early and timely actions can be taken. The standards must be revised from time to timely actions can be taken. The standards must be revised from time to time keeping in mind the changes of business environments. 2.
Measuring of performance. After setting up of standards the performance of the employees is measured by evaluating the actual work done by the employees. When the performance can be measured numerically then it is very convenient to measure the performance. While measuring the performance the quantitative as well as qualitative aspect of performance is kept in mind. Sometimes employees achieve the quantitative standards by ignoring qualitative standards. That is why while measuring the performance quality standards are also measured. Certain quality parameters are fixed to measure the quality standard when numbers of rejection or sales return increases. It indicates low standard of quality.
Generally the performance of managers is measured by looking at the overall efficiency level of the organisation. The performance of research and development department is measured by change in technology and updating of production department. The performance of financial department is measured by checking the solvency and liquidity ratios etc. the performance must be measured periodically in short period of time.
3.
Compare performance against standard. After measuring the performance the manager compares the actual performance with the planned performance and standard. If there is match in both then the controlling function ends there only. But if there is mismatch or deviation then the manager tries to find out the extent of deviation. If the deviation is minor then it should be ignored. But if the deviation is more than timely action must be taken.
4.
Analysing deviations. All deviations need not be brought to the notice of top management. A range of deviations should be established and only cases beyond this range should be brought to the knowledge of top level management. They must divide the deviations in two categories deviations which need to be attended urgently in one category and minor or insignificant decisions in other category. These two categories must be controlled by following ways:
(i) Critical point control. It means keeping focus on some key areas (KRAs) and if there is any deviation in these key areas, and then it must be attended urgently. Key areas are those which have impact on whole organisation. For example, if there is increase in production cost by Rs. 5, per unit and there is increase in postal cost by Rs. 20, then more focus should be to find out reasons for increase in cost of production as it will affect the profits and future revenue of organisation whereas postal cost is incurred rarely and managers have no control over postal cost. (ii) Management by exception. It means a manager who tries to control every thing may end up controlling nothing. The deviations which are beyond the specific range should only be handled by managers and minute or minor deviations can be ignored. Manager should not waste his time and energy in finding solutions for minor deviations rather he should concentrate on removing deviations of high degree.
For example, if production cost increases by Rs.2, it can be ignored but if it increase more than Rs.2, then managers must try to find out the reason for such increase after identifying the reasons for deviations which need immediate attention. These deviations and reasons must be brought to the knowledge of top level management for critical evaluation whereas the increase less than Rs. can be handled at supervisory level or can be ignored also for some time. The causes for deviations can be many: for example, fault in machinery, inefficient staff, shortage of resources, over or understating of standards. It is very essential to find out the exact and accurate cause of deviation. Advantages/ Merits of Management by Exception (MBE) •
It saves time and efforts of managers.
•
It focuses attention of managers on significant matters.
•
•
5.
No wastage of time and energy of managers to solve routine problems. These are solved by subordinates. It differentiates between critical and simple problems.
Taking corrective measures. On comparing the actual performance with the planned performance, the manager will come to know about the deviations between the plan and actual performance. They the next step is to know the reasons for such deviations and trying to remove deviations in future. The manager takes measures to bring back everything on the track i.e., according to plan. Taking corrective measures may involve.
(a)
Let the situation remain same if the deviations are minor.
(b)
Redesign or re-frame the plans or strategies if these are overstated or not matching with the present day business environment.
(c)
Taking corrective measures to improve the performance so that in future it matches with the plan.
Generally the managers take measures to improve the performance such as sending the employees for training if the deviation is due to inefficient performance, getting the machine repaired if delay in performance is due to fault in the machinery, making the supervisors more responsive. If delay is due to carelessness and laziness of the employees, sometimes the managers
have to see the standards and targets again if standards are not realistic and achievable. This revision of standards is called downward revisions because standards are reduced to make them realistic and achievable. Sometimes the performance is higher than the set standards; in that case upward revision of the plan is done and plans are set at high rote so that they match with the actual performance. The manager must take the corrective measure only by finding the root cause of the deviation and try to remove that cause. 6.
Feedback in controlling. The controlling function does not end by taking corrective action as it is a continuous process. After suggesting the corrective measure a feedback report is prepared. Feedback refers to list of reasons for deviations of plans or for ineffiency in overall working of organisation; along with reasons the corrective measures are also specified in the feedback report and feedback acts as a base to establish the standard for next year and controlling process again starts from 1st step.
“Deviation” in Controlling
Deviation refers to difference between actual performance and standard performance. Positive deviation. When actual performance is better than the plan performance it is called positive deviation e.g., plan 100 units. Actual Production= 120 units Deviation = +20 units Negative deviation. When actual performance is less than the plan performance then it is called negative deviation. For example, Plan = 100 units Actual production = 80 units Deviation = -20 units Techniques of managerial control
The main techniques of managerial control can be classified into following two categories: 1. Traditional Techniques 2. Modern techniques
Techniques of
Traditional Personal observations Statistical reports Break even analysis Budgetary control
Modern techniques Return on investment Ratio analysis Responsibility accounting Management audit PERT/ CPM techniques
Traditional techniques
These are the techniques which were commonly used by various companies. Although in present environment these have become outdated but still many companies are using these: 1. Personal observation. 2. Statistical reports. 3. Break even analysis 4. Budgetary control
Personal observations. This is the most traditional and most popular method of control. Under this manager observe the subordinates while they are performing jobs. They generally note down their observations. With the help of these observations they can easily analyse the performance of employees. By comparing the performance chart of current year with previous year the managers can know the progress of their performance. 1.
Statistical reports. Various concepts of stats such as graphical presentation, correlation, average, percentage, ratios etc. are very useful in analysis the performance of employees. By converting performance report into statistical chart or table you can easily point out the progress or deviation of performance. 2.
Break even analysis. Brake even analysis is a useful technique to study relationship between costs and profit, boreal even point is a point of no profit no loss. When sales reached breakeven point, it refers to sale 3.
amount at which company is neither earning profit nor incurring loss. With the help of break even analysis technique manager can estimate profits at levels of cost and revenue. The formula for calculating brake even point is:
Foll Follow owin ing g figu figure re show showss brak brakee even even char chartt of a firm firm.. Grap Graphi hica call lly y breakeven point is a point where total revenue and total cost intersect. In the following figure firm will attain breakeven point when sale is 50000 units.
All the points to the left of brae even point indicate loss and right to breakeven point indicates profit.
0
25
50
75
Units of output (In Thousands)
Fig. 8.2
Breakeven chart helps the firms to keep a close check on their variable cost and determine the level of output at which firm can earn its target profit. It also helps to measure the points at which all the costs are fully covered and beyond that point can each more profits.
Budgetary control. Budget is a statement of expected results and expected cost expressed in numerical terms. Budge is a statement which helps us to know the future results and to achieve these results how much we will have to spend. There are different types of budgets which can can be prep prepar ared ed by an organi ganisa sati tion on:: for exam xample, ple, sale saless budg budgeet, production budget, financial budget, cash budget etc. 4.
In budgetary control technique the estimated results are compared with with the the actu actual al resu result lts. s. The The vari variat atio ion n betw betwee een n thes thesee two two indi indica cate tess inef ineffi fici cien ency cy.. Budg Budget etar ary y cont contro roll prov provid ides es foll follow owin ing g bene benefi fits ts to the the company: 1. Budgeting Budgeting focuse focusess on standards standards or objective objectives. s. 2. Budg Budget et help helpss subo subord rdin inat ates es to comp compar aree thei theirr perf perfor orma manc ncee with with budgetary standards and can do self appraisal. 3. Through Through budgeting budgeting mangers mangers can allocate allocate resources resources to departments departments according to their budgetary allocation. 4. Budgets help to improve coordination between various departments. As budget of one department Depends on other. For exam exampl ple, e, budg budget et of sale saless depa depart rtme ment nt Depe Depend ndss upon upon budg budget et of production department Budget of production department Depends upon budget of purchase department. 5. It helps to use the princip principle le of management management by exceptio exception n by giving more attention to department where actual operations and target deviate from budgetary standards.
The success of budgetary techniques depends upon the estimation of standards. As far as possible we should prepare flexible budgets due to dynamic environment.
Modern Techniques of Control
Now a day the common control techniques preferred by companies are: 1.
Return on investment (ROI). Return on investment is a useful technique of controlling over-all performance of company. It is also known as return on capital employed. The essence of this approach is that profits is not taken as an absolute figure but it is considered in relation to capital invested with this method we can compare the earning of one company with other even when they have invested different capital because it determines the ration of earning and not the absolute earning. The rate of return can be calculated by using following formula.
Net income can be taken before or after tax. Total, investment includes working capital, fixed capital and free reserve. To avoid confusion gross assets can also be taken in place of total investment. The technique of ROI offers following advantages to an organisation.
2.
(i)
It in indicates ho how ef effectively re resources ar are be being us used.
(ii)
We can compare the performance of business with previous year’s performance by comparing ROI of both the years.
(ii (iii)
It fac faciilita litattes bal balan ance ced d use use of cap capital ital empl employ oyed ed..
(iv)
It focuses attention on profits and relates them to capital invested.
Ratio Analysis. It refers to evaluation and analysis of financial statements by calculating some important ratios. The common ratios which help to draw important conclusions from the financial statements are:
(i)
Liquidity ratio. This ratio helps to measure the ability of business- men to pay the amount due to various stakeholders. These also help to know the short term solvency of firms. Common ratios which are calculated under the category of liquidity ratio are: (a)
(b)
(ii)
(iii)
Solvency Ratio. This ratio is calculated to find out the long term solvency of firms. It helps to find the ability of firm to pay back its debts. The common rations calculated under solvency ratios are: (a)
Debt Equity ratio
(b)
Proprietary Ratio
Profitability ratios. These ratios are calculated to find out the profits ability position of a businessman. These ratios measure the relationship between profits or earnings and capital employed or sales. The common ratios used by companies to measure profitability ratio are. (a)
(b)
(c)
(iv)
Turnover Ration. Turnover ratios are calculated to determine the efficient utilisation of resources. Higher turnover indicate efficient utilisation whereas lower turnover means inefficient utilisation of resources. The common turnover rations are: (a)
(b)
3.
Responsibility Accounting. Under this technique of controlling organisation is divided into various responsibility centers and head of each centre is responsible for the achievement of their centre. These responsibility centres are generally various sections or departments of an organisation and head of the department is considered as Responsibility head as he is responsible for the overall growth and achievement of his department or centre. The common types of responsibility centers created in the organisation are:
(i)
Cost or expenses centre. In this centre managers are responsible for the cost incurred in the centre and not for the revenue generation. They are accountable if actual cost exceeds the budget or estimated cost. Generally production centers act as cost centre to keep a check on production or operational cost of the firm.
(ii)
Revenue centre. This centre is responsible for generating the revenue. Manager of this centre is accountable of actual revenue is not same or is less than the estimated revenue. Generally sales or marketing departments are set up as revenue centre.
(iii)
Profit centre. This centre is responsible for the profit of the organisation. Profit=revenue- cost. So the centre head of profit centre is accountable for revenue as well as the cost. He has to ensure that revenue is not less than estimated revenue and cost is not more than the estimated cost.
(iv)
Investment centre. This centre is responsible not only for profit but also for the assets he uses. This centre makes use of return on investment. The ROI of different departments is calculated
separately. This centre ensures that there is no wastage of assets and all assets are used properly for increasing the profits of the company. 4.
Management audit. This control technique helps to measure the efficiency levels of managers. Financial audit has been used by firm from long time but the management audit is a new concept. Although there is no chartered accountancy degree which is authorized to does management audit. But still many companies are doing management audit is a comprehensive and constructive review of the performance of management team of any organisation. Managers perform various functions such as planning; organizing, staffing, directing and controlling etc. the main purpose of management audit is seeing that these functions are performed efficiently and effectively. The main advantages of Management audit are:
(i)
It reviews overall plan and policies of managers.
(ii)
It helps to locate present and future deficiency in the performance of management function.
(iii)
It would highlight possible opportunities for the organisation.
(iv)
It would determine whether or not organisation is working efficiently.
(v)
It would evaluate the progress made by the enterprise through the introduction of new techniques or ideas.
(vi)
It ensures updating of existing managerial policies and strategies in the light of environmental changes.
Limitations of management Audit
5.
(i)
There is no standard technique of management audit.
(ii)
Management audit is not compulsory by law like financial audit.
(iii)
There is shortage of qualified management auditors.
(iv)
The scope and contents of management vary from firm to firm.
Net work techniques (PERT and CPM). The object of network analysis is to help in planning, organizing and controlling the operations to enable the management in accomplishing the project economically and efficiently.
These techniques deal with time scheduling and resources allocation for these activities and aim at effective execution of projects with-in given time schedule and cost. There are various types of network techniques but PERT i.e., programmed evaluation and review technique and CPM i.e., Critical Path Method are most popular techniques. PERT provides the framework for treating wide range of project management’s problems. PERT provides managers with the information they need in planning and controlling schedules and cost in development projects. Under critical path method (CPM) the project is analyzed into different operations or activities and their relationships are determined and shown on the network diagrams.
The steps involved in using PERT/CPM is given below: (i)
The project is divided into a number of clearly identified activities.
(ii)
These clearly indentified activities are arranged in logical sequence.
(iii)
A net work diagram is prepared to show the sequence of activities.
(iv)
Time estimates are prepared for each activity. Generally these time estimates are prepared: these are optimistic (shortest time) pessimistic (longest time) and most likely time. In CPM only one time estimate is prepared.
(v)
In CPM cost required to complete the project is also calculated.
(vi)
The longest path is identified as critical path. It represents the sequence of those activities where no delay can be permitted.
(vii)
If required the plan can be modified so that there is timely execution and completion of project.
PERT and CPM are commonly used in ship- building, aircraft manufacturing and other construction projects. For example:- If a project consists of six steps say A to F and after completing step A we can start B and C and after completing D we can start E and after completing D and E we can start F. So network diagram will be:
Activity A B C D E F
Predecessor A A B C D,E
Time (Weeks) 4 2 6 8 3 4
Start
Stop
Fig. 8.3:6.
Network diagram
Management Information System (MIS). It is a control technique which provides information and support for effective managerial decision-making. Right decision can be taken at right time only when managers receive accurate and timely information. MIS provides the required information to managers on time and systematically. MIS is a communication tool for managers. By getting information on time managers can take timely actions if actual performance is different from standards.
Advantages of MIS are: (i)
It provides accurate information to all the managers working at different levels.
(ii)
It helps in planning, controlling and decision-making.
(iii) It provides cost effective management information. (iv) It improves quality of information with which a manager works. (v)
It reduces information overload i.e., only relevant information is provided to them.
Facility Location & Plant layout Plant location: - Probably no location of suitable site is so perfect as to guarantee success but bad location can be so bad as to bankrupt a company.
Important decision which decides the fate of the business. In the past, the plant location was not given the due importance and decided or individual preferences of the entrepreneur & social customs & environment. Government also became instrumental in the selection of plant location because they used this as instrument of developing the backward areas. Therefore for the balance development of the country the government encouraged industry (both private & public sector) to set up plants in the remote/backward areas which were other wise not suitable for setting up the plants. The site selection becomes more important with the size & nature of the plant. A small size small scale industry would rather have its location near a big city/market and can move easily with any market champs. However big size industry which have large investment & almost permanent facilities seated cannot shift easily. Therefore for such plants, the proper section of site is extremely important.
Importance of plant location (i) Goods location reduces the cost of production & distribution & thus increases the plant’s profitability & competitiveness. (ii)Locating a business requires large investment & almost permanent infrastructure. Therefore shifting this frequently may entail large cost and therefore not advisable.
(iii)
Plant location determines the nature of investment costs to be incurred and decides the level of operating cost.
(iv)
Location fixes some of the physical factors of overall plant design e.g. healing & ventilation refinement, storage capacity for raw material, cost of labour, taxes, cost of construction etc.
(v)Location may also have some benefits from the government in terms of tax holiday or cheap land available etc. I need for selection of suitable site may arise in following cases (a)
While staring a new factory
(b)
During expansion of the existing plant
(c)
Relocation of the existing plant.
Dynamic Nature of plant location There is nothing like permanent good location. The business uncertainty & dynamic environment may convert a good location of today into an inferior one of tomorrow & vice versa. It may happen due to one or more of the following reasons. (a) Shift in structure of market or movement of market (b)Changes in cost of transportation (c) Changes in cost & availability of raw materials (d) Change in cost pricing policy of the enterprise (e) undesirable labour situation (f) Non available of labour, rise in labour cost (g) Takeover by the government (h) Relocation of associated ministries & plants.
PLANT LOCATION AND SITE SELECTON The geographical location of the final plant can have strong influence on the success of the industrial venture. Considerable care must be exercised in selecting the plant site, and many different factors must be considered. Primarily the plant must be located where the minimum cost of production and distribution can be obtained but, other factors such as room for expansion and safe living conditions for plant operation as well as the surrounding community are also important. The location of the plant can also have a crucial effect on the profitability of a project. The choice of the final site should first be based on a complete survey of the advantages and disadvantages of various geographical areas and ultimately, on the advantages and disadvantages of the available real estate. The various principal factors that must be considered while selecting a suitable plant site are briefly discussed in this section. The factors to be considered are: 1. Raw material availability. 2. Location (with respect to the marketing area). 3. Availability of suitable land. 4. Transport facilities. 5. Availability of labors. 6. Availability of utilities (Water, Electricity). 7. Environmental impact and effluent disposal. 8. Local community considerations. 9. Climate. 10.Political strategic considerations. 11.Taxations and legal restrictions RAW MATERIALS AVAILABILITY:
The source of raw materials is one of the most important factors influencing the selection of a plant site. This is particularly true for the sulfuric acid plant because large volumes of
sulfur are consumed in the process which will result in the reduction of the transportation and storage charges. Attention should be given to the purchased price of the raw materials, distance from the source of supply, freight and transportation expenses, availability and reliability of supply, purity of raw materials and storage requirements. LOCATION:
The location of markets or intermediate distribution centers affects the cost of product distribution and time required for shipping. Proximity to the major markets is an important consideration in the selection of the plant site, because the buyer usually finds advantageous to purchase from near-by sources. In case of sulfuric acid plant, the major consumers are fertilizer industries and hence the plant should be erected in close proximity to those units. AVAILABILITY OF SUITABLE LAND:
The characteristics of the land at the proposed plant site should be examined carefully. The topography of the tract of land structure must be considered, since either or both may have a pronounced effect on the construction costs. The cost of the land is important, as well as local building costs and living conditions. Future changes may make it desirable or necessary to expand the plant facilities. The land should be ideally flat, well drained and have load bearing characteristics. A full site evaluation should be made to determine the need for piling or other special foundations. TRANSPORT:
The transport of materials and products to and from plant will be an overriding consideration in site selection. If practicable, a site should be selected so that it is close to at least two major forms of transport: road, rail, waterway or a seaport. Road transport is being increasingly used, and is suitable for local distribution from a central warehouse. Rail transport will be cheaper for the long-distance transport. If possible the plant site should have access to all three types of transportation. There is usually need for convenient rail and air transportation facilities between the plant and the main company head quarters, and the effective transportation facilities for the plant personnel are necessary. AVAILABILITY OF LABOURS :
Labors will be needed for construction of the plant and its operation. Skilled construction workers will usually be brought in from outside the site, but there should be an adequate pool of unskilled labors available locally; and labors suitable for training to operate the plant. Skilled tradesmen will be needed for plant maintenance. Local trade union customs and restrictive practices will have to be considered when assessing the availability and suitability of the labors for recruitment and training. AVAILABILITY OF UTILITIES:
The word “utilities” is generally used for the ancillary services needed in the operation of any production process. These services will normally be supplied from a central facility and includes Water, Fuel and Electricity which are briefly described as follows: Water: -The water is required for large industrial as well as general purposes, starting with water for cooling, washing, steam generation and as a raw material in the production of
sulfuric acid. The plant therefore must be located where a dependable water supply is available namely lakes, rivers, wells, seas. If the water supply shows seasonal fluctuations, it’s desirable to construct a reservoir or to drill several standby wells. The temperature, mineral content, slit and sand content, bacteriological content, and cost for supply and purification treatment must also be considered when choosing a water supply. Dematerialized water, from which all the minerals have been removed is used where pure water is needed for the process use, in boiler feed. Natural and forced draft cooling towers are generally used to provide the cooling water required on site. Electricity: - Power and steam requirements are high in most industrial plants and fuel is ordinarily required to supply these utilities. Power, fuel and steam are required for running the various equipments like generators, motors, turbines, plant lightings and general use and thus be considered as one major factor is choice of plant site. ENVIRONMENTAL IMPACT AND EFFLUENT DISPOSAL:
Facilities must be provided for the effective disposal of the effluent without any public nuisance. In choosing a plant site, the permissible tolerance levels for various effluents should be considered and attention should be given to potential requirements for additional waste treatment facilities. As all industrial processes produce waste products, full consideration must be given to the difficulties and coat of their disposal. The disposal of toxic and harmful effluents will be covered by local regulations, and the appropriate authorities must be consulted during the initial site survey to determine the standards that must be met. LOCAL COMMUNITY CONSIDERATIONS:
The proposed plant must fit in with and be acceptable to the local community. Full consideration must be given to the safe location of the plant so that it does not impose a significant additional risk to the community. CLIMATE:
Adverse climatic conditions at site will increase costs. Extremes of low temperatures will require the provision of additional insulation and special heating for equipment and piping. Similarly, excessive humidity and hot temperatures pose serious problems and must be considered for selecting a site for the plant. Stronger structures will be needed at locations subject to high wind loads or earthquakes. POLITICAL AND STRATEGIC CONSIDERATIONS:
Capital grants, tax concessions, and other inducements are often given by governments to direct new investment to preferred locations; such as areas of high unemployment. The availability of such grants can be the overriding consideration in site selection. TAXATION AND LEGAL RESTRICTIONS:
State and local tax rates on property income, unemployment insurance and similar items vary from one location to another. Similarly, local regulations on zoning, building codes, nuisance aspects and others facilities can have a major influence on the final choice of the plant site.
Choice of site (slates) Three slates a) Selection of region b) Selection of community c) Selection of actual site Steps in Plant Location by Bethel Factors Affecting Plant
Selection of region
Selection of community
Selection of plant site
Selection of region: •
Availability of raw materials: it is categorized into two:
•
Ubiquities i.e., existing everywhere like clay, water etc.
•
Localized materials i.e. minerals, coal, sugarcane etc. & it is sub divided into pure (cotton, raw silk) & gross materials (iron-ore, limestone. Sugarcane).
•
Spriegel & Lansburgh quoted “Nearness to the source of raw materials is of special importance when the material is bulky in relation to its value & when the volume & weight are greatly reduced during its processing.”
Spriegel & Lansburgh quoted “Nearness to the source of raw materials is of special importance when the material is bulky in relation to its value & when the volume & weight are greatly reduced during its processing.”
For e.g.: Textile mills in Maharashtra, sugar factories in U.P, marble manufacturing in Jabalpur, sandal wood products in Mysore, fish-canning & salt pans near coast, Export of Alphansos from Ratnagiri.
Nearness
to fuel & power: it is a decisive factor in plant location. It is necessary to ensure that the phases, voltage, frequency, rates, regularity, special discounts allowed are suitable to factory.
Transport: getting raw materials to place of manufacture, transporting finished goods to place of consumption & carrying employees to the factory & sales representative to the consumers are functions of transport.
James Lundy quoted “ideal plant from the point of view of transportation is one which is centrally located & directly connected by water, rail, road & air. Cost, dependability, time required to transport finished goods, prompt availability, time required to transport finished goods, prompt availability, shift in the market & speed are factors considered for choosing particular mode.
For e.g.: TAPS Uses Road, Water & Own Rail Route.
Market: a place where particular products are sold. Nearness to market influences: •
Reduced cost of transporting finished goods & promotional expenses.
•
Enables to study the consumers.
•
Enables to render quick service & after-sales services.
•
Execute replacement orders without delay.
•
Perishable nature of goods.
•
Fragile nature of goods.
Meteorological conditions & topography: Kimball & Kimball quite “the effect of climate upon the efficiency in the case of working force required to work outdoors, as in case of quarries, Constructional industries etc cannot be minimized. A cool climate develops the best of worker. “for e.g.: Agro- industries.
SELECTION OF COMMUNITY:
Labour: Kimball & Kimball wrote “ the need of adequate supply of labour is obvious, but a number of consideration such as cost of living & the character of labour available as to both skill & temperament should be taken into account.” According to labour, factory may be located as follo0ws:
•
Semi- skilled/ unskilled- Rural areas.
•
Skilled- urban areas. The need of management is to face less strikes or lockouts & to achieve lower labour cost per unit of production. A stable labour force, the right type of labour, reasonable wage rates, adequate number of employees, reliability of labour supply, proper attitude towards work are feature that influence supply of labour.
Supplementary & complementary factories: d. Jones described advantages of concentration of industries:
•
Helps to increase the variety of materials that supplier’s offers.
•
Improves the labour market for employer & employee.
•
Helps banks to discount commercial papers readily.
•
Attracts a variety of repair plants like foundries, tool makers & machine shops.
•
Serves to perfect the local markets.
•
Division of labour is possible.
Banking & credit institutions: factory expansion needs funds to meet the requirements. Existence of banks will exert influence over location of plants.
Local taxes & Insurance: factories must be located in a place where taxes, insurance costs are comparatively low. E.g.: fire cracker industry.
Water supply: water should be available in adequate quantity & proper quality. The factors in this connection are stability in its supply, mineral content of water, problems leasing to water.
Momentum of early start: some of the facilities like banking, transport, communication, repair services, shops & hotels give momentum to growth of industries in such an area.
Historical factors: The existences of historical towns are responsible for location of such industries. E.g.: Banaras, luck now, Kanjivaram, Kanpur.
Political stability: the political situation in potential locations should be consider ed while selecting a locality for establishing a factory. E.g.: Singur, liquor industries in Gujarat.
State assistance: karnataka state provides assistance like feasibility study subsidy; investment subsidy; concession on term loans, processing fee, working capital loan; stamp duty exemption; sales tax exemption to some extent; subsidy on electricity
tariff, technical guidance; raw materials; marketing facilities; allotment of land & sheds to entrepreneurs.
SELECTION OF EXACT PLANT SITE: Following factors must be considered while selecting plant site: 1) Pric Pricee of of lan land d 2) Type Type of soil soil 3) Wa Wast stee disp dispos osal al 4) Expans Expansion ion potent potential ial 5) Availabili Availability ty of commercial commercial services services 6) Comm Commun unic icat atio ion n 7) Availa Availabil bility ity of of amenit amenities ies 8) Health Health of the locali locality ty 9) Statut Statutory ory consid considerat eration ion 10)
Flood & drought conditions
11)
Right & title of the land
12)
Good scenery
13)
Attitude of local people
14)
Technology know-how
15)
Existence of rel religious & soci ocial instituti utions
Plant layout After selecting the suitable site, the next step is to plant and organize the facilities and equipment to be used in the factory. A particular type of building is required to be selected and the method of arranging material, machinery & equipment has to be decided. Factory building provides the housing for men, material & machines. The The arra arrang ngem emen entt of mach machin iner ery y & equi equipm pmen entt insi inside de the the fact factor ory y buil buildi ding ng for for manufacturing process is known as factory layout or plant layout. Plant layout can be defined defined as “A technique of locating marines, processes processes & plant services services which the factory in order to secure the greatest possible output of high quality at the lowest possible cost of production”.
OBJECTIVES OF A GOOD PLANT LAYOUT A good plant layout is one which enables the right equipment coupled with right method, in right place to permit processing of a product unit in the most effective manner. According to F.G. Moore “a good layout is one which allows material rapidly and directly for processing.
The objectives of a good plant layout are:Integrate the production production centers: - A good layout integrates the production centers 1. Integrate
namely men, material & machines, into logical balanced & effective production units. a) It permits permits the arrangement arrangement of of equipment equipment to provide provide greater greater utilizati utilization on b) It minim minimize izess the producti production on delays delays & reduce reducess conges congestio tion n by allowing allowing smooth smooth & Continuous flow of raw material & work in process. c) Increases Increases output output by shorten shortening ing the the manufactur manufacturing ing cost cost 2. Reduces material handling: - equipments are so arranged as to minimize material
handling & transportation
3. Effective Effective utilization utilization of space: - utilizes space both vertical & horizontal in the best
possible manner Works conven convenien ience ce & job satisfa satisfacti ction on: - prov provid ides es plea pleasa sant nt,, clea clearr & nois noisee free free 4. Works
government for workers. Temperature, ventilation, light, humidity & dirt are well controlled. Safety is taken as important factor to be provided. 5. Flexibility: - good layout provides flexibility for possible changes in the plant’s
production programme (both in design & required output). 6. Removal of bottlenecks: - good layout provides for smooth flow of operation, flow of
materials & eliminates bottlenecks through balancing of plant capacities. 7. Quick disposal of work : - provides for quick disposal of work & maximum works of
time in production. 8. Avoids industrial accidents - provides adequate space for movement of raw material
etc and therefore reduces the chances of industrial accidents. 9. Maintains decency & orderliness in the plant area.
Principles of plant layout 1. Overall integration: - a goods layout should ensure integration of men, material,
machinery & supporting activities in the best possible way Maximum movement movement: - The number of movements of men & material should be 2. Maximum
least 3. Smooth & continuous flow: - it should be ensured. Bottlenecks, backtracking &
congestion points should be removed 4. Utilisation of cube space : - Space is at a premium & its best use should be made. In
addition to the floor, ceiling should also be used for storing things. 5. Satisfaction Satisfaction & safety: - layout layout should ensure safety, good ventilation, ventilation, freedom from
dust, noise, fumes etc. it improves the morale of workers. 6. Flexibility: - it means that layout should be adopted & re-arranged at least cost for
other possible usage & causes least inconvenience.
IMPORTANCE OF PLANT LAYOUT A good plant layout may not be a guarantee to success but a bad plant layout is sure to destroy the performance of organisation. 1. The layout determines the arrangement of facilities & sources in the plant. It outlines the relationship between production centers & service department. 2. It ensures the flow of materials & personnel in the plant & therefore is concerned with time effort & cost spent on transportation. 3. It determines the type of handling system & their cost of installation. 4. It specifies the location, accessibility & the size of the store & also identifies the space & location of temporary storage for work in process. 5. Helps effective utilization of machines. 6. Helps in production, planning & control system e.g. renting, machine loading etc. 7. Good plant layout improves the quality of supervision 8. Improves the quality of output 9. Supervisors’ span of control may be effectively increased.
Factors affecting plant layout
1. Management policy
Plant layout job affected by management’s policy on (i)
Size & nations of product
(ii)
Plants for expansion
(iii)
Amount of inventory in stock
(iv) 2. Manufacturing process
Layout will on the type of manufacturing process e.g. (i)
Synthetic/ analytical
(ii)
Government
3. nature of product
Nature of product affords the layout in many ways e.g. (i)
Small & night products can be moved easily to the machines where for heavy & bulky products may have to be moved.
(ii)
One or a few standardized product can biller is produced through product layout in large numbers while prows layout may be belier for producing a large Variety of non-standardized products.
4. Volume of production
Plant layout & material handling equipment would be different in large scale organization than in a small scale manufacturing modesty.
5. Type of equipment in use
Use of single purpose and malts purpose machines would substantially affect the plant layout. Similarly noisy and vibrating man hives would repines a special core in the plant layout.
6. Type of
Layout would be in a simple strayed building than in mulch strayed building.
7. Availability of total floor area.
Layout would also expend on the floor area available. One head price mat is asked in case of shorter of stoic.
8. Arrangement of material havening equipment.
Plant layout and material havening equipment/ services are closely related it is necessary to provide attuned such as hand buck, fork buck etc.
9. Service facilities
Layout must take core of service facilities like canter, lockers, drinking wafer, just aid , wash rooms etc.
10. Possibly of futures expansion
Adequate thought must be given to layout to take care of possible expansion of fatuities in the near future.
Types of plant layout
A. Process Layout (Functional Layout) 1 Store room
2 Inspection Deficient
3 Producing Section
4 Milling Section
This is also known as functional layout. It is characterized by 5 6 keeping similar Lathe Shaper section section machines or similar operations at one 7 8 location (place). In Drill section Stock room other words, all machines will be at one place, all milling machines at another & so on the machines as to be arranged according to their functions. This type of layout is generally employed for plants/ industry engaged in job order production and non repetitive kind of manufacturing activities.
Advantages (i) Wide flexibility exists as regards allotment of work to equipments & workers.
(ii) Better utilization of available equipments. (iii)Comparatively less number of machines are required and this lesser capital
investment. (iv)
Better product quality because the supervisors & workers aliens to one type of machines & this become specialists.
(v) Variety of jobs coming - makes work more interesting. (vi)
Workers don’t get affected by the works done by others.
Disadvantages 1. Process layout needs more spaces. 2. Automatic material handling is more efficient. 3. More material in process remaining in queue for further operations. 4. Completion of same product takes more time.
5. Work in progress inventory is large. 6. Production control becomes difficult. 7. Material handing is more & more associated costs.
B. Product layout This is also known on line (type) layout. It implies that version operations on a product are performed in a sequence and the machines are placed along the product flow lines e.g. machines are arranged in the sequence in which a given product will be operated upon. This type of layout is preferred for continuous production.
D E F G
x Store room (rent materi al)
Y A
B
H
I
V L K J
M
N
O
P
STOCK ROOM
Z
Raw material from the store is fed to three lines X, Y & Z material in X line gets processed on machines D, E, F & G and meets material of Y line after it has been processed on the main assembly line machines A B. Products of X & Y lines are assembled at W and get processed on machines H & I still another part comes from Z line and assembles with the main product at V. After the total assembly gets worked on machines M, N, O & P, to goes to the stock room. (The inspection phase has not been shown in the layout).
Advantages 1. Less space requirements for the same volume of production. 2. Material handling is easy and saves on line and cost.
3. Less in-process inventing. 4. Product completion takes lesser line. 5. Better coordination & simple PPC. 6. Smooth & coordination work flow.
Disadvantages 1. Less flexible because it is product specific.
2. One shut down in the machine may totally interrupt the line. Therefore, some study by machines of each type may be required. 3. Role of output depends upon the slowest machine. It may lead to idle time of other machines. 4. It one inspector looks after the inspection of too many machines, it (inspection) may be slow. 5. It may be difficult to increase production beyond the capacity of the line.
C. Combination Layout These days pure product or process layout are rare. A combination of the two combines the advantages of both types of layouts.
For example, production steps may be Process layout & assembly by line. OR Main Product by Process Layout & by product by line. D. Fixed Position Layout When the product being manufactured in too big e.g. Ship, aircraft or big Pressure Vessel, a fixed position layout is resolved to. Here the product remains stationery and men, material & equipment move to the product site. Advantages 1. Least movement of materials. 2. Affords maximum flexibility for incorporating all sorts of cheques.
3. Different types of products (projects) can be undertaken with the same layout.
Disadvantages 1. High cost of equipment landline. 2. Low utilization of labour & equipment.
Problems of layout Problems of layout may arise in any one of the following 1. Starting a new plant.
When starting a new plant of is mercenary to determine a) Management of production & service repatriates & their proximity of each other in the plant. b) Arrangement of productive facilities within this experiment.
2. Changes in the product design
Changes in the product design may entail a change in the séance of operators or a new set of operations to mat these change the layout may have to be changed
