Ethics 1
Ethics 1
Ethics 1
UNIT – 1
MANAGEMENT FUNCTIONS AND STRUCTURE
Management – Definition – Basic Functions – Contributions of Taylor and Fayol. Types of
structure – Line, Staff, Line and Staff, Functional, Committee, Project and Matrix Structures.
Departmentalization – Centralisation – Decentralization – Span of Control – Management by
Objectives – Management by Exception.
INTRODUCTION TO MANAGEMENT
Groups of people working in an organization to develop or appraise or attain the common goal of
the organization by utilizing the available resources are called Management. In simple terms it
means managing the work done by the people. Just as the mind coordinates and regulates the
various activities of the person, the management coordinates and regulates the activities of
various members of an organization.
Management is the process of Planning, Organizing, Staffing, Directing, Coordinating and
Controlling the human, physical, financial, and information resources of the organisation in an
effective and efficient manner in order to maintain the common objectives.
DEFINITION:
F.W. Taylor -“Art of knowing exactly what you want your men to do and then seeing
that it is done the best and cheapest way”.
Henry Fayol –“To Manage is to forecast, to plan, to organize, to command, to co-ordinate
and to control”.
Peter F.Drucker –”Management is work and as such it has its own skills, its own tools
and its own techniques”.
Mary Parker - “Management is the art of getting things done through and with people”.
Theo Haiman and William G Scott - Management is a social and technical process which
utilized resources influences human action and facilitates changes in order to accomplish
organizational goals.
Koontz and O Donnel - Management is the creation and maintenance of an internal
environment in an enterprise where individuals working in groups goals, efficiently and
effectively towards the attainment of group goals. It is the art of getting the work done through
and with people in formally organized groups.
RESOURCES – 5 M’S
1) Men
2) Machine
3) Material
4) Money
5) Methods
FUNCTIONS OF MANAGEMENT
Planning
•Look ahead and chart out future course of operation
•Formulation of Objectives, Policies, Procedure, Rules, Programmes and Budgets
Organizing
•Bringing people together and tying them together in the pursuit of common objectives.
•Enumeration of activities, classification of activities, fittingindividuals into functions,
assignment of authority for action.
Directing
•Act of guiding, overseeing and leading people.
•Motivation, leadership, decision making.
Controlling
•Laying standards, comparing actuals and correcting deviation-achieve objectives according to
plans.
Co-ordination
•Synchronizing and unifying the actions of a group of people.
‘POSDCORB’ FUNCTIONS OF MANAGEMENT:
1) Planning: Planning means forecasting or predicting the future activity in a specific
manner or structure. It is the basic function and essential for all the organization.
2) Organizing: It is collection or joining of all the resources available within the
organizational and outside, in order to achieve the organizational goal with efficiency.
3) Staffing: It involves appointing the right man for the right job at the right time. The
management is to analyze the human resource, see if he is suitable for the job and accordingly
allocate the work in the organization.
4) Directing: It is showing the correct path or correct way to achieve the organizational goal
within the stipulated time.
5) Controlling: Controlling as a function involves regulating the person or examining the
person whether he is working in the right way or not. In order to achieve the common goal as
efficient as possible.
6) Coordinating: It is a type of support function. It involves accumulating the work to
achieve the task.
7) Budgeting: It means allocation of the resources. It involves financial planning for the
future activities.
8) Reporting: It is a statement showing the various activities to the top management. It
shows the status of the work done.
NATURE/CHARACTERISTICS OF MANAGEMENT
1. It is an Universal Activity: Management is relevant in every sphere of activity. It is
relevant in army, government, private household work etc. the work can be done in a more
systematic manner with the application of the techniques of management. The material and
human resources can be effectively handled and the foal can be attained with maximum
efficiently. Ex. a student study at random and systematic manner. Later is best one.
2. It is goal oriented: Management focuses attention on the attainment of specific
objectives. For Ex a business may aim for a particular level of sales. This can be achieved by
proper forecast of sales by planning production by fixing the targets.
3. It is an Intellectual activity: The practice of management requires application of mind
and intelligence. Every work needs to be properly planned and execute work has to be assigned
to different Individuals and responsible have to be fixed on them. Ex in a manufacturing unit
production finance and marketing are the important activities performed. It has to work in proper
co-ordination with the other departments. Then only objectives of the firm can be achieved.
4. It is a process: It is process consisting of various stages/ functions such as Planning,
Organising, Directing, Controlling and Co-ordination. Planning is the starting point of
management and control is its last stage.
5. Management is both Art and Science: The practice of science needs knowledge of
theory and formulae. But the practice of art requires skill management is social science. It
focuses attention on the behavior of individuals and groups. The theoretical knowledge may not
help always that time they require skill ex if the workers in a factory demand more pay and
threaten to go on strike if their demand is not considered. Here the skill of the manager will help
to avert the strike then its theoretical.
6. It is a Social Process: Management deals with the behavior of individuals and group. In
a work place individuals work as a team. The behavior of an individual is bound to be different
while he is part of a group ex: an individual worker may be forced to join a strike program
because of the union.
7. It is an on-going Activity: It is a continuous process planning, organizing etc have
unlimited use. Management will exist as long as there are human activities.
8. It is Intangible: It is invisible cannot be seen, but it can be felt.
9. Management is a Profession: Like medical, law and engineering, management has also
come to be recognized as a profession
MANGEMENT IS AN ART AND SCIENCE
Art:
Practical know how
Technical skills
Concrete results
Creativity
Personalised nature
Science:
Empirically Derived
Critically tested
General principles
Cause and effect relationship
Universal applicability
‘Management as a science provides principles and as an art helps in tackling situations’.
ROLE AND IMPORTANCE OF MANAGEMENT
Achievement of group goals
Optimum utilization of resources
Minimum Cost
Survival and growth
Generation of employment
Development of nation
MANAGEMENT VS ADMINISTRATION
Meaning
Administration as a function is concerned with determination of corporate policies, coordination
of the various departments (production, finance, distribution etc.) of the organization under the
control of the executives.
Management is concerned with execution of the policy within the limits setup by administration and
employment of the organization for the particular objective before it. In other words Management is the
doing process and administration is the thinking process.
LEVELS OF MANAGEMENT
FUNCTIONS OF TOP LEVEL MANAGEMENT
• To provide a basic sense of direction to the activities of the company by setting its long
range mission and translating into clear set of objectives
• To design the organization structure of the company in terms of differentiated and
integrated activities, role of various positions, authority & responsibility between them.
• Top management must ensure the quality of personnel in terms of their skills, orientations
and commitment
• To ensure that the resource conversion and exchange systems are designed and operated
efficiently.
• Periodic review of objectives for necessary modifications is a part of this function
FUNCTIONS OF MIDDLE LEVEL MANAGEMENT
• To interpret and explain the plans and policies formulated by top management
• To monitor & control the operating performance
• To cooperate among themselves so as to integrate the various activities of a department
• To train, motivate and develop supervisory personnel; and
• To lay down rules & regulations to be followed by supervisory personnel.
FUNCTIONS OF LOWER LEVEL MANAGEMENT
• To plan day to day production within the goal laid down by higher authorities
• To assign jobs to workers and to make arrangements for their training and development
• To issue orders & instructions
• To supervise & control workers‟ operations and to maintain personal contact with them
• To arrange materials and tools and to maintain machinery
• To advise & assist workers by explaining work procedures, solving their problems etc.
• To maintain discipline and good human relations among workers
• To report feedback information and workers‟ problems to the higher authorities.
THREE LEVELS OF MANAGEMENT
Board of Directors
TOP
Managing Director
MANAGEMENT
Executive Directors
Workshop manager
worker
3. JOB ANALYSIS: Job analysis is undertaken to find out the one best way of doing the thing. The best
way of doing a job is one which enquires the least movements, consequently less time and cost.
(i) Time study involves the determination of time a movement takes to complete. The movement which
takes the minimum time is the best one. This helps in fixing the fair work for a period.
(ii) Motion study involves the study of movements in parts which are involved in doing a job and
thereby eliminating the wasteful movements and performing only necessary movements. This reduces
the time taken in performing a work and also the fatigue of workers.
(iii) Fatigue study shows the amount and frequency of rest required in completing the work. After a
certain period of time, workers feel fatigue and cannot work with full capacity. Therefore, they require
rest in between.
4. STANDARDISATION: As far as possible, standardization should be maintained in respect of
instruments and tools, period of work, amount of work, working conditions, cost of production, etc.
These things should be fixed in advance on the basis of job analysis and various elements of costs that
go in performing a work.
5. SCIENTIFIC SELECTION AND TRAINING OF WORKERS: A worker should be given work for which he is
physically and technically most suitable like, education, work experience, aptitude, physical strength,
etc.
6. FINANCIAL IINCENTIVES: Financial incentives can motivate workers to put in their maximum efforts. If
provisions exist to earn higher wages by putting in extra effort, workers will be motivated to earn more.
7. ECONOMY: The economy and profit can be achieved by making the resources more productive as
well as by eliminating the wastages.
8. MENTAL REVOLUTION: Scientific management depends on the mutual co-operation between
management and workers. For this co-operation, there should be mental change in both parties from
conflict to co-operation
PRINCIPLES OF SCIENTIFIC MANAGEMENT
Taylor has given certain basic principles of scientific management. The fundamental principles are:
1. REPLACING RULE OF THUMB WITH SCIENCE: Taylor has emphasized that in scientific management,
organized knowledge should be applied which will replace rule of thumb. While the use of scientific
method denotes precision in determining any aspect of work, rule of thumb emphasizes estimation.
2. HARMONY IN GROUP ACTION: Group harmony suggests that there should be mutual give and take
situation and proper understanding so that group as a whole contributes to the maximum.
3. CO-OPERATION: Scientific management involves achieving co-operation rather than chaotic
individualism.
4. MAXIMUM OUTPUT: Scientific management involves continuous increase in production and
productivity instead of restricted production either by management or by worker.
5. DEVELOPMENT OF WORKERS: In scientific management, all workers should be developed to the
fullest extent possible for their own and for the company’s highest prosperity.
A sound organisation requires sound organisation structure. This requires the identification and
analysis of activities While designing a structure, the following points should be given adequate
consideration.
1. Departmentation. Departmentation is the process of arranging work to form positions
functions, and other organisational elements. There are several ways of departmentation.
However, any base should provide (i) facility in co-ordination (ii) advantages of specialisation,
(iii) minimum cost, (iv) emphasise on important activities, (v) consideration of internal and
external factors, and external factors, and (vi) development of individuals. Departmentation is
not a fixed pattern, it should be checked and analysed from time to time to make necessary
adjustment according to changes in internal an external variables.
2. Balancing. Each function should be given its proper emphasis with respect to its basic
purpose in the organisation. Each element of the organisation should be seen in the context of
total structure because no decision can be taken on a particular element in isolation. Compromise
in various elements gives a balanced and workable organisation structure.
3. Focusing of Operating Responsibility. The work assignment creates responsibility.
Organisation structure should clearly define the responsibility of all the individuals so that they
exactly know what is expected of them. Clearly defined responsibility helps in delegating
appropriate authority to various level. Moreover, when responsibility is clearly defined, the
persons can be trained accordingly to occupy the positions.
4. Establishing Span. Span of management, supervision, or control refers to the number of
people one manager can supervise. There is a limit on this number; however, arbitrary
designation of limits on number is misleading. In practice, the span may vary widely because a
number of factors determine this. The span should be decided on the basis of its needs at various
levels of organisation
5. Facilitating Units. Departmentation and responsibility centres provide as to who will
perform the work. The persons heading the responsibility centres need the help of facilitating
units which are created in the organisation. These units may be organised in the form of
departments, sectors, or committees. In organising these units, factors like co-ordination of
operating units, consistent action throughout the organisation, provision for adequate importance
and control, and common use of specialised facilities should be considered.
6. Continuity. The structure is determined for future period also. As such, it should be
designed in such a way that it helps in achieving the objectives of near future also. Forthis
purpose, the structure should be kept flexible enough so that it can be adjusted to changing
conditions.
Advantages
Simple to establish and operate
Promotes prompt decision making.
Easy to control as the managers have direct control over their subordinates.
Communication is fast and easy as there is only vertical flow of communication.
Disadvantages
Lack of specialisation
Managers might get overloaded with too many things to do.
Failure of one manager to take proper decisions might affect the whole organisation.
However, line structures are suitable for small businesses where there are few subordinates
organisations where there is largely of routine nature and methods of operations are simple.
Two ways of designing Line Organisation
Line organisation can be designed in two ways:
Pure Line Organisation
Departmental Line Organisation
1. Pure Line Organisation
Under this from, similar activities are performed at a particular level. Each group of activities is
self-contained unit and is able to perform the assigned activities without the assistance of others.
Pure line organisation may be depicted as follows:
Though, this is simple in organizing but it almost non-existent in the modern world.
2. Departmental Line Organisation
Under this form, entire activities are divided into different departments on the basis of similarity
of activities.
Each department is placed under one departmental superintendent. All persons in the department
are subject to control by the departmental head. The basic objective of this form is to have
uniform control, authority, and responsibility.
Advantages
Line managers are provided by expert advice by these specialists.
Staff managers provide specialist advice which can improve quality of decisions in various
departments.
Disadvantages
Line managers and staff managers might have conflicts on particular issues.
Line and staff managers might not be clear as to what the actual area of operations is and what is
expected of them. Co-ordination may be a problem.
Staff personnel are not accountable for the results and thus may not take tasks seriously.
However, Line and staff organisation is very suitable for large organisation.
3) Functional Organisation Structure
Functional organisation structure is were “authority rests with the functional heads; the structure
is sectioned by departmental groups.”The organisation is divided into a number of functional
areas. This organisation has grouping of activities in accordance with the functions of an
organisation such as production, marketing, finance, human resource and so on.
The specialist in charge of a functional department has the authority over all other employees for
his function.
It is a kind of Formal Organisation whose structure is based on organising resources to perform
specialized tasks or activities in order to attain the goals of organisation.
This structure emerges from the idea that the organisation must perform certain functions in
order to carry on it‟s operations.
Functional structure is created by grouping the activities on the basis of functions required for
the achievement of organisational objectives. For this purpose all the functions required are
classified as shown below:-
CENTRALISATION
Centralisation is the systematic and consistent reservation of authority at central point within the
organisation
Benefits of Centralisation
This system results in certain advantages to the organisation
1- Facilitating Personal Leadership. Personal leadership can be a potent influence in the
success of a small organisation and during its early growth stages. The success and survival of
the small, young enterprise in the competitive market depends upon aggressiveness, singleness of
purpose, and flexibility. Under a talented and dynamic leader, centralisation in small
organisation may result in quick decisions, enterprising and imaginative action, and high
mobility
2- Providing Integration. Certain amount of centralisation is necessary to unify and
integrate the total operation of the enterprise. Some sort of central direction is required to keep
all parts of the organisation moving harmoniously together towards a common objective. Thus, it
acts as a binding force on the various parts of the organisation.
3- Uniformity of Action Centralisation brings uniformity in all actions in the organisation.
Thus, to the extent that the organisation wishes all its units to do the same thing in the same way
or the same time, there must be centralisation of appropriate decisions.
4- Handling Emergencies. When emergency decisions affecting all the units of the
organisation are to be taken, centralisation is necessary. The more acute emergency or the more
acute competition requires greater centralized decision-making.
5- Other Benefits. Besides, centralisation minimizes duplication of work and wastages
require easier control, and makes communication easier.
However, these advantages of centralisation are limited in certain circumstances and particularly
in smaller organisations. A stage comes when decentralisation becomes desirable to achieve its
advantages and where the limitations of centralisation come in the way of successful
organisational functioning.
DECENTRALISATION
Decentralisation has become the prevailing philosophy for organising activities on the part of
large organisations.
Benefits of Decentralisation
Many organisations, which were centralized at earlier stages, have been forced to go for
decentralisation simply because they could not cope up with the situation under centralized
authority. This show the benefits of decentralisation which are as follows:
1. Reducing Burden to Top Executives. Decentralisation is necessary for solving the
problems of expanding organisations. It is the means by which the chief executive can extend his
leadership over a giant organisation, when the chief executive makes operating decisions and
with problems of immediate urgency, he finds it almost impossible to adopt the relaxed and
contemplative point of view necessary for planning and thinking ahead. Decentralisation relieves
this pressure on the chief executive an provides him time to think for the future and to make
plans accordingly.
2. Facilitating Diversification. Decentralisation can facilitate the growth and
diversification of product lines. Divisionalization facilitates diversification an former is
successful under decentralisation. For under decentralisation, each product line is treated as
separate unit and proper emphasis on all important matters such as present position, future
prospects, an comparative efficiency, can be given.
3. Ensuring Marketing Innovations. Customers require satisfaction in respect of supply of
qualitative products, regularity of supply, and at cheaper rates. Marketing innovations ensure
better customer satisfaction. Each organisation has to carry on these marketing innovations for its
existence and growth. In decentralized organisation structure, higher level people get much time
for the creativity and innovations. The impact of decentralisation on both product and market has
proved by the various organisations.
4. Motivating Mangers. Various research studies have shown that we organisation
structure itself can influence the people within the organisation. The extent to which the
organisation facilities participation, communication, delegation, mutual interaction, and
interdependence, motivates people for higher productivity. Decentralization tends to emphasise
those desirable characteristics in whatever type of structure it is found.
5. Encouraging Development of Managers. Managers are made, not born and
decentralisation is one of the best methods of developing managers in the organisations. Other
methods of management development have their own contributions in this field. However, giving
manager‟s management jobs to do and to delegate authority for decision-making make them
more mature and competent and broad-based. The problem of succession is overcome this way
and the future growth and success of the organisation are ensured as most organisations find lack
of managerial talent a limiting factor in growth. Perhaps, the necessity of management
development is one of the compelling reasons for decentralisation.
SPAN OF CONTROL
In a business of more than one person, unless the business has equal partners, then there are
managers and subordinates. Subordinates are workers controlled by the manager.
A hierarchy describes the structure of the management of the business, from the top of the
company – the managing director, through to the shop floor worker, who reports to their
foreman, in a manufacturing business.
The hierarchy of a business is usually best understood by drawing an organisation chart
showing which levels of management and employees report to whom.
An example of a hierarchy is shown in the diagram below
A span of control is the number of people who report to one manager in a hierarchy. The more
people under the control of one manager - the wider the span of control. Less means a narrower
span of control.
An example of a narrow span of control is shown in the diagram below:
Yes No
Do we revise goal what is the reason
standards or target
Questions
Part A
1. Define management
2. What is „PODSCORB‟?
3. Who is the father of scientific management?
4. Define planning.
5. What is meant by committee form of management?
6. Define decentralization.
7. Define centralization.
8. What is span of control?
9. Define MBO
10. What do you mean by MBE?
Part B
1. Define management. Explain the various functions of management.
2. What is meant by organization structure? Explain its types.
3. Explain Fayol‟s 14 principles of management.
4. What is Departmentation? Explain the different methods of Departmentation.
5. Discuss MBO in detail and state its merits and demerits.
6. Explain the steps involved in MBE. What are its disadvantages?
7. Differentiate between the centralization and decentralization
8. Write the merits and demerits of centralization
9. Write the advantage and limitation of decentralization
10. What are the steps involved in scientific management by F.W.Taylor