1.

UNIT –
IINTRODUCTIONTOMANAGEMENT

CONCEPTOFMANAGEMENT
Managementiswhatmanagersdo.Itreferstothepeopleattoplevelintheorganization. It is
often viewed as maneuvering, i.e. doing something cleverly to change asituation and make
things happen the way you want them to. It has drawn the concepts
andprinciplesfromanumberofdisciplinessuchaseconomics,sociology,psychology,anthropology
,andstatisticsandsoon.Thereareavarietyofviewsaboutthetermmanagement. Traditionally, the
term "management" refers to the activities (and often
thegroupofpeople)involvedinthefourgeneralfunctions(planning,organizing,leading,controlling
).
Another common view is that "management" is getting things done through others.
Tomost employees, the term "management" probably means the group of people (executives
andother managers) who are primarily responsible for making decisions in the organization.
Innon-profit organizations, the term management might refer to all or any of the activities of
theboard,executivedirectorand/or program directors.

HumanR Physicalr
esources esources
Effectiveand
Managerial efficientutiliz Goals
activities ation

Financial
Resources Information
resources
In general, management is a set of activities directed at the efficient and
effectiveutilization of resources in the pursuit of one or more goals. Different scholars from
differentdisciplines have expressed their views on management. For example, economists
have treatedmanagement as a factor of production; sociologists have treated it as a class or
group ofpersons;practitioners havetreatedit asaprocesscomprisingdifferentactivities.

Definition:
1. According to Harold Koontz, “Management is an art of getting things done
throughandwiththepeopleinformallyorganizedgroups.Itisanartofcreatinganenvironmen
t in which people can perform and individuals and can co-operate
towardsattainmentof groupgoals”.
2. According to F.W. Taylor, “Management is an art of knowing what to do, when to
doandseethat it is donein thebestand cheapestway”.
3. According to Henry Fayol, “To manage is to forecast and to plan, to organize
tocommand,to coordinateand tocontrol”.
Therefore,wecansaythatgoodmanagementincludesbothbeingeffectiveandefficient.
Being efficient means doing the task correctly atleast possible cost with minimumwastage of
resources. Management is a process involving planning, organizing,
staffing,directingandcontrollinghumaneffortsto achievestatedobjectives inanorganization.
 1.2

IMPORTANCEOFMANAGEMENT
Managementhasbeenimportanttothedailylivesofpeopleandtotheorganizations.
Theimportanceof management maybetraced inthe followingcontexts:
1. Achievementofgroupgoals:A humangroupconsistsof severalpersons,eachspecializing
in doing a part of the total task. Each person may be working
efficiently,butthegroupasawholecannotrealizeitobjectivesunlessthereismutualcooperati
onandcoordinationamongthem.Managementcreatesteamworkandcoordinationin
thegroup.
2. Optimumutilizationofresources:Managersforecasttheneedformaterials,machinery,
money and manpower. They ensure that the organization has adequateresourcesandat
thesametimedoes not haveidleresources.
3. Minimization of Cost: In the modern era of cut-throat competition no business
cansucceed until it is able to supply the required goods and services at the lowest
possiblecost per unit.Management directs the day-to-day operations in such a way that
allwastagesareavoided.
4. Survival and Growth: An enterprise has to adapt itself to the changing demands
ofthe market and society.It takes steps in advance to meet the challenges of
changingenvironment.Managers enable the enterprise to minimize the risks and
maximize thebenefitsof opportunities.
5. GenerationofEmployment:Bysettingupandexpandingbusinessenterprises,managers
create jobs for the people.Managers also create such an environment
thatpeopleworkingin enterprisecanget job satisfactionand happiness.
6. Continuity in the organization: Continuity is very important in the organization.Itis
only management that keeps the organization continuing. Where there are noproper
guidelines for decisionmakingcontinuitycannot be guaranteed.
7. Development of the Nation: Efficient management is equally important at
Nationallevel.Thedevelopmentofacountrylargelydependsonthequalityofthemanageme
ntofitsresources.Byproducingwealth,managementincreasesthenationalincome and
livingstandards ofpeople.

NATUREOFMANAGEMENT
The study and application of management techniques in managing the affairs of
theorganization have changed its nature over a period of time. The following points will
describethenatureof management:
1. Management is a Social process:Management is done by people, through peopleand
for people. Social process refers to a series of activities that are performed in
thesociety. These activities are carried out by administrators, politicians,
economists,doctors,lawyers, parents, etc.
2. Management is goal oriented: Management involves achieving certain goals; it
hasno justification to exist without goals. The basic goal of management is to
ensureefficiencyandeconomyin utilizationof human, physicaland financialresources.
3. Management is Universal: Management is an essential element of every
organizedactivity irrespective of the size or type of activity. All types of organizations
requiremanagement.Managersat alllevels perform thesame basic functions.
4. Management is a continuous process: Management is dynamic and an on-
goingprocess. The cycle of management continuous to operate so long as there is
organizedactionfor the achievement of groupgoals.
 1.3

5. Management is a Group Activity: Management is very much less concerned

withindividual‟s efforts. It is more concerned with groups. It involves the use of
groupeffort to achieve predetermined goal of management of ABC & Co. is good
refers to agroupof persons managingtheenterprise.
6. Relative, Not Absolute Principles: Management principles are relative, not
absolute,and they should be applied according to the need of the organization. A
particularmanagementprinciplehasdifferentstrengthsindifferentconditions.Therefore,pr
inciplesshould be applied accordingto theprevailingconditions.
7. Management is Multidisciplinary: Management has been developed as a
separatediscipline,butitdrawsknowledgeandconceptsfromvariousdisciplineslikepsycho
logy, sociology, economics, statistics, operations research, etc. Managementintegrates
the idea andconcepts taken from these disciplines and presents
newerconceptswhichcan beput into practiceformanagingtheorganizations.
8. Management is Intangible: Management is an unseen or invisible force. It cannot
beseen but its presence can be felt everywhere in the form of results. However,
themanagerswho perform thefunction aretangibleorvisible.
9. Management isaProfession:A Professionrefers toa vocationorabranchofadvanced
learning such as engineering or medicine. Management helps to carry
outeveryprofession in a scientificmanner.
10. Management is an Art as well as Science: An art is characterized by
practicalknowledge,personalcreativityandskill.Ascienceisasystematizedbodyofknowle
dgeoffacts.Itinvolvesbasicprinciples,whicharecapableofuniversalapplication.

MANAGEMENTASARTORSCIENCE
To understand the basic nature of management,it must be analyzed in terms of artand
science, in relation to administration, and as a profession, in terms of managerial
skillsandstyle of managers.

ManagementasaScience:
Science means a systematic body of knowledge pertaining to a specific field of
study.It contains general principles and facts which explains a phenomenon. These principles
andtheories help to explain past events and may be used to predict the outcome of
actions.Scientificmethodsofobservationsandexperiments areusedtodevelopprinciples
ofscience.

Thus,theessential featuresof scienceareasfollows:

1. Systematic body of knowledge: Management has a systematic body of
knowledgeconsisting ofgeneral principles and techniques.These help to explain
events andserveasguidelines formanagers indifferent typesoforganizations.
2. Universal principles: Management contains sound fundamental principles which
canbe universally applied. For instance, the principle of unity of command states that
at atime oneemployeeshould beanswerable to onlyoneboss.
3. Scientificenquiryandexperiments:Managementprinciplesarealsobasedonscientific
enquiry and investigation. These have been developed through
experimentsandpractical experienceofalargenumberof managers.
4. Cause and effect relationship: The principles of management establish cause
andeffect relationship between different variables. For instance lack of balance
betweenauthorityandresponsibilitywillcause management to becomeineffective.
 1.4

5. Tests of validity and predictability: Principles of management can also be tested

fortheir validity. For example, the principle of unity of commandcan betested
bycomparing two persons, one having a single boss and other having two bosses.
Theperformanceof thefirstperson will be higherthanthat ofthesecond.

ManagementasanArt:
Artimpliestheapplicationofknowledgeandskillstobringaboutthedesiredresults.
Theessentialelements ofartsare:
1. Practical knowledge: Every art signifies practical knowledge. For example, a
personcannot become a successful manager simply by reading the theory and getting
adegree. He must also learn to apply his knowledge in solving managerial problems
inpracticallife.
2. Personal skill: Every artist has his own style and approach to his job. Every
managerhas his individual approach and style in solving managerial problems. The
success ofamanager depends on his personalityin addition to his technical knowledge.
3. Result-oriented approach: Arts seeks to achieve concrete results. The process
ofmanagement is also directed towards the accomplishment of desirable goals.
Everymanager applies certainknowledgeandskills to achievethe desiredresults.
4. Creativity: Art is basically creative and an artist aims at producing something
thathad not existed before. A manager effectively combines and coordinates the
factors ofproductionto creategoods and services.
5. Improvement through people: Practice makes one perfect. Every artist
becomesmoreandmoreefficientthroughconstantpractice.Amanagergainsexperiencethro
ughregularpracticeand becomes moreeffective.

ManagementisCombinationofArtandScience:
Management knowledge exhibits characteristics of both a science as well as an art.
Itis a science because it has an organized body of knowledge consisting of certain
universalfacts. It is known as an art because it involves creating results through practical
application
ofknowledgeandskills.However,artandsciencearecomplementarytoeachother.Artwithout
science has no guide and science without art is knowledge wasted. For example, asuccessful
manager must know the principles of management and also acquire the skill ofapplyingthose
principles forsolvingmanagerial problemsin different situations.

FUNCTIONSOFMANAGEMENT
Management is a process of the quality of both physical as well as human resources
toseek objectives. The elements or activities which are performed in this process are known
asfunctionsofmanagement. Variousauthors haveclassifiedthesefunctionsdifferently:
Writers ManagementFunctions
Henry Planning,Organizing,Commanding, Coordinating,Controlling

FayolLutherG POSDCORD-
Planning,Organising,Staffing,DirectingCoordinating,Re
ullick porting,Directing

Planning,Organising,Staffing,Leading,Controlling
Koontz
Thus, the functions of management may be classified in to five categories:
 1.5

Planning,Organizing, Staffing, Directing (leadership, motivation, communication,

coordination) andControlling.
 1.6

PLANNING
The first function of the manager is planning. It is also the foremost and the
essentialfunction. Planning defines the goals and objectives to be reached in the plan period.
It alsoconsists of policies, procedures, methods, budgets, strategy and programmes that are
neededtoachievethe goalsset.Decision-makingisthe mostimportantandintegralpartofplanning.
Planning is the most basic and pervasive process involved in managing. It
meansdeciding in advance what actions to take and when and how to take them. Planning is
needed,firstly for committing and allocating the organization‟s limited resources towards
achievingitsobjectivesinthebestpossiblemannerand,secondlyforanticipatingthefutureopportuni
tiesandproblems.
Planning is putting down in black and white the actions which a manager intends
totake. Each manager is involved in planning though the scope and character may vary with
thelevel of the manager. Planning involves determination of objectives; forecasting;
formulationofpolicies and programmes;and preparation ofschedules.

Thestepsgenerallyinvolved inplanning are as follows:

1. EstablishingVerifiableGoalsorSetof goalstobe achieved
2. EstablishingPlanningPremises
3. Decidingthe planningPeriod
4. FindingAlternativeCourseofAction
5. EvaluatingandselectingaCourseofAction
6. DevelopingDerivativeplans
7. MeasuringandControllingtheprogress

ORGANIZING
Organizing is to give a proper shape to the structure that should execute the
plansmoothly toachieve its success.It is the function of putting together different parts
formingan enterprise and makes it an organic whole to enable it to carry out defined
operations.Various activities to fulfill the goals have to begroupedand these areto be assigned
topeople in-groups or departments. The authority, responsibility, accountability needed at
eachlevelto execute theplanis to bedefined anddelegated.
Organizing simply can be defined as a process that results in organizational
structurethroughdepartmentalization,linkingdepartmentstogether,definingauthorityandrespons
ibility and prescribing authority relationship sub activities. The organizing functiondeals with
all those activities that result in the formal assignment of tasks and authority and
acoordinationofeffort.Thesupervisorstaffstheworkunit,trainsemployees,securesresources,ande
mpowersthe workgroupinto aproductiveteam.
 1.7

Theprocess oforganizingconsistsofthe followingsteps:

a. Determininganddefiningthe activitiesrequiredfortheachievementofplannedgoals;
b. Groupingtheactivitiesintoproperandconvenientunits;
c. Assigningthedutiesandactivitiestospecificpositionsandpeople
d. Delegatingauthorityto thosepositions and people;
e. Definingand fixingresponsibilityforperformance; and
f. Establishinghorizontalandverticalauthority-
responsibilityrelationshipthroughouttheorganization.

STAFFING
Itisthefunctionofmanningtheorganizationstructureandkeepingitmanned.Staffinghasass
umedgreaterimportanceintherecentyearsduetoadvancementoftechnology,increaseinsizeofbusi
ness,complexityofhumanbehavioretc.Themainpurpose of staffing is to put right man on right
job i.e. square pegs in square holes and roundpegsin round holes.
The staffing functioninvolvesidentifying/selecting
therightpersonforexecutingeachtaskplanned.Bycarryingthefunctionsoforganizingandstaffingt
he"plan"istransformedfromadocumentleveltotheoperationalstage.Havingfoundtherightcandid
ate,itisequally importantthatyouareable toretainhim.Among other things,motivation and
leadership provided by the top management of organization also plays animportantrole.
Thestaffingfunction includesall thejobsconnected with:
 ManpowerPlanning;
 Recruitment;Selection&placement;
 Training&development;
 Remuneration,PerformanceAppraisal;
 Promotions&Transfer.

DIRECTING
It is that part of managerial function which actuates the organizational methods
towork efficiently for achievement of organizational purposes. It is considered life- spark of
theenterprise which sets it in motion the action of people because planning, organizing
andstaffing are the mere preparations for doing the work. Direction is that inert-personnel
aspectof management which deals directly with influencing, guiding, supervising, motivating
sub-ordinatefortheachievement oforganizational goals.
Thefunctionofdirectingembracesthe followingactivities:
a. Issuingordersandinstructions.
b. Supervising(overseeing) peopleatwork.
c. Motivation,i.e.creatingthewillingnesstoworkforcertainobjectives.
d. Communication,i.e.establishingunderstandingwithemployees
regardingplansandtheirimplementation, and
e. Leadershiporinfluencingthebehaviorof employees.
Directionhas followingelements:
1. Supervision: implies overseeing the work of subordinates by their superiors. It is
theactof watching &directingwork &workers.
2. Motivation: means inspiring, stimulating or encouraging the sub-ordinates with
zealto work. Positive, negative, monetary, non-monetary incentives may be used for
thispurpose.
 1.8

3. Leadership:maybedefinedasaprocessbywhichmanagerguidesandinfluencesthe work
ofsubordinates in desired direction.
4. Communications:istheprocessofpassinginformation,experience,opinionetcfromone
person toanother.It isa bridgeof understanding.

CONTROLLING
Controlisthetoolforcourseregulationastheorganizationmarchesaheadandcorrecting it
when it diverts off-course. The results of the activity must confirm to the laiddown standards
and all variations should be analyzed and root cause identified.
Controllingincludesongoingcollectionoffeedback,andmonitoringandadjustmentofsystems,proc
esses and structures accordingly. Examples include use of financial controls, policies
andprocedures,performancemanagementprocesses,measures toavoid risksetc.
Planning and controlling go hand in hand. There can be no control without a plan
andplans cannot be successfully implemented in the absence of controls. Controls provide
ameans of checking the progress of the plans and correcting any deviations that may
occuralongtheway.Itimpliesmeasurementofaccomplishmentagainstthestandardsandcorrection
ofdeviation ifanytoensure achievement oforganizational goals.
The purpose of controlling is to ensure that everything occurs in conformities with
thestandards.Controllingisthemeasurement&correctionofperformanceactivitiesofsubordinates
in order to make sure that the enterprise objectives and plans desired to obtainthemas
beingaccomplished.

Theprocess of controllinginvolves the followingsteps:

a. establishingstandardsfor measuringworkperformance;
b. measurementof actualperformance andcomparingitwiththestandards;
c. findingvariances between thetwo and seethe reasons ; and
d. takingcorrectiveactionforrectifyingdeviationssoastoensureattainmentofobjectives

MANAGEMENTLEVELS

Level of Management refers to the categories or layers of managerial positions in

anorganization. The level of management determines the amount of authority and status of
thepersonoccupyingthe position at that level. ManagerialHierarchyconsists of:
 1.9

Top-levelManagementorSeniorManagement:
TheseincludesboardofDirectors,CEO‟stheycomprisesmallgroupsbutareresponsible for
overall management they formulate plans, decide objectives & communicatetomiddlelevel
management.
1. Requireanextensive knowledgeof managementroles andskills.
2. Theyhavetobe awareof externalfactorssuchasmarketsand governmentpolicies.
3. Theirdecisionsaremadeusinganalytic,directive,conceptualandbehavioral/
participativeprocesses.
4. Theyareresponsibleforstrategicdecisions.
5. Theyhaveto chalk out the plan and seethat planmaybeeffectivein thefuture.

MiddleLevelofManagement:
The branch managers and departmental managers constitute middle level. They
areresponsibletothetopmanagementforthefunctioningoftheirdepartment.Insmallorganization,
there is only one layer of middle level of management but in big
enterprises,theremaybeseniorand junior middlelevel management. Theirrolecan
beemphasized as:
1. Executingplansoftheorganizationinaccordancewiththepoliciesanddirectivesofthetop
management.
2. Theyparticipateinemployment&trainingoflowerlevelmanagement.
3. Theyinterpretandexplain policiesoftoplevel managementtolowerlevel.
4. Theyareresponsibleforcoordinatingtheactivitieswithin thedivisionordepartment.
5. Theyevaluate the performance
ofemployeesandsendthereportsandotherimportantdatato top level management.

LowerLevelofManagement:
Lower level is also known as supervisory / operative level of management. It
consistsof supervisors, foreman, section officers, superintendent, workers, etc. They are
concernedwithdirection and controllingfunction ofmanagement.Their activities include:
1. Assigningof jobsandtasks tovariousworkers.
2. Theyguideand instructworkers for dayto dayactivities.
3. Theyareresponsible forthe qualityas well as quantityof production.
4. Theycommunicateworkersproblems,suggestions,andrecommendatoryappeals,etc.,to
thehigher level, andhigherlevelgoals&objectivesto theworkers.
5. Theyarrangenecessarymaterials, machines,tools etcfor gettingthethings done.

EVALUATIONOFMANAGEMENTTHOUGHT
From the start of the 19th century until the 20th century, managers and scholars
haveformedatheoreticalframeworktoexplainwhattheybelievetobegoodpracticesofmanagement
. Their efforts led to different classes of perspectives on management and eachperspective is
based on different assumptions towards the objectives of the organization
andhumanbehavior.
 1.10

Theschools ofmanagement thoughtsareclassifiedas follows:

1. Classical Perspective: This perspective existed in the 19th century and early 20th
century.It focuses on the rational and scientific approaches to the study of management
and onfinding ways to mould an organisation to become more efficient. Classical
managementtheory can be divided into three perspectives distinguished by the issuesand
problemsthattheyaddress.
 ScientificmanagementemergedprimarilyamongAmericanscholarsandmanagers and
focused on issues involved in the management of work and workers.The theory of
scientific management developed by F.W.Taylor and others acceptedtheempirical
methods for arrivingat conclusions.
 Administrative theory (also called Functional approach) evolved from a
concernby both European and American academicians and managers with the
nature andmanagement of the total organization.Issuesand problems that they
sought toaddress focused on the technical efficiency of the organization. Other
thinkers likeHenry Fayol following the functional approach emphasized on the
importance ofmanagerialfunctions andprinciples foruniversal application.
 Bureaucracy theory was developed by the German sociologist, Max Weber,
whichportrays the structure and design of organization characterized by a hierarchy
ofauthority,formalizedrulesandregulationsthatservetoguidethecoordinatedfunctionin
gofan organization.

2. Neo-ClassicalorHumanRelationsPerspective:Theneo-classicalwriterstriedtoremove the
deficiencies of the classical school and suggested improvements for
goodhumanrelationsintheorganization.Humanrelationisfrequentlyusedasageneraltermto
describe the ways in which managers interact with their employees. When
„employeemanagement‟ stimulates more and better work, the organization has effective
humanrelations,whenmoraleandefficiency deteriorate, itshuman relations are
saidtobeineffective.
Thehumanrelationsmovement/approacharosefromearlyattemptstosystematically
discover the social and psychological factors that would create
effectivehumanrelations.Theirpropositionsarebasedon'humanrelationsstudies'andmotivatio
nal theories such as Hawthorne Experiments, Maslow‟s need hierarchy theory,etc.

3. Quantitative Management or Behavioral Sciences Perspective: The behavioral

schoolemergedpartly
becausetheclassicalapproachdidnotachievesufficientproduction,efficiency and workplace
harmony. People did not always follow predicted or expectedpatterns of behavior. Thus
there was increased interest in helping managers deal moreeffectivelywith thepeople
sideof their organizations.
Severaltheoriststriedtostrengthenneoclassicalmanagementtheory withtheinsights of
sociology and psychology. The behavioral science perspective believes that itis difficult
to understand the sociology of a group separate from the psychology of
theindividualscomprisingit and theanthropologyofthe culturewithinwhichit exists.

4. ContemporaryorModernPerspective:Themodemmanagementthinkersdefineorganizatio
n as a system and also consider the impact of environment on the
effectivenessoftheorganization.Theorganizationisviewedasadaptivesystemswhichmustinor
derto survive adjust to environmental changes. As a result, two approaches have
gainedprominenceafter1960s,which are:Systemsapproachand Contingencyapproach.
 1.11

SCIENTIFICMANAGEMENT
The classical scientific branch arose because of the need to increase productivity
andefficiency. The emphasis was on trying to find the best way to get the most work done
byexamining how the work process was actually accomplished and by scrutinizing the skills
oftheworkforce.
The concept of scientific management was introduced by Frederick Winslow
Taylorin USA in the beginning of 20th century (1856-1915). Since Taylor has put the
emphasis onsolving managerial problems in a scientific way, often, he is called as Father of
ScientificManagementandhiscontributionsastheprinciplesofscientificmanagement.Healsodeve
lopedatheoryoforganizations,whichhasbeenlargelyacceptedbysubsequentManagementPhiloso
phers.

Definition:
“Scientific management is concerned with knowing exactly what you want to do
andthenseein that theydo itin thebest and cheapestway.”
Taylor was concerned with the problems of increasing labour productivity
withoutputting under strain or workers.Scientific management implies the application of
scientificmethods of study and analysis to the problems of management. On the basis of
experiments,he published many papers and books and all his contributions were compiled in
his book“ScientificManagement”.

Hiscontributionsaredividedinto twoparts:
 Principlesofscientificmanagement.
 Elementsandtoolsofscientificmanagement.

PrinciplesofScientificManagement:
Taylorhas givencertainbasicprinciplesofscientificmanagement.
1) Replacing rule of thumb with science: It requires scientific study and analysis
ofeach element of a job in order to replace the old rule of thumb approach
developmentofascienceforeachelementofaman‟sjobrequiresthatdecisionsshould
bemadeonthebasis of facts ratherthan opinions and beliefs.
2) Harmony in group action: Taylor has pointed out that attempts should be made
toobtain harmony ingroup action ratherthan discord. Group harmony
suggeststhatthere should be mutual give and take situation and proper understanding
so that groupasa whole contributes to themaximum.
3) Co-operation:Scientificmanagementinvolvesachievingcooperationratherthanchaotic
individualism. It is based on mutual confidence, co-operation and goodwill.Co-
operation between management and workers can be developed through
mutualunderstandingand achangein thinking.
4) Maximumoutput:Scientificmanagementinvolvescontinuousincreaseinproduction and
productivity instead of restricted production either by management
orbyworker.Thiscanbepossiblewhenefficiencyandoutputaremaximized.Maximumoutp
ut and optimum utilization ofresources brings profits.
5) Development of workers: All workers should be developed to the fullest
extentpossible for their own and for the company‟s highest prosperity. Training
should beprovided to the workers to keep them fully fit according to the requirement
of newmethods ofworkingwhich maybedifferentfromnon-scientificmethods.
 1.12

ElementsandToolsofScientificManagement:
1. Separation of planning & doing: Taylor emphasized the separation of
planningaspect from actual doing of the work. In other words planning should be left
to thesupervisorand the worker should concentrateonlyon operational work.
2. Functional foremanship: Taylor introduced the concept of functional
foremanshipbased on specialization of functions. In this system, eight persons are
involved todirect the activities of workers. Out of these four persons are concerned
with planningviz., route clerk, instruction card clerk, time and cost clerk and
disciplinarian. Theremaining four persons are concerned with doing aspect of the job,
viz., speed boss,inspector, gangboss andmaintenanceforeman.
WorkShopManager

PlanningIncharge ProductionIncharge

Route Time Instruction Disciplinar Gang Route Inspecto Maintenance

Clerk andcostcl Cardclerk ian Boss Boss r Foreman
erk

Worker

3. Standardization: It is a process of fixing well thought out and tested standards

ofnorms with a view to minimize efficiency of work. It should be maintained in
respectof instruments and tools, period of work, amount of work, working conditions,
cost ofproduction,etc.
4. Selection and Training: Taylor has suggested that workers should be selected
onscientificbasistakingintoaccounttheireducation,workexperience,aptitude,physical
strength, etc. A worker should be given work for which he is physically
andtechnically most suitable. Apart from selection, proper training should be provided
toworkersto makethem moreeffectiveand efficient.
5. FinancialIncentives:Financialincentivescanmotivateworkerstoputintheirmaximum
efforts. If provisions exist to earn higher wages by putting in extra effort,workers will
be motivated to earn more. According to this scheme, a worker whocompletes the
normal work gets wages at higher rate per piece and one who does notcomplete gets
at lower rate.
6. Economy: While applying scientific management, not only scientific and
technicalaspects should be considered but adequate consideration should be given to
economyand profit. The economy and profit can be achieved by making the resources
moreproductiveas well as byeliminatingthe wastages.
7. MentalRevolution:scientificmanagementdependsonthemutualco-operationbetween
management and workers. For this co-operation, there shouldbe mentalchangein both
partiesfrom conflict to co-operation.

CRITICISM:
Scientific management ignored human side of organization. Taylor and his
discipleswerecalled"EfficiencyExperts"becausetheyconcentratedattentiononimprovingefficie
ncy of workers and machines. Scientific management is therefore restricted in scope asa
theory of Industrial Engineering or Industrial Management, rather than a general theory
ofmanagement.
 1.13

Although it is accepted that the scientific management enables the management to

putresourcestoits bestpossibleuse andmanner,yet ithasnotbeensparedof severecriticism.
Employer’sViewpoint:
1. More Expensive: Scientific management is a costly system and a huge investment
isrequired in establishment of planning dept., standardization, work study, training
ofworkers. It maybebeyond reach of small firms.
2. Time Consuming: Scientific management requires mental revision and
completereorganizing of organization. A lot of time is required for work, study
standardization&specialization.
WorkersViewpoint:
1. Unemployment: Workers feel that management reduces employment
opportunitiesthroughreplacementofmenby machinesandby
increasinghumanproductivityfewerworkers areneeded to do workleadingto
chuckingout from theirjobs.
2. Exploitation: Workers feel they are exploited as they are not given due share
inincreasing profits which is due to their increased productivity. Wages do not rise
inproportionasriseinproduction. Wagepayment createsuncertainty&insecurity.
3. Monotony: Due to excessive specialization the workers are not able to take
initiativeon their own. Their status is reduced to being mere cogs in wheel. Jobs
become dull.Workersloseinterest in jobs and derivelittle pleasurefrom work.
4. Weakening of Trade Union: Everything is fixed & predetermined by
management.Soitleavesnoroomfortradeunionstobargainaseverythingisstandardized,sta
ndardoutput, standardworkingconditions, standard timeetc.
5. Over speeding: The scientific management lays standard output, time so they have
torush up and finish the work in time. The workers speed up to that standard output,
soscientific management drives the workers to rush towards output and finish work
instandardtime.

ADMINISTRATIVE/MODERNOPERATIONAL MANAGEMENT
Administrativetheoryfocusesonthetotalorganizationandattemptstodevelopprinciplestha
twilldirectmanagerstomoreefficientactivities.Administrativetheoristslookedatproductivityimpr
ovementsfromthe"topdown",asdistinguishedfromtheScientificApproachofTaylor,whoreorgani
zedfrom"bottomup".Administrativetheoristsdevelopedgeneral
guidelinesofhowtoformalizeorganizationalstructures andrelationships.
Henri Fayol (1841-1925) was a French mining engineer who spent many of his
lateryearsasanexecutiveforaFrenchcoalandironcombine.In1916,asdirectorofthecompany,
Fayol penned the book General and Industrial Management. In this book, Fayolclassified the
study of management into several functional areas which are still
commonlyusedinexecutivetrainingandcorporatedevelopmentprograms.Thefunctionalareasiden
tified by Fayol are planning, organizing, commanding, coordinating, and controlling.
Hiscontributionsaredividedin thefollowingcategories:
AccordingtoFayolthefollowingarethelistofqualitiesrequiredin amanager:
 Physical–includesHealth,Vigor andaddress.
 Mental–includesabilitytounderstandandlearn,judgment,andcapability.
 Moral–includesenergy, firmness,initiative,loyalty,etc.
 Educational–includesqualifications.
 Technical-peculiartothefunctionbeingperformed.
 Experience–knowledge inrelatedfield.
 1.14

OrganizationalActivities:
Heemphasizedtheroleofadministrativemanagementandconcludedthatallactivitiesthatoc
curinbusiness organizations couldbe dividedinto six maingroups.
1. Technical-relatedtoproduction ormanufacturing.
2. Commercial–includesbuying,sellingandexchange.
3. Financial–includessearchforcapitalandits optimumuse.
4. Security–related to protectionofpropertyand person.
5. Accounting–includesrecordkeeping,costingandstatistics.
6. Managerial – includes planning, organizing, commanding, coordinating
andcontrolling).
He concluded that the six groups of activities are interdependent and that it is the
roleofmanagementtoensureallsixactivitiesworksmoothlytoachievethegoalsofanenterprise.

General14PrinciplesofManagement:
HenryFayolhasgiven14generalprinciplesofmanagement:
1. Division of work: It is helpful to take the advantage of specialization. Here, the
workis divided among themembers of the group based on theemployee‟s skills
andtalents.
2. Authority and Responsibility: Fayol finds authority as a continuation of official
andpersonalfactors.Officialauthorityisderivedfromthemanager‟spositionandpersonal
authority is derived from personal qualities such as intelligence,
experience,moralworth,past services,etc.,Responsibilityarisesoutof assignmentof
activity.
3. Discipline:Allthepersonalservinginanorganizationshouldbedisciplined.Discipline is
obedience, application, behavior and outward mark of respect shown byemployees.
4. Unity of Command: Unity of command means that a person should get orders
fromonly one superior. Fayol has considered unity of command as an important
aspect inmanagingan organization.
5. Unity ofDirection: According to this principle, eachgroupofactivities with thesame
objective must have one head and one plan. Unity of direction provides
bettercoordinationamongvarious activities to beundertaken byan organization.
6. Subordination of individual interest to general interest: Individual interest must
besubordinate togeneralinterestwhenthere
isconflictbetweenthetwo.Howeverfactorslikeambition,laziness,weakness,etc.,tendtore
ducetheimportanceofgeneralinterest.Therefore,superiorsshouldsetanexampleinfairness
and goodness.
7. Remuneration to Personnel: Remuneration to employees should be fair and
providemaximumpossiblesatisfaction toemployees andemployers.
8. Centralization of Authority: Authority is to be centralized when decision
makingpowers are retained at top level. The degree of centralization or
decentralization isdeterminedbythe needsofthe company.
9. Scalar Chain: There should be a scalar chain of authority and of
communicationranging from the highest to the lowest. It suggests that each
communication going upor coming down must flow through each position in the line
of authority. It can beshort-
circuitedonlyinspecialcircumstances.Scalarchaincanbepresentedasfollows:
 1.15

10. Order: This is a principle relating to the arrangement of things and people. In
socialorder,thereshould betheright manin theright place.
11. Equity: Equity is the combination of justice and kindness. Equity in treatment
andbehavioris liked byeveryoneand it brings loyaltyin theorganization.
12. Stability of tenure: No employee should be removed or transferred within short
time.There should be reasonable security of jobs. Stability of tenure is essential to get
anemployeeaccustomed tonew workand succeedingin doingitwell.
13. Initiative: Within the limits of authority and discipline, managers should
encouragetheir employees for taking initiative. Initiative is concerned with thinking
out andexecutionofaplan. Initiative increaseszeal and energyonthe partofhumanbeings.
14. Esprit de corps: It is the principle of „union is strength‟ and extension of unity
ofcommand for establishing team work. The manager should encourage esprit de
corpsamonghis employees.
Until today, his principles remain important as they continue to have a
significantimpactoncurrentmanagerialthinking.Fayol'smaincontributionwastheideathatmanage
ment was not a talent related to genetic hereditary, but a skill that could be taught. Hecreated
a system of ideas that could be applied to many areas of management and laid downbasicrules
formanaginglargeorganizations.

DECISIONMAKING
Decision-makingisanessentialaspectofmodernmanagement.Itisaprimaryfunction of
management. Decision-making is the key part of manager's activities. Decisionsare important
as they determine both managerial and organizational actions. A decision
maybedefinedas"acourseofactionwhichisconsciouslychosenfromamongasetofalternativestoac
hieveadesiredresult."Itrepresentsawell-balancedjudgmentandacommitmentto action.
Decision is a choice from among a set of alternatives. The word 'decision' is
derivedfrom the Latin words de ciso which means 'a cutting away or a cutting off or in a
practicalsense' to come to a conclusion. Decision-making is a process by which a decision
(course ofaction)is taken.Decision-makingliesembeddedin the processof management.
According to Trewatha& Newport, "Decision-making involves the selection of
acourse of action from among two or more possible alternatives in order to arrive at a
solutionforagiven problem".

DecisionMakingProcess:
Decision-making involves a number of steps which need to be taken in a
logicalmanner. Decision-making process prescribes some rules and guidelines as to how a
decisionshould be taken or made. This involves many steps logically arranged. Drucker
recommendedthe scientific method of decision-making which, according to him, involves the
following sixstepsas shown below:

1. Identify/Define the Problem: Identification of the real problem before a

businessenterprise is the first step in the process of decision-making. It is rightly said
that aproblem well-defined is a problem half-solved. Information relevant to the
problemshould be gathered so that critical analysis of the problem is possible. In brief,
themanager should search the 'critical factor' at work. It is the point at which the
choiceapplies.
 1.16

Identify/DefinetheProblem

AnalyzingtheProblem

DevelopingAlternativeSolutions

Selectingthe BestSolution

ImplementationofDecision

Feedback &FollowupAction

2. Analyzing the Problem: After defining the problem, the next step in the decision-
making process is to analyze the problem in depth. This is necessary to classify
theproblem in order to know who musttake thedecision andwho mustbe
informedaboutthedecision taken.
3. DevelopingAlternativeSolutions:Afterdefiningtheproblemandanalyzingitsnature,then
extstepistoobtaintherelevantinformation/dataaboutit.Usingthisdata the manager has to
determine available alternative courses of action that could beused to solve the
problem at hand. If necessary, group participation techniques may
beusedwhiledevelopingalternativesolutionsasdependingononesolutionisundesirable.
4. Selecting the Best Solution: After preparing alternative solutions, the next step in
thedecision-making process is to select an alternative that seems to be most rational
forsolvingtheproblem.Thealternativethusselectedmustbecommunicatedtothosewho are
likely to be affected by it. Acceptance of the decision by group members
isalwaysdesirable and useful forits effectiveimplementation

5. Implementation of Decision: After the selection of the best decision, the next step
isto convert the selected decision into an effective action. Without such action,
thedecision will remain merely a declaration of good intentions. Here, the manager
has toconvert 'his decision into'theirdecision'throughhis leadership.
6. Ensuring Feedback: Feedback is the last step in the decision-making process.
Here,the manager has to make built-in arrangements to ensure feedback for
continuouslytestingactualdevelopmentsagainsttheexpectations.Itislikecheckingtheeffe
ctivenessoffollow-up measures.

Factorsinfluencingthemanagerialdecisionmakingprocess:
There are many reasons due to which the decision taken by the manager may
beineffective.Thevariousfactors influencingthemanagerial decisionmakingprocess are:
1. Inadequate information, data and knowledge: For rational decision-making
accurate,reliableandcompleteinformationaboutvariousaspectsoftheproblemunderinvest
igation is necessary. The possible future trends can be estimated with the help ofsuch
information. However, adequate and reliable information may not be available
atthetimeof decision-making.
 1.17

2. Uncertain environment: Decisions are taken on the basis of information

availableabout various environmental variables. However, the variables are many and
complexinnature.Theymayberelatedtopolitical,economic,socialandotheraspects.Itisnot
possibleto studyall such variablesin depth dueto inadequate information/data.
3. Limitedcapacityofdecision-maker:Adecision-makershouldbeexpert,knowledgeable,
intelligent and matured. He needs vision and capacity to imaginepossible future
situation. In the absence of such qualities, the decision-maker may notbe able to take
rational decisions. Similarly, the decision taken may not be rational ifthe decision-
maker fails to follow all necessary steps required for scientific decision-making.
4. Personal element in decision-making: Decision-making should be always
impartialand also favorable to the organization. Decision against organization but
favorable todecision maker or other employees will be unfair. Such decision will not
be rational.Similarly, every decision-maker has his own personal background in the
form ofpersonalbeliefs,attributes, preferences,likes anddislikesand so on.
5. A decision cannot be fully independent: Managerial decisions are interlinked
andinterdependent. A manager has to make adjustments or compromises while
makingdecisions. For example, for reducing price, some compromise with the quality
may benecessary.

BASICCONCEPTSOFORGANISATION
The term 'organization' connotes different meanings to different people. Many
writershave attempted to state the nature, characteristics and principles of organization in
their ownmay. The word 'organization' is also used widely to connote a group of people and
thestructure of relationships. The term „organization‟ is used in many ways. It means
differentthingsdifferent people. Currentlythe followinguses of theterm arepopular
 Agroup ofpeopleunitedbya common purpose.
 Anentity,anongoing,businessunitengagedinutilizingresourcestocreatearesult.
 Astructureof relationships between variouspositionsinanenterprise.
 A processbywhichemployees,facilities andtasksarerelated,toeachother,withaviewto
achievespecificgoals.

Definition:
According to Koontz and O'Donnel"It is grouping of activities necessary to
attainenterpriseobjectivesandtheassignmentofeachgroupingtoamanagerwithauthoritynecessary
to superviseit".

Stepsin Organizing:
Organizinginvolvesthefollowinginterrelatedsteps:
1. Determination of Objectives: Organization is always related to certain
objectives.Therefore, it is essential for the management to identify the objectives
before startingany activity. It will help the management in the choice of men and
materials with thehelpof which it canachieveits objectives.
2. Identification and Grouping of Activities: If the members of the group are to
pooltheir efforts effectively, there must be proper division of the major activities.
Each
jobshouldbeproperlyclassifiedandgrouped.Thiswillenablethepeopletoknowwhatisexpe
cted ofthem as members ofthegroup.
 1.18

3. Assignment of Duties: After classifying and grouping the activities, each

individualshould be given a specific job to do according to his ability and made
responsible forthat.Heshould alsobegiven theadequate authoritytodothe job,assignedto
him.
4. DevelopingAuthority,ResponsibilityandRelationships:Sincesomanyindividualswor
kinthesameorganization,itistheresponsibilityofmanagementtolay down structure of
relationships in the organization. This will help in the smoothworkingof theenterprise
byfacilitatingdelegationof responsibilityandauthority.

PRINCIPLESOFORGANISATION
Effective and efficient working of any organization depends on how the
managerialfunction of organization is being performed. The function of organization can be
carriedeffectivelywith thehelpofunder mentioned principles:
1. Divisionofwork:Whilestructuringorganization,divisionofwork,attheveryoutset, should
be considered as the basis of efficiency. It is an established fact thatgroup of
individuals can secure better results by having division of work. This is alsocalledthe
principle of specialization.
2. Attention to objectives: An organization is a mechanism to accomplish certain
goalsor objectives. The objectives of an organization play an important role in
determiningthetypeof structurewhich should bedeveloped.
3. Span of Management: Span of management also refers to span of control
signifyingthe number of subordinates reporting directly to any executive. It is an
established factthat larger the number of subordinates reporting directly to the
executive, the moredifficultit tends to beforhim to superviseand coordinatethem
effectively.
4. Unity of Command: Organization structure should also be designed in such a
waythat there exists unity of command in the sense that a single leader is the
ultimatesourceofauthority.
5. Flexibility:Whiledesigningtheorganizationitshouldbekeptinmindthatorganizational
structureshould not be regardedas static.Every organization is alivingentityin a
livingenvironment which is fastchanging.
6. Properbalance:Itisimportanttokeepvarioussegmentordepartmentsofanorganization in
balance. The problem of balance basically arises when an activity or adepartmentis
further dividedand subdivided into smallersegments
7. Efficiency: The organization should be able to attain the predetermined objectives
atthe minimum cost. From the point of view of an individual, a good
organizationshouldprovide themaximum work satisfaction.
8. Decentralization:Thisprincipleisofgreatsignificancetobigorganizations.Decentralizati
on implies selective dispersal of authority to help departments and unitsto run
effectively and efficiently without frequent interruptions from the top of theenterprise.
9. Scalar principle: Scalar chain refers to the vertical placement of superiors
startingfrom the chief executive at the top through the middle level to the supervisory
level
atthebottom.Properscalarchainorlineofcommandisprerequisiteforeffectiveorganization.
10. Continuity: The form of organization structure should be such which is able to
servetheenterprise toattain its objectives foralongperiod of time.
11. Coordination: The principal of coordination underlines that there should be
properliaison and cooperation between different departments and units of work. Unity
ofeffortsfortheaccomplishmentof desiredobjectivesis themain aimoforganization.
 1.19

12. Authority and Responsibility: Authority should commensurate with

responsibility.While assigning the responsibility, authority should also be assigned. If
authority isnotgranted, thesubordinates cannot dischargetheir responsibilityproperly.

TYPESOFORGANISATION
Theorganizationfunctionalstructureisdividedintotwocategories as:
1. Formalorganization
2. Informalorganization
FormalOrganization:
A formal organization is deliberately designed toachieve some particular objectives.It
refers to the structure of well-defined jobs, each bearing a definite measure of
authority,responsibilityandaccountability.Thestructureisconsciouslydesignedtoenabletheorgan
izational members to work together for accomplishing common objectives. It tells himto do
certain things in a specified manner, to obey orders from designated individuals and
tocooperatewith others. Theformal organizationis built around fourkeypillars;namely,
a. divisionoflabor,
b. scalarandfunctionalprocesses,
c. structure,and
d. spanofcontrol.
Thebasiccharacteristics offormalorganizationareasfollows:
1. Organizationstructureislaid bythe top managementto achieveorganizational goals.
2. Organizationstructure isbasedondivisionoflabor
andspecializationtoachieveefficiencyin operations.
3. Organizationstructureconcentratesonthejobstobeperformedandnottheindividualswho
areto perform jobs.
4. Theorganizationdoesnottakeintoconsiderationthesentimentsoforganizationalmembers.
5. The authority andresponsibilityrelationshipscreatedbytheorganizationstructureareto be
honored byeveryone.

InformalOrganization:
Informal organization refers to the relationship between people in the
organizationbased on personal attitudes, emotions, prejudices, likes, dislikes, etc. These
relations are notdeveloped according to procedures and regulations laid down in the formal
organizationstructure; generally, large formal groups give rise to small informal or social
groups. Thesegroups may be based on same taste, language, culture or some other factor.
These groups
arenotpreplanned,buttheydevelopautomaticallywithintheorganizationaccordingtoitsenvironme
nt.
Thesalientfeatures ofinformalorganization areasfollows:
1. Informalrelationsareunplanned.Theyarisespontaneously.
2. Formationofinformalorganizationsisanaturalprocess.
3. Informalorganizationreflectshumanrelationships.
4. Informalorganizationsarebasedoncommontaste,problem,language,religion,culture,etc.
 1.20

DifferencebetweenFormalandInformalOrganizations:
Thedifferencebetweenformal andinformal organizationscan beenumeratedas:
1. Formation:Formal organization isdeliberately created by management.Itistheresult of
a conscious and deliberate effort involving delegation of authority. On theother hand,
informal organization arises spontaneously and no conscious efforts
aremadetocreateit.Ittakesplaceonthebasisofrelationships,caste,culture,occupationsand
on personal interests etc.
2. Basis: A formal organization is based upon rules and procedures, while an
informalorganizationisbaseduponattitudesandemotionsofthepeople.Itdependsoninform
al,socialcontacts betweenpeople workingand associatingwith one another.
3. Nature: A formal organization is stable and predictable and it cannot be
changedaccording to the whims or fancies of people. But an informal organization is
neitherstablenor predictable.
4. Set-up: A formal organization is a system of well defined relationships with a
definiteauthorityassignedtoeveryindividual.Itfollowspredeterminedlinesofcommunicat
ion. On the contrary, an informal organization has no definite form andthereareno
definite rulesas to who is to report to whom.
5. Emphasis: In a formal organization, the main emphasis is placed on authority
andfunctions.Inaninformalorganizationthestressisonpeopleandtheir relationships.
6. Authority: Formal authority is attached to a position and it flows from top to
bottom.Informalauthorityisattachedtoapersonanditflowseitherdownwardsorhorizontall
y.
7. Existence: A formal organizations exists independently of the informalgroups thatare
formed within it. But an informal organization exists within the framework of
aformalstructure.
8. Rationality: A formal organization operates on logic rather than on sentiments
oremotions. All activities follow a predetermined course. As an association
betweenlike-minded people, an informal organization has little rationality behind it. In
aninformal organization, activities are influenced by emotions and sentiments of
itsmembers.

DEPARTMENTATION
Departmentation is a means of dividing the large functional organization into
smaller,flexible administrative units. It makes grouping of activities into units and sub-units
createdthrough departmentation which are known as department, division, section, branch
etc. Theprocess of departmentation takes place at all levels in the organisation. At the top
level, thebreakup of functions into activities is called “Primary Departmentation”. Grouping
activitiesinto separate units at the middle level is called “Intermediate Departmentation” and
at thelower level it is called “Ultimate Departmentation” or “Secondary Departmentation”.
Let usdiscusssomedefinitions of Departments.

Definition:
1. According to Louis Allen, “Departmentation is a means of dividing the large
andmonolithicfunctionalorganisationintosmallerflexibleadministrativeunits.”
2. According to Koontz and O‟Donnell, “A department is a distinct area, division
orbranch of an enterprise over which a manager has authority for the performance
ofspecifiedactivities.”
 1.21

In short, we need departmentation in an enterprise to divide the activities along

withauthority, responsibility and accountability with sole objective to get the work done
smoothlyandin thebest possibleway.

ImportanceofDepartmentation:
The importance of departmentationis tofacilitate successfuloperation and
tocreateanenvironmentforeffectiveperformance.Groupingofactivitiesandemployeesintodepart
ments makes it possible to expand an organisation to a large extent. It enables theorganisation
to recapture some of the advantages of the small functional organisation
whileminimisingthedisadvantagesofthatwhichcomeswithincreasingsize,diversityanddispersio
n.
Theimportanceof departmentationmaybestatedinthefollowingway:
1. Specification:Departmentationhelpstogrowspecificationinvariousactivitieswhichleads
to improving theefficiencyof operation.
2. Feeling of autonomy: Departmentation gives independent charges to managers.
Thefeelingofindependenceprovidessatisfactionandinturnincreasestheirresponsibilitiesa
nd efficiency.
3. Fixation of responsibility: Through departmentation, responsibilities of the work
canbe precisely and accurately fixed. The authority and responsibility of each
departmentisdefined precisely.
4. Budget Preparation: It makes the preparation of budget for departments easier
aswellas forthe organisation as a wholeeasier.
5. DevelopmentofManagement:Themanagersofeachdepartmentperformspecialised
functions. They take independent decision and develop themselves forhigher
positions. Departmentation facilitates the development of managerial
personnelbyprovidingthem opportunities forexercisinginitiatives.
6. Facility in Appraisal: Since the managers perform specified jobs, their
performanceappraisalsbecomeeasier.Departmentationfacilitatesadministrativecontrola
sstandardsofperformancearelaid down separatelyforeach department.
7. ProperSupervision:Astheauthorityformakingdecisionsisdiffusedtothemanagers of the
departments and works are assigned to each individual departmentwise,supervision
and control become easier.

PrinciplesofDepartmentation:
1. Attainment of organisational objectives: It implies that departments are designed
orcreated to provide all the facilities to achieve organisational objectives in an
effectiveandefficient manner.
2. Comprehensivedepartmentation:Itimpliesthattheentirefunctionsoftheenterprise
areto becovered while creatingthe departments.
3. Inter-departmental co-operation: It implies that departments should be designed
insuchawaythat maximum inter-departmental co-operation is possible.
4. Promotionofspecialisation:Itshouldhelpinenhancingbothmanagerialandoperationalsp
ecialisation sothat organisational efficiencycan beachieved.
5. Cost-benefit analysis: It should be designed and developed in a manner to get
themaximumbenefit with minimum possible costs.
6. Specialattentiontokey-resultareas:Key-
resultareasarethoseareaswhichdeterminethelongtermgrowthandsurvivalofanorganisati
on.Itmay includeprofitability, market standing, public relation etc. According to this
principle whilecreatingdepartments the key-result areasshould begiven
specialattention.
 1.22

7. Principle of flexibility: It implies that there should be sufficient scope to change

thedesignor set of departmentsas per therequirementsof changingsituation.
8. Humanconsideration:Humanconsiderationsuchasneeds,values,attitudes,expectation,
feelings etc. must be taken into consideration while creating departmentsalongwith
technical orfinancial considerations.

MethodsofDepartmentation:
Differentmethodsofcreatingdepartmentsinanorganisationare:
1. DepartmentationbyFunction
2. Departmentation byProduct
3. DepartmentationbyCustomer
4. Departmentation byTerritory
5. DepartmentationbyProcess

DepartmentationbyFunction:
In departmentalization by function the activitiesof an organisation are divided
intotheprimaryfunctionstobeperformedi.e.manufacturing,marketing,researchanddevelopment,
employee relations, and finance. This arrangement has the advantage of thespecialization and
concentration of similar activities within a departmental unit. The majorproblem with this
form is the coordination of the specialized activities. The following
chartdepictsclearlythedepartmentation on thebasis of function:

Advantages:
Themain advantagesof thisbasis ofdepartmentations are:
1. Benefitsofspecialisation.
2. Coordinationamongdepartments.
3. Simpleorganisationstructure.

Dis-advantages:
Themaindisadvantagesofthisbasisofdepartmentation are:
1. Isolationofthedepartments.
2. Lackofcoordination.
3. Hindereddevelopmentof individuals.
 1.23

DepartmentationbyProduct:
Large organisations with number of products can follow the departmentations on
thebasis of products. All the activities related to each product are grouped separately. That
is,eachdepartmentbecomesautonomous,dealingina particular product.For
example,anorganisation manufacturing a number of products like soaps, tooth paste,
cosmetics, blades,milk powder, etc. groups all the activities from manufacturing to
distribution independentlyforeach product. Thefollowingchart that depictsdepartmentation
byproduct:

Advantages:
Themainadvantages of Departmentionbyproductare:
1. Profitabilityofeach productcan be assessed.
2. Betterservicetoconsumerscanbeprovidedasthesalesmenhavethoroughknowledg
eabout theproduct.
3. Itissuitablefor undertakingsmanufacturingvariedandcomplexproductlines.
4. Flexibilityinproductlinescanbeattainedastheadditionordroppingofproductlines
is easy.
5. Specilisationismadepossible.

Disadvantages:
Themaindisadvantagesof departmentationbyproductare:
1. Confusioninthecustomers‟mind.
2. Duplicationandwastagesofresources.
3. Increasedcosts.

DepartmentationbyCustomersorMarkets:
An organisation can divide its activities into departments on the basis of
differentcustomer groups served by the organisation, such as industrial users, consumers,
wholesalers,retailers etc. The following chart depicts the customer-wise departmentation. The
followingchartthat depicts departmentation bycustomers:
 1.24

Advantages:
Theadvantagesof developmentationsbycustomerare:
1. Specialisedservicetocustomers.
2. Supplyofgoodsaccordingtocustomer‟srequirements.

Disadvantages:
Thedisadvantagesofdepartmentationbycustomer are:
1. Difficultyincoordination.
2. Highcost.
3. Underutilisationofhumanresources.

DepartmentationbyTerritory:
Underthissystemtheactivitiesoftheorganisationsaregroupedintodifferentdepartments on
the basis of the geographical area. For example, a company can carry out itsactivities by
grouping them into regions like eastern region, western region, southern
region,northernregion,etc.Thistypeofdepartmentationissuitableforlargeorganisationswhichare
geographically spread over to different areas. The following chart depicts the
territorialdepartmentation:

Advantages:
Theadvantagesofterritorialdepartmentationsare:
1. Familiaritywithcustomers intheparticular region.
2. Enjoyingadvantagesoflocalsituations.
3. Benefitsfrom geographicalmarketsegmentation.
4. Trainingfordevelopment.

Disadvantages:
Thedisadvantagesofterritorialdepartmentationsare:
1. Increaseincosts.
2. Difficultyincoordinationand control.
 1.25

DepartmentationbyProcess:
Departmentationbyprocessimpliesthegroupingoftheactivitiesintodifferentdepartments
on the basis of the processes involved in production. For example, in a textileunit,
departmentation can be done on the basis of process i.e. spinning, weaving,
dyeings,bleachingetc. Thefollowingchart shows the departmentation byprocess:

Advantages:
Theadvantages of departmentation byprocess are:
1. Highoperationalefficiency.
2. Benefitsofspecialisation.
3. Reductioninmanufacturingtimeand unnecessarymovementsin theprocess.

Disadvantages:
Thedisadvantagesofdepartmentationsbyprocessare:
1. HighCosts.
2. Requiringcontinuoustraining.

In actual practice no single method of grouping activities is applied throughout

theorganisation structure. In reality, a single organisation may employ one or all of the bases
ofdepartmentalizationat thesameof various hierarchicallevels.

DECENTRALIZATION
An organization is said to be decentralized when managers at middle level and
lowerlevel are given the authority to take decisions on matters relating to their functions.
They arerequiredto takedecisionkeepingin view theoverall policies ofthecompany.
According to Allen, "Decentralization refers to the systematic effort to delegate to
thelowest levels all authority except that which can only be exercised at central points."
Thus,decentralization means reservation of some authority (power to plan, organize, direct
andcontrol) at the top level and delegation of authority to make decisions at points as near
aspossibleto whereactions takeplace.

AdvantagesofDecentralization:
1. Reduction in the Burden of Chief Executive: Decentralization of authority
reducesthe burden of the chief executive, as he delegates a major part of his authority
to hissubordinatesand thiswill enablehim to devotemoretimeon importantfunctions.
2. Quick Decisions: Decentralization avoids red-tapism in making decisions as it
placesresponsibility for decision making as near as possible with the place where
actionstakeplace.
3. Diversification of Activities: With the addition of new product lines, an
organizationmay grow complex and pose a challenge to the top executives. The
challenge can bemet effectively by decentralizing the authority under the overall
coordinating purviewofthe top management.
 1.26

4. DevelopmentofManagerialPersonnel:Whenauthorityisdecentralized,thesubordinates
get the opportunity of taking initiative to develop their talents and toenable them to
develop qualities for managerial positions. They learn how to decideanddepend on
theirownjudgment and how to manage.
5. Effective Control and Supervision: The greater the degree of decentralization,
themoreeffectivebecomesthespanofcontrol.Itleadstoeffectivesupervisionasmanagersatt
helowerlevelshavecompleteauthority tomakechangesinworkassignment, to change
production schedules, to recommend promotions and to takedisciplinaryactions.
6. Effective Coordination: Under decentralization, coordinated efforts are required
onlyat the levels of segments created by decentralization. This makes coordination
moreeffective
7. Improvement of Motivation and Morale: Decentralization of authority fulfils
thehuman needs of power, independence and status. It gives the local executives
anopportunity to take initiative and to try new ideas. This improves their motivation
andheightenstheir morale.
8. Miscellaneous Economies: In addition to the above advantages, decentralization
alsoachieves several internal and external economies. Internal economies include
speediercommunication, better utilization of lower level and middle level executives,
greaterincentive to work and greater opportunities for training. These make possible
for themanagementtoreducethecostof productionandmeet competitioneffectively.
LimitationsofDecentralization:
1. Decentralizationincreasestheadministrativeexpensesbecauseitrequirestheemployment
of trained personnel to accept authority. The services of such highly
paidpersonnelmaynot be fullyutilized particularlyinsmall organizations.
2. Decentralizationrequirestheproductlinesoftheconcerntobebroadenoughtoallowcreation
ofautonomousunits, which isnot possibleinsmall concerns.
3. Decentralizationofauthoritymaycreateproblemsinbringing
coordinationamongthevarious units.
4. Decentralizationmaynotbepossiblebecauseofexternalfactors.Ifacompanyissubjectto
uncertainties,it willnot beable tomeet theseunder decentralization.
5. Decentralizationmaybringaboutinconsistencies in thecompany.

DELEGATIONOFAUTHORITYAND RESPONSIBILITY
Delegationofauthoritymeansconferringauthoritytoanothertoaccomplishaparticularassig
nmentwhileoperatingwithprescribedlimitsandstandardsestablished.Delegation of authority is
the key to organization. An executive confers authority on thesubordinates to accomplish
specific tasks which may not be able to do alone. That means amanager canget things
donethrough others bysharingauthoritywith them.
PrinciplesofDelegationofAuthority:
Thefollowingprinciplesareguidestosuccessfuldelegation.Unlesscarefullyrecognizedinp
ractice,delegationmaybeineffective,organizationmayfailandthemanagerialprocess
maybeseriouslyimpeded:
1. Paritybetweenauthorityandresponsibility:Thereshouldbecompleteparitybetween
authority and responsibility. If authority is more than responsibility, peoplewill make
misuse of their authority and if responsibility is more than authority, theresultscan
never be achieved.
 1.27

2. Responsibility in terms of results: To be effective, delegation of authority should

bealways be in terms of exact results of responsibility. In other words,
responsibilityshouldbespecificonaspecificperson,becauseeverybody‟sresponsibilityisn
obody‟s responsibility.
3. Principle of Unity of command: To avoid confusion, conflicts and duplication
ofwork-orders, instructions and guidelines should flow to a subordinate from a
singleparticular executiveonly.
4. Delegationofresponsibility:Authoritycanbedelegated,butresponsibilitycannotbedeleg
ated.Bydelegatingauthority,anexecutivedoesnotescapefromresponsibility.Heis,
inaddition, responsibleforthe actof hissubordinatesalso.
5. Overlapping of responsibilities: While delegating authority, it must be ensured
thatdutiesandresponsibilities ofsubordinates do notoverlap.
6. Free flow of information: In delegation of authority, there should be free two
waycommunication (i.e. exchange of ideas, suggestions, instructions, guidelines,
etc.,)betweenan executiveand asubordinate.
7. Delegatedauthority:Authoritydelegatedtoasubordinateshouldbeadequate,enough and
as per the status and position of the subordinate, in order to achieveoptimumresults.

TYPESOFMECHANISTICANDORGANICSTRUCTURESOFORGANIZATION
Anorganizationstructureshowstheauthorityandresponsibilityrelationshipsbetween the
various positions in the organization by showing who reports to whom. It is a
setofplannedrelationshipsbetweengroupsofrelatedfunctionsandbetweenphysicalfactorsandpers
onnelrequiredforthe achievement oforganizationalgoals.
Organizationinvolvesestablishinganappropriatestructureforthegoalseekingactivities.
The structure of an organization is generally shown on an organization chart or ajob- task
pyramid. For instance, if an undertaking is in production line, the, dominant
elementinitsorganizationchart,wouldbemanufacturing
andassembling.Agoodorganizationstructure should not be static but dynamic. It should be
subject to change from time to time
inthelightofthechangesinthebusinessenvironment.Whiledesigningtheorganizationstructure,due
attentionshould begivento the principlesof soundorganization.

Therearetwotypesofstructuralvariables,namely;
a) Basic structure involves such central issues as how the work of the organization
willbe dividedandassignedamong positions,groups,departments,divisions,etc. andhow
the coordination necessary to achieve organizational objectives will be broughtabout.
b) Operatingmechanismincludessuchfactorsasinformationsystem,controlprocedures,rule
sand regulations,system of rewardand punishment, etc.
 1.28

Inordertoorganizetheeffortsofindividuals,anyofthefollowingtypesoforganizationstructu
res maybesetup:
1. Lineorganization
2. Lineandstafforganization
3. Functionalorganization
4. Matrixorganization
5. Committeeorganization
6. Projectorganization
7. InvertedPyramidstructure
8. Virtualorganization
9. Cellularorganization
10. Teamstructure
11. Boundarylessorganization
12. LeanandFlatorganization

LINEORGANIZATION
It is also known as scalar or military or vertical organization and perhaps is the
oldestform. In this form of organization managers have direct responsibility for the results;
lineorganizationcan bedesignedin two ways:
a) PureLineOrganization:Underthisform,similaractivitiesareperformedataparticular
level. Each group of activities is self – contained unit and is able to
performtheassigned activities without the assistanceofothers.
 1.29

ProductionManager

Foreman-A Foreman-B Foreman-C

Worker Worker Worker

b) Departmental Line Organization: Under this form, entire activities are divided
intodifferentdepartments onthe basis ofsimilarity of activities. The basicobjective
ofthisform is tohaveuniform control, authorityandresponsibility.

ProductionManager

Foreman-A Foreman-B Foreman-C

(BodyMoulding) (Seating) (Finishing)

Worker Worker Worker

Suitability:
Thistypeoforganisationalstructureissuitabletosmallscaleorganizationswherethenumber
of subordinates is quite small.

Advantages:
1. Simplicity:Lineorganizationisverysimpletoestablishandcanbeeasilyunderstandbytheemp
loyees.
2. Discipline: Since each position is subject to control by its immediate superior
position,often the maintenance of discipline is easy unity of command and unity of
directionfosterdiscipline amongthepeople in the organization.
3. Co-ordination:Thehierarchyinmanagementhelpsinachievingeffective coordination.
4. Effectivecommunication:Therewillbeadirectlinkbetweensuperiorandhissubordinate;bot
h can communicate properlyamonghimor herself.
5. Economical:Lineorganizationiseasyto operate anditislessexpensive.
6. Unityofcommand: In thiseveryperson is under thecommand of onebossonly.
7. Prompt decision: Only one person is in charge of one division or department.
Thisenablesmanager to takequick decisions.
8. Over all development of the managers: The departmental head has to look after all
theactivitiesofhisdepartment;therefore,itencouragesthedevelopmentofallroundmanagers
at thehigher level of authority.

Disadvantages:
1. AbilityofManager:Thesuccessoftheenterprisedependsuponthecaliberandability
offewdepartmentalheads,lossofoneortwocapablemenmay puttheorganizationin
difficulties.
 1.30

2. Personnel limitations: In this type of organization an individual executive is

supposeto discharge different types of duties. He cannot do justice to all different
activitiesbecausehecannot be specialized in all thetrades.
3. Overloadofwork:Departmentalheadsareoverloadedwithvariousroutinejobshencetheyca
nnot sparetimeformanagerial functionslike planning, budgeting, etc.
4. Dictatorial way: In line organization, too much authorities centre on line
executive.Henceit encourages dictatorial wayofworking.
5. Duplicationofwork:Conflictingpoliciesofdifferentdepartmentsresultinduplicationofwo
rk.
6. Unsuitableforlargeconcerns:Itislimitedtosmallconcerns.
7. Scope of favourism: As the departmental heads has the supreme authority, there
ischanceof favourism.

LINEANDSTAFFORGANIZATION
It refers to a pattern in which staff specialists advise line managers to perform
theirduties. When the work of an executive increases its performance requires the services
ofspecialists which he himself cannot provide because of his limited capabilities on
thesematters. Such advice isprovided to line managers by staffs personalwho
aregenerallyspecialists in their fields. The staff people have the right to recommend, but have
no authoritytoenforcetheirpreferenceon otherdepartments.
Features:
1) Thisoriginstructureclearlydistinguishesbetweentwoaspectsofadministrationviz.,planni
ngandexecution.
2) Staffofficersprovideadviceonlytothelineofficers;theydonothaveanypowerofcommando
ver them.
3) Thestaff supplements thelinemembers.

Suitability:
Itcanbefollowedinlargeorganizationswherespecializationofactivitiesisrequired,becauseit
offersampleopportunities forspecialization.
 1.31

Advantages:
1. Planned specialization: The line and staff structure is based upon the principle
ofspecialization. The line managers are responsible for operations contributing directly
tothe achievement of organizational objectives where as staff people are there to
provideexpertadviceon the matters oftheirconcerns.
2. Quality decisions: Decisions come after careful consideration and thought each
expertgiveshis advicein theareaof his specializationwhich is reflectedin thedecisions.
3. Prospectforpersonalgrowth:Prospectforefficientpersonaltogrowintheorganization not
only that, it also offers opportunity for concentrating in a
particulararea,therebyincreasing personal efficiency
4. Lesswastage:Therewillbelesswastageofmaterial.
5. Training ground for personnel: It provides training ground to the personnel in
twoways. First, since everybody is expected to concentrate on one field, one‟s
trainingneedscaneasilybeidentified.Second,thestaffwithexpertknowledgeprovidesopport
unities to line managers for adopting rational multidimensional approach
towardsaproblem.

Disadvantages:
1. Chances of Mis-interpretation: Although the expert advice is available, yet it
reachesthe workers through line supervisors. The line officers may fail to understand
themeaningofadviceandthereisalwaysariskofmisunderstandingandmisinterpretation.
2. Chances of friction: There are bound to be occasions when the line and staff
maydiffer in opinion may resent in conflict of interests and prevents harmonious
relationsbetweenthe two.
3. Ineffective Staff in the absence of authority: The staff has no authority to
executetheir own advice. Their advice is not a binding on the line officers. Therefore
theadvice given byspecialist maybeignored bylineheads.
4. Expensive:Theoverheadcostoftheproductincreasesbecauseofhighsalariedspecializedsta
ff.
5. Loss of initiative by line executives: If they start depending too much on staff
maylosetheirinitiativedriveand ingenuity.

FUNCTIONALORGANIZATION
Itisthemostwidely usedorganizationstructure inthemediumandlargescaleorganizations
having limited number of products. This structure emerges from the idea thattheorganization
mustperform certain functionsin orderto carryonits operations.
Functional structure is created by grouping the activities on the basis of
functionsrequired for the achievement of organizational objectives. For this purpose, all the
functionsrequiredareclassifiedintobasic,secondary andsupporting functionsaccording
totheirnature&importance.
Features:
1) Thewholeactivitiesofan organizationaredivided intovarious functions.
2) Eachfunctionalareaisputunderthechargeofoneexecutive.
3) Foranydecision, onehastoconsultthe functionalspecialist.

Suitability:
Functionalorganisationalstructureissuitableforlargescaleorganizations.
 1.32

GeneralManager

Marketing Finance Personnel Production

Manager Manager Manager Manager

BranchManager OfficeManager FactoryManager

Lineofauthority
Functionalauthority

Advantages:
1. Separation of work: In functional organization, work has been separated from
routinework. The specialist has been given the authority and responsibility for
supervisionand administration pertaining to their field of specialization unnecessary
over loadingofresponsibilities is thusavoided.
2. Specialization:Specializationandskilledsupervisoryattentionisgiventoworkerstheresult
is increasein rate ofproductionand improved qualityof work.
3. Easeinselectionandtraining:Functionalorganizationisbaseduponexpertknowledge.
The availability of guidance through experts makes it possible to train theworkers
properlyin comparativelyshort span of time.
4. Reduction in prime cost: Since for every operation expert guidance is there,
wastageofmaterial is reducedand thus helpsto reduceprime cost.
5. Scope of growth and development of business: This type of organization
presentsamplescopefor the growth and development ofbusiness.

Disadvantages:
1. Indiscipline: Since the workers receive instructions from number of specialist it
leadstoconfusiontowhomtheyshouldfollow.Therefore,itisdifficulttomaintaindiscipline
2. Shiftingofresponsibility:Itisdifficultforthetopmanagementtolocateresponsibility for
the unsatisfactory work everybody tries to shift responsibility onothersforthefaults
andfailure.
3. Kills the initiative of workers: As the specialized guidance is available to the
workersthe workers will not be using their talents and skills therefore their initiative
cannot beutilized.
4. Overlapping of authority: The sphere of authority tends to overlap and gives rise
tofrictionbetween the persons of equal rank.
5. Lackofco-ordinationbetweenfunctions:exceptthefunctioninwhichheisspecialized he is
absolutely indifferent to other functions. Therefore, there is a lack
ofcoordinationoffunctionand efforts.
 1.33

MATRIXORGANISATION
It is also called project organization. It is a combination of all relationships in
theorganization, vertical, horizontal and diagonal. It is a mostly used in complex projects.
Themain objective of Matrix organization is to secure a higher degree of co-ordination than
whatispossiblefromthe conventional,organizational structuressuchaslineandstaff.
In matrix organization structure, a project manager is appointed to co-ordinate
theactivities of the project. Under this system a subordinate will get instructions from two
ormorebosses, Viz., administrativehead and hisproject manager.

GeneralManager

Production Personnel Finance Marketing

Project
W W W W
AManag
er

Project W
W W W
BManag
er

Project W W W W
CManag
er
Suitability:
Itcanbeapplicablewherethereisapressurefordualfocus,pressureforhighinformationproce
ssing, and pressure forshredresources.
Ex:Aerospace,chemicals,Banking, Brokerage, Advertisingetc.

Advantages:
1. Itoffersoperational freedom&flexibility
2. Itfocusesonend results.
3. ItmaintenanceprofessionalIdentity.
4. Itholdsanemployeeresponsibleformanagementofresources.

Disadvantages:
1. Itcallsforgreaterdegreeofcoordination,
2. It violatesunityof command.
3. Difficultto defineauthority& responsibility.
4. Employeemaybede motivated.

COMMITTEEORGANISATION
A committee does not represent a separate type of organization like line and staff,
orfunctional. It is rather a device which is used as supplementary to or in addition to any of
theabove types of organizations. A committee may be defined as a group of people
performingsome aspects of Managerial functions. Thus, a committee is a body of persons
appointed orelectedfor theConsideration ofspecific matters brought beforeit.
 1.34

Suitability:
Itissuitableforeducationalorganizationsanduniversities.

Merits:
Poolingupofopinions.
Itfacilitatescoordination.
Itenhancescommunication.
Itgivesbettermotivation.

Demerits:
Itishighlyexpensive.
Itmakescompromiseddecisions.
Lackofsecrecy.
Domination byfewmembers.

PROJECTORGANIZATION
A project organization is a special case where common service like finance,
purchaseetc. are organized at the functional level. But project resources are allocated to the
projectmanager. Since the business responsibility rests with the project manager, necessary
authorityis given to him with the requisite resources.
This type of organization structure helps inmakingdecisions forproject control in
termsof cost, resourceand time.

Merits:
1. Thiscalls forquick divisions.
2. Organizingall functional.
3. Propercoordinationofworkofdifferentdepartments.
 1.35

Demerits:
1. Ittendstoincreasetheproblemsofcontrolfortopmanagement.
2. Itisspecialcaseofproductorganization.
3. Theorganization maygetdisintegratedwith increasingfocus on departments.

VIRTUALORGANIZATION
The concept of virtual organisation or corporation along with virtual team and
officehas entered management field very recently. The meaning of virtual is having the
efficacywithout the material part; unreal but capable of being considered as real for the
purpose. Itworks in a network of external alliances, using the Internet. This means while the
core of theorganization can be small but still the company can operate globally is a market
leader in itsniche.
Employees in a virtual organization will become emasculate and ineffective in
theabsenceof information and knowledge. Therefore, virtual organizations use a
seamlesswebofelectroniccommunication media.Themain components ofthis web areas
follows:
1. Technology:Thetraditionalwaysofworkinghasbeentransformedthroughnewtechnology.
2. E-mailintegration: The whole organization can takeadvantage
ofSMSproductssuchas„ExpressWay‟byintegratingSMSintotheexistinge-
mailinfrastructure.
3. Office systems integration: SMS technology can greatly enhance the existing or
newofficesystems.Forexample,phonemessagescanbesentviaSMSratherthanreturningit
in a messagebook.
4. Voice Mail Alert: Addition of SMS technology to the existing voice mail
systembuildsan effectivemethod of receivingvoicemailalerts.
5. Mobile Data: This enables a laptop to retrieve information anywhere through
themobile phone network. In the past corporate information has been inaccessible
frommanyplaceswhereitisneeded.Onecankeepconnectedtohis/hervirtualorganizationfr
om anywherebylinkinglaptop to mobile phone.
 1.36

Advantages:
1. Savestimeandtravel expenses.
2. Providesexcessto outsideexperts,without downtimeandtravelor loggingexpenses.
3. Abilitytoorganizeinteamsevenifmembersarenotinreasonableproximitytoeachother.
4. Firmscanexpandtheirpotentiallabourmarkets.Theycanhireandretainthebestpeopleirresp
ectiveof their physical locations.
5. Employees can accommodatebothpersonal andprofessionallives.
6. Employees canbeassignedtomultipleconcurrent teams.
7. Dynamicteammembershipallows peopletomovefrom oneprojecttoanother.
8. Teamcommunicationandworkreportsareavailableon-linetofacilitateswiftresponsesto
thedemandsof aglobal market.

Disadvantages:
1. Lackofphysicalinteractions.
2. Lackofsynergiesarisingfromface-to-faceinteraction.
3. Non-availabilityofverbalandnon-
verbalcuessuchasvoice,eyemovement,facialexpressionand bodylanguagewhich
makecommunication moreeffective.

BOUNDARYLESSORGANIZATION
It may be defined as an organisation structure that can avoid all the barriers
(vertical,horizontal, external, geographic) much more permeable than they are now.
Boundary lessorganisation allows free flow of ides/information / resources throughout the
organisation andintoothers. Theboundaries are:
1. Vertical: Boundariesbetweenlayerswithinanorganization.
2. Horizontal:Boundarieswhichexistb/worganizationaldepartments.
3. External: Barriers between the organization and the outside world.
(Customers,suppliersothergovt. committees).
4. Geographic:Barriersamongorganizationunitslocatedindifferentcountries.
A boundary less organisation is the opposite of a bureaucracy with numerous
barriersanddivision.Incontrast,theorganisationwithoutboundariesoffersinteractionandnetworki
ng among professionals inside and outside the organisation. It is characterized
byteamworkandcommunication.
The purpose of this initiative was to remove barriers between the various
departmentsas well as between domestic and international operations. To reward people for
adopting the“integration model”, bonuses were awarded to those who not only generated new
ideas butalsoshared them with others.

Advantages:
1. Itallowsfreeflowofideasof
informationorresourcesthroughouttheorganisationandothers.
2. Boundarylessorganizationisable toachievegreaterintegrationandcoordination.
3. Theyareableto adaptto environmentalchanges.
4. Itishighlyflexibleandresponsive.
5. Itreducesineffectiveness.
6. Creativity,quality,timeliness.
7. Increaseinspeedandflexibility.
 1.37

Disadvantages:
1. Lackof flexibilitytochangingmission needs/rapidlychanging world.
2. Slow/poorinrespondingcustomerrequirement.
3. Failuretogetthingstodone.
4. Customer/vendorhasa hardtimedealingwiththe organization.

TEAMSTRUCTURE
One of the newest organizational structures developed in the 20th century is team.
Insmall businesses, the team structure can define the entire organization. Teams can be
bothhorizontal and vertical. While an organization is constituted as a set of people who
synergiesindividual competencies to achieve newer dimensions, the quality of organizational
structurerevolvesaround the competencies ofteamsin totality.
For example, every one of the Whole Foods Market stores, the largest natural-foods grocer
inthe US developing a focused strategy, is an autonomous profit centrecomposed of an
averageof 10 self-managed teams, while team leaders in each store and each region are also a
team.Largerbureaucraticorganizationscanbenefit fromtheflexibilityofteamsaswell.

Suitable:
Xerox,Motorola,andDaimlerChryslerareallamongthecompaniesthatactivelyuseteamsto
perform tasks.

Advantages:
1. Team-basedorganizationsfilterdecisionmakingdowntoalllevelsofmanagement.
2. Team-basedorganizationsrequirethatallemployeesparticipateinthedecision-
makingprocess.
3. Employeesfeeltheyarepartofthetotalorganization,ratherthanmembersofanindividualdep
artment.
4. Team-
basedorganizationsrunmoreefficientlyandeffectively,givingthemacompetitiveedgein
today'sglobal market.

Disadvantages:
1. Recognitionforindividualachievementwithinahierarchicalorganizationisamotivatorand
afactor indetermining compensation.
2. Team-basedorganizationsvalueteamperformanceoverindividualperformance.
3. Lackof focuson theindividual inteam-based organizations.
4. Motivatingindividualsinateam-basedorganizationcan bemorechallenging.
5. Team-basedorganizationsaredecentralizedratherthanhierarchical.
 1.38

INVERTEDPYRAMIDSTRUCTURE
This is an alternative to traditional chain of command. This is a structure which
isnarrow at the top and wide at the base. It includes few levels of management i.e. sales
peopleand sales support staff sit at the top as they are key decision makers for all issues
related tosales and dealings with customers. Since they are in tough with customers, they are
given allthefreedom to follow theirown judgment atall levels.

Suitable:
Thisorganisationstructureis suitableforsalesassociates, journalism,etc.

Advantages:
1. Inthisstructurethecustomersare giventhefirstpreference.
2. Itbecomessimpletoknowtheirpreferencesandplanthestrategiesoftheorganisationaccordi
ngly.
3. Frontlineemployeesaregivenmoreresponsibilityandauthorityintheorganisationthantheto
p managementbecause theyareclosestto thecustomers.
4. Decentralizationofauthorityandresponsibilityplaceaveryimportantroleinpromptand
timelydecisions.
5. Theinvertedpyramidstructuremotivatestheemployeesastheyareplacedinabetterpositiont
han thetop management.

Disadvantages:
1. This structure may be dangerous because the role of top management is shifted
tosupporting one from that of commanding one which ultimately leads to the
directionless-organisation.
2. In this structure there is absence of clear authority and responsibility levels as a
resultofwhich people becomeconfused andbusiness veers out ofcontrol.
3. Frontline supervisor cannot make strategies regarding organisations even though
theyhaveproper understandingof the customersbecausetheyarenot equippedtodo so.

CELLULARORGANISATION
A form of organization consisting of a collection of self-managing firms or cells
heldtogetherbymutualinterest.Acellularorganizationisbuiltontheprinciplesofself-organization,
member ownership, and entrepreneurship. It has been replacing other systems.Inthis the
workers manufacturetotal products in teamsi.e. cells.
 1.39

Each cell within the organization shares common features and purposes with its
sistercells but is also able to function independently. Every team of workers has the
responsibilityto improve or maintain the quality and quantity of its products. The cells
comprise selfmanaged teams. They monitor themselves and correct wherever necessary on
their own. Theideais anextension oftheprinciplesofgrouptechnology,orcellularmanufacturing.

Advantages:
Itallowsfreeflowofideasof informationorresourcesthroughouttheorganisationandothers.
Theyareableto adapt toenvironmental changes.

Itishighlyflexibleandresponsive.
Itreducesineffectiveness and Increaseinspeed.

Disadvantages:
Slowresponsecustomerrequirement.
Failuretogetthingstodone.
Lackof flexibilitytochangingmission needschangingthe world.
Customerhasahardtime dealingwiththeorganization.

FLATANDLEANORGANISATION

FlatOrganizationsarethose,whichhavefeworevenonelevelofmanagement.Forexample, a
service organization with equal partners and 30 employees. Flat organizations
areknownbytheirwiderspanofmanagementofcontrol.Eachmanagercontrolsmorenumberofempl
oyees atagivenpoint of time.

ManagingDirector

SalesManager ProductionManager PersonnelManager FinanceManager

 1.40

Tall/
Leanorganizationsmayhavemanylevelsofmanagement.Itfocusesonverticalcommunicationthro
ughthelevelsofgrades.Itinvolvesnarrowspanofmanagement.Generallythegreatertheheightoforg
anisationalchart,thesmalleristhespanofcontrol,viceversa.
ManagingDirector

GeneralManager

SalesManager ProductionManager PersonnelManager FinanceManager

Advantages:
Itissimpletounderstand.
Easysupervision & control.
Quickdecisionsarepossible.
It sets clearlythe directlines ofauthorityand responsibilityofa linemanager.

Disadvantages:
Lackofspecialization
Low–Morale
Autocraticapproach
Overburdentomanager

IMPORTANTQUESTIONS
Explainthenatureandfunctionsof management?
Explainhow scientificmanagement paved wayfor changes inthetraditional mindset.
3. “Managementisregardedasanartbysome,sciencebyothers”.Inthelightofthis
statement,Explainthe exactnatureof management
4. WhatisthecontributionofHenryFayoltomanagementthought?
Explain14principlesofmanagement thought.
5. Writeshort noteson:
a. Maslowtheoryof Hierarchyof Human Needs
b. FrederickHerzbergtwofactor theoryof motivation.
c. TheoryXandTheoryY (DouglasMc.Gregor)
d. Mayo‟sHawthorneExperiments
6. ExplaintheconceptofSystemsapproachtoManagementwithdiagram?
7. Whatarethechallengesyouhavetofaceasamanger?Discuss.
8. Statethehistoryofevolutionofmanagementthoughtwithemphasisonmodernmanagement
techniques.
9. Ismanagement anartorscience?Justifyyouranswer.
10. Defineorganizationanddiscussitscharacteristics.
11. Explainthemeaningoforganization andstate itsprinciples.
12. Whatdoyoumeanbyformalandinformalorganization?Evaluateitsimportance.
Unit-5:ProjectManagement 5.41 CSP
13. Whatdoyouunderstandbyinformalorganization?
Howdoesitdifferfromaformalorganization?
14. "Organizationisanimportanttooltoachieveorganizationalobjectives",Comment.
15. Writebriefnotesandmeritsanddemeritsofthefollowing.
a. Line&stafforganization
b. Lineorganization
c. Functionalorganization
16. What do you understand by decentralization?
Explaintheadvantagesanddisadvantagesof decentralization.
17. Discusstheprocessoforganizingandexplaintherelationshipamongorganization,organizin
gand management.
18. Givebriefnoteonclassificationoforganizationbasedonauthorityrelationshipandevaluatet
heirmerits anddemerits.
19. Whatarethedifferentorganizationalstructuredesignsinmoderntrends?
20. DefineDepartmentation.Explain themethods ofDepartmentation.
21. Brieflyexplainthe meritsand demeritsof thefollowing:
a. Matrixstructure
b. Projectorganisation
c. Committeeorganisation
d. Boundaryless organisation

Management Science CSPATRO