258) Principles and Practice of Management by Manmohan Joshi

MANMOHAN JOSHI
PRINCIPLES AND
PRACTICE OF
MANAGEMENT
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Principles and Practice of Management
1st edition
© 2017 Manmohan Joshi & bookboon.com
ISBN 978-87-403-1785-5

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PRINCIPLES AND PRACTICE OF MANAGEMENT contents
CONTENTS
1 Concept of management 7
1.1 Introduction 7
1.2 Meaning 7
1.3 Evolution of management thought 10
1.4 The scientific management theory 11
1.5 Classical organisation theory 12
1.6 Neo-classical theory of human relations movement 13
1.7 Contemporary theories 15
1.8 Management process 17
1.9 Functions of management 17
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2 Planning and forecasting 19

2.1 Introduction 19
2.2 Principles of planning 19
2.3 Types of planning 20
2.4 Importance of planning 20
2.5 Responsibility for planning 21
2.6 Process of planning 22
2.7 Forecasting 23
3 Organising 25
3.1 Introduction 25
3.2 Features of modern organisation 25
3.3 Organisational structure 26
3.4 Delegation of responsibility 29
3.5 Authority 30
3.6 Coordinating 32
4 Staffing process 33
4.1 Introduction 33
4.2 Manpower planning 33
4.3 Recruitment of personnel 36
4.4 Recruitment process 38
4.5 Selection 40
4.6 Induction 44
4.7 Training and development 46
4.8 Employee counseling 49
4.9 Disciplinary action 50
4.10 Equal opportunity policy 51
5 Leadership 52
5.1 Meaning of leadership 52
5.2 Importance of leadership 52
5.3 Leadership relationship 52
5.4 Functions of a leader 53
5.5 Leadership styles 55

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6 Motivation 58
6.1 Meaning and importance 58
6.2 Theories of motivation 58
6.3 Impact of motivation theories 65
6.4 Advantages of motivated employees 65
6.5 Motvational factors 66
7 Communication 67
7.1 Meaning of communication 67
7.2 Importance of communication 67
7.3 Features of effective communication 68
7.4 Types of administrative communication 69
7.5 Types of internal communication 69
7.6 Effective external communication 72
7.7 Barriers to communication 73
7.8 Overcoming barriers 74
8 Managerial control 76
8.1 Need for control 76
8.2 Types of control 76
8.3 Elements of managerial control system 77
8.4 Control strategies 79
9 Decision making 80
9.1 Introduction 80
9.2 Features 80
9.3 Scope 81
9.4 Purpose 81
9.5 Types 81
9.6 Process 82
9.7 Effective decision making 86
References 89
About the author 91

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PRINCIPLES AND PRACTICE OF MANAGEMENT Concept of Management
1 CONCEPT OF MANAGEMENT
1.1 INTRODUCTION
Management in one form or another has been practised since the beginning of human
society. Since early times people grouped together for various purposes, for example, hunting,
agriculture and other activities which required team work. To be effective, such groups
needed leaders – people whose tasks were to plan what was to be done and how, and to
direct and control the efforts of others.
These leaders – whether they were the heads of families or clans, or chiefs appointed to
lead – can therefore be seen as having been the first ‘managers,’ as such, because they
influenced the activities of other people. In a large number of cases the early leaders held
their positions by brute strength, forcing other people to obey their commands, while some
of them were benevolent leaders who really looked after their groups.
With the passage of time the concept of management has changed from the one practised
in earlier times to the one which has elements of humane approach, motivation etc.
1.2 MEANING
The term ‘management’ commonly refers to a group of people holding lucrative positions in
an organisation, while the activity of management is that aspect of work which is concerned
with the efforts of the workforce of an organisation.
Moreover, many of us think of a manager as paper-pushing and issuing instructions,

requiring little initiative and few skills. Yet the dictionary defines a manager as someone
who manages, for example, business or public affairs, or someone capable of organising
activities and resources.
1.2.1 CONCEPT
There are many answers to the question, “What is management?” but there is no simple
answer. Various views have been given:
• Management is the use of techniques properly applied. There are managers who
do things and those who get things done.
• Managing as a practice is an art, and the organised knowledge underlying the practice
may be referred to as science. So science and art in this context are complimentary.
• Managing is the art of managing the activities of other people.

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Taylor (1911) defined management as “the art of knowing what you want to do and then
seeing that it is done in the best and cheapest way.”
According to Fayol (1930), “to manage is to forecast and to plan, to organise, to coordinate
and to control.”
Mullins (2004) has stated:
“It is through the process of management that the efforts of the

members of an organisation are coordinated, directed, controlled and
guided towards the achievement of organisational goals.”
1.2.2 HUMAN ASPECT OF MANAGEMENT
The success of any organisation depends directly on effectively making use of human resources.
Although the term ‘management’ is often used to refer to a group of people holding senior
(executive) positions in an organisation, the activity of management is that aspect of their
jobs which is primarily concerned with the efforts of the organisation. The real test of our
abilities as leaders, managers and team members of an organisation is how effectively we
can establish and maintain human organisations for the purpose of achieving results.
Peter Drucker (1979) has said:
“Management is tasks. Management is discipline. But management is

also people. Every achievement of management is the achievement
of a manager. Every failure is the failure of a manager.”
What is it that makes some succeed and others fail? It is the way of looking at where they
want to go and how they are going to get there. It means having an idea, a mental plan,
a vison, and the skills to execute these ideas.
We can say that management is the process of working with and through individuals, groups,
and other resources (equipment, capital, technology). To be successful, organisations require
their management personnel to have interpersonal skills. The achievement of organisational
objectives through leadership is management.

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1.2.3 NATURE
Management is a job but it is a job which is much more difficult because it involves
dealing not with ‘inanimate’ objects, services or theories but with men and women who
are unpredictable. Each of these men and women has a different or complex character,
skills and abilities, likes and dislikes, prejudices, and so on. Management involves providing
leadership to such groups of people – the workgroup – because these people:
• need adequate training to perform their work effectively;

• need advice, guidance and assistance;
• are to be motivated and controlled; and
• need to be organised as a workgroup, and their efforts are to be coordinated so
that they work together as a team.
1.2.4 SCOPE
The modern world of business is very complex, and this very complexity has led to what
is called ‘specialisation’ or the ‘division of labour,’ by which different people get specialised
in performing – and become specialists in – different types of work.
There are two aspects to the work of a manager – the ‘technical’ and the ‘human.’ The
‘technical’ or ‘functional’ work of different managers can – and does – vary enormously.
There are sales managers, production managers, finance managers, stores managers, and
many more. Moreover, the technical or functional work of, say, a factory manager in one
organisation might well differ in many respects from that of a factory manager in another
organisation.
Nevertheless, all those different types of managers should have considerable knowledge of the
technical aspects of their specific jobs in addition to being proficient ‘managers of people.’
It is, in any case, not very easy to train, supervise and control the work of others without
knowing what they are – or should be – doing.
So the scope of any manager’s role comprises two quite different aspects:
• The technical or functional aspect which is concerned with the work to be performed
by the organisation or department or section or workgroup; and
• The managerial aspect which is concerned with the people who are to perform the
specified work in the organisation or department or section or workgroup.

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1.2.5 IMPORTANCE
Management is essential for the successful functioning of an organisation. It is all the more
important for business organisations. Every business needs the power of management.
According to Peter Drucker (1993), “management is a dynamic life-giving element in
an organisation; without it the resources of production remain mere resources and never
become production.”
Most businesses have competitors producing or providing similar goods or services to their
own. And in most cases a particular business can prosper – and indeed survive – only by
keeping abreast or ahead of the competition. And it can only expand – for the benefit of
its owners and its employees alike – by doing better than its competitors.
Only a skilled manager can ‘weld’ his/her subordinates into an efficient and coordinated
team capable of achieving its objective in the best and most economical way.
The importance of management can be highlighted in the following:
• Achievement of group goals;

• Optimum utilisation of resources;
• Minimization of cost;
• Survival and growth; and
• Employment generation.
1.3 EVOLUTION OF MANAGEMENT THOUGHT

Several scholars who have researched on the genesis of management maintain that it is as
old as civilization and has been practised since the evolution of societies. Communities came
together under the authority of a chief or a king who was supposed to lead the people.
While the Egyptians built their pyramids, or the Chinese built the Great Wall, management
activities such as authority, planning, organising, controlling, and evaluating were observed.
There was also division of labour, and the leaders practised supervision of work. Even today,
in villages and small towns, these management activities are still practised. Management
theories have been developed from the primitive base and they are continuously being tested
to justify their contribution in societies.

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Modern management theory is not something which has just happened – it has evolved,
and is continuing to evolve to meet ever-changing circumstances, technologies, challenges,
ethical and other ideas and new theories. However, the variety of approaches to management
analysis and the number of differing views have resulted in much confusion as to what
management is, what management theory and science is, and how management events
should be analysed. This is why scholars have called this situation “the management theory
jungle” (Koontz, 1961). Since that time, the vegetation in this jungle has changed somewhat,
new approaches have developed, and older approaches have taken new meanings, but the
development of management science and theory still have the characteristics of a jungle.
Wilkinson and Cave (1987) have stated that management theory emerged in industry and that
its development is attributed to the USA. They also indicate that, under management theory,
there are various management approaches, which can be applied to achieve organisational
objectives and goals. These are the scientific approach, the classical management theory,
bureaucratic theory, human relations theory, behavioural theory, the systems theory, and
the contingency theory.
As a matter of fact, the varied contributions to this field of study came from many different
backgrounds; each contributor brought to bear on their work their own opinions, based on
their own experience which was often limited or restricted in scope. Some earlier contributors
tried to ‘generalise’ from their sometimes limited or restricted experience, while others
researched in great detail in isolated and haphazardly chosen experimental situations.
1.4 THE SCIENTIFIC MANAGEMENT THEORY

The first management theory was what is popularly referred to as Frederick Taylor’s scientific
management. At the turn of the 19th–20th century, the most notable organisations were large
and industrialised. Often they included ongoing routine tasks that manufactured a variety
of products. The United States highly prized scientific and technical matters, including
careful measurement and specification of activities and results. Management tended to be
the same. Frederick Taylor developed the ‘scientific management theory’ which espoused the
careful specification and measurement of all organisational tasks. Tasks were standardised as
much as possible. Workers were rewarded and punished. This approach appeared to work
for organisations with assembly lines and other mechanistic, routine activities. Many experts
stamped this theory as narrow and termed it as ‘Machine Theory.’
However, this theory had two features:
• The tasks being referred to are largely repetitive mechanical in nature, which can
be divided and sub-divided.
• The tasks do not require any problem solving capabilities, and this theory devoted
much attention to standardizing the methods.

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1.5 CLASSICAL ORGANISATION THEORY

In this category of management theory are Max Weber’s bureaucratic theory and Henri
Fayol’s administrative theory. Max Weber attempted to do for sociology what Taylor had
done for industrial operations. He embellished the scientific management theory with his
bureaucratic theory. He focused on dividing organisations into hierarchies, establishing
strong lines of authority and control. He suggested organisations develop comprehensive
and detailed operating procedures for all routine tasks. Weber developed a set of principles
for an ‘ideal’ bureaucracy. These principles included:
• Fixed and official jurisdictional areas;

• A firmly ordered hierarchy of super and subordination;
• Management based on written records;
• Expert training;
• Official activity taking priority over other activities; and
• Management of a given organisation follows stable, knowable rules.
Fayol believed that management had some principal rules:
• To forecast and plan;

• To organise;
• To command;
• To coordinate; and
• To control.
He developed fourteen principles of administration to go along with management’s five

primary roles. As quoted by Stoner and Freeman (1987), these principles are:
• Specialisation;
• Authority;
• Responsibility;
• Unity of command;
• Unity of direction;
• Subordination of individual interest to general interest;
• Remuneration of staff;
• Centralization;
• Line of authority;
• Order;
• Equity;

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• Stability of tenure;
• Initiative; and
• Espirit de corps.
Fayol believed personal effort and team dynamics were part of an ‘ideal’ organisation.
The classical theorists talked a lot about the division of labour, strict compartmentalized
authority oriented organisational structure, span of control, and others. But many others
proved later that human relationship, inter-relationship, and group life played a vital role
in organisations.
According to classical theory, almost both the lower and top level staff function independently.
Top level management makes decisions and sets goals and passes them on to the lower level
workforce without consulting them. However, the workers in all the organisations want to
know about the setting of goals, causes for failures if any, and the ways to achieve the goals.
1.6 NEO-CLASSICAL THEORY OF HUMAN RELATIONS MOVEMENT

Eventually, unions and government regulations reacted to the rather dehumanizing effects
of scientific and bureaucratic theories. In the 1920s more attention was given to individuals
and their unique capabilities in the organisation. A major belief was that the organisation
would prosper if its workers prospered as well. Human resource departments were added
to organisations. The behavioural sciences played a strong role in helping to understand the
needs of workers and how the needs of the organisation and its workers could be better
aligned. This prompted the development of many other approaches some of which focus on
psychological and social aspects of life in a work situation. Elton Mayo and Mary Parker
Follet are recognised for experimenting on these two aspects, which they did in Hawthorne
plant of Western Electric Company in Chicago in later part of 20th century. The prior
thought was that pleasant physical conditions like heating, good furniture and lighting were
the factors contributing to satisfying outputs in organisations. Later, these were proved not
to be the only factors. Psychological factors like job satisfaction and attitudes were also seen
as important. Mary Parker Follet studied human behaviour in a workplace and came up
with four principles of management coordination.
They are:
• Involving direct contact between those involved;

• Commencing as early as possible;
• Being continuous; and
• Being concerned with all the various elements in the work situation.

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These steps show concern for both production and people.
The results of these experiments showed that group dynamics and social makeup of an
organisation were an extremely important force for or against higher productivity. This
outcome caused the call for greater participation for the workers, greater thrust and openness
in the working environment, and a greater attention to teams and groups in the workplace.
While Taylor’s inputs were the establishment of the industrial engineering, quality control
and personnel departments, the human relations movement’s greatest impact came in what
the organisation’s leadership and personnel department were doing. The seemingly new
concepts of ‘group dynamics,’ ‘team work,’ and ‘organisational social systems,’ all stem from
Mayo’s work in mid-1920s.
1.6.1 MCGREGOR’S THEORY ‘X’ AND THEORY ‘Y’
McGregor (1987) postulated his ideas in ‘Theory X’ and ‘Theory Y.’ Using human behaviour
research, he noted that the way an organisation runs depends on the beliefs of its managers.
(This theory has been discussed in detail later under ‘Motivation.’ See 6.2.7)
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1.6.2 EVALUATION OF NE0-CLASSICAL THEORY
The following critical evaluation has been done by social thinkers:
• Some assumptions are highly imaginary. For example, an assumption is that there is
solution to each and every problem to the satisfaction of all the parties concerned.
But it is far from truth. Often personnel in organisations have conflicting interests.
• The various formats and structures suggested by neo-classical theorists have limitation
in applications. They are not universal specific structures, and such formats cannot
suit all types of organisations.
1.7 CONTEMPORARY THEORIES

1.7.1 CONTINGENCY THEORY
It asserts that when managers make a decision, they must take into account all aspects of
the current situation and act on those aspects that are essential to the situation at hand.
1.7.2 SYSTEMS THEORY
The systems theory has had a significant effect on management science and understanding
of organisations. A system is a collection of parts unified to accomplish an overall goal. If
one part of the system is removed, the nature of the system is changed as well. A system
can be looked at as having inputs (e.g. resources such as materials, money, technologies,
people), processes (e.g. planning, organising, motivating, and controlling), outputs (products
or services), and outcomes (e.g. enhanced quality of life or productivity for customers/
clients). Systems share feedback among each of these four aspects of the system. The effect
of systems theory is that it helps managers to look at the organisation more broadly. It has
also enabled managers to interpret patterns and events in the workplace i.e. by enabling
them to recognise the various parts of the organisation, and, in particular, the interrelations
of parts.

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1.7.3 TEAM BUILDING THEORY
This theory emphasises quality circles, best practices, and continuous improvement. It is
a theory that mainly hinges on team work. It also emphasises flattening of management
pyramid, and reducing the levels of hierarchy. Finally, it is all about consensus management
i.e. involving more people at all levels in decision making.
1.7.4 MANAGEMENT BY OBJECTIVES (MBO)
Peter Drucker (1954) asserted that management comes into existence for specific purpose,
and introduced the term MBO. It includes:
• Planning;
• Setting standards;
• Performance appraisal; and
• Motivation.
The MBO approach is result oriented and is based on the idea of effective participation of
all the members for achieving objectives. It includes the following steps:
• Defining jobs;
• Setting objectives;
• Developing action plan;
• Review; and
• Performance appraisal.
Drucker’s contribution has made tremendous impact on management practices.

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1.8 MANAGEMENT PROCESS

Henri Fayol (1930) was mostly concerned with the process of management, that is, what
the actual job of a manager was. He suggested that there are five elements of management
which are universal to all managers in all organisations. According to him, “to manage is
to forecast and plan, to organise, to command, to coordinate and to control:”
• To forecast and to plan: Managing entails looking ahead: assessing the future and
determining as accurately as possible, the probable course of future events which
might affect an organisation and its operations. Based on the forecasts, plans can
be formulated to attempt to deal with the expected pattern of future events, and
to take steps to overcome problems which it is anticipated will arise in the future,
and as far as possible to avoid them before they arise.
• To organise: Organising involves putting the plans into practice, implementing the
managerial decisions made, and so arranging the work which is to be performed
that the organisation’s objectives will be achieved as laid down in the plans.
• To command: Commanding implies knowing the workers well and the business
thoroughly, and issuing instructions in such a way that a high level of activity by
the workforce is maintained.
• To coordinate: Coordination involves ensuring that all efforts move smoothly together
in the same direction, that is, towards the achievement of the organisation’s objectives.
• To control: It means that management must be certain that what is being done is
in conformity with the plan. For this, a control system is essential.
1.9 FUNCTIONS OF MANAGEMENT

The ‘managerial’ aspect of any manager’s job or work can be divided into five functions or
types of activities. They are:
• Planning: Planning is the basic managerial function. It helps in deciding the course
of action to be followed for achieving various organisational objectives. It is a
decision in advance, what to do, when to do, and who will do the particular task.
Planning is a continuous process that takes place at all levels of management. Plans
may be of many types, such as short-range plans, medium-range plans, strategic
plans, administrative plans, and operational plans.
• Organising: The function of organising is to arrange, guide, coordinate, direct and
control the activities of an organisation. It provides the necessary framework within
which people associate for the attainment of objectives. It also includes designing
jobs, structuring organisation, and training employees to do so.

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• Coordinating: Organising and coordinating are closely linked, and very frequently
coordinating is an essential continuation of organising. Coordinating involves
ensuring that all efforts move smoothly together in the same direction, that is,
towards the common objectives.
• Motivating: It is only through the efforts of the workforce that the objectives
of the organisation can be achieved. Hence a manager should be aware of what
these motivational forces are, and he/she should provide requisite motivation to
all concerned.
• Controlling: Controlling is the management function of ensuring that performance
conforms to plans. Control is essential for achieving the objectives of an organisation.
Control is the process which enables management to get its policies implemented and
take corrective action if performance is not according to pre-determined standards.
Planning
Controlling Organising
Functions of
Management
Motivating Coordinating
Fig. 1/1 Functions of Management

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PRINCIPLES AND PRACTICE OF MANAGEMENT PLANNING AND FORECASTING
2 PLANNING AND FORECASTING

2.1 INTRODUCTION
Planning entails deciding how the pre-determined ‘objectives’ of a business should be
achieved in the most efficient and economical way in accordance with policy. Planning is
the activity concerned with making plans. Plans are really ‘routes to objectives.’ Once the
objectives of an organisation have been set, planning is necessary to work out how to achieve
the objectives in practice, within the framework of the policies formulated.
2.2 PRINCIPLES OF PLANNING

Whatever may be the planning period, certain principles are involved. They are as follows:
• The purpose of a plan must be determined. Goals to be achieved must be clearly

identified.
• Plans must be formulated on clearly defined data and information. Forecasts help
in this connection, but other data sources must also be used, such as past records,
performance, experience etc.
• The plans of the various functions or sub-systems of the organisation must be
coordinated to avoid confusion.
• Standards to be achieved by the plans must be set, and performance must be
monitored.
• Plans must be flexible to allow for modification in the light of experience of their
practical implementation.
• Full communication between all personnel concerned in operating the plan, at any
level, is essential. Involvement by all people concerned is an important factor in
successful planning.
• Plans must be seen to be achievable. Over-ambition must be avoided as that
tends to lead to discouragement and frustration at the failure to attain the goals
set. On the other hand, under-ambition in planning provides no incentive, and
encourages inefficiency.

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2.3 TYPES OF PLANNING

Planning can be broadly categorized into the following:
• Strategic planning: In business, top management is involved mainly with the ‘long-
term planning’ which is often called ‘strategic planning.’ It is concerned primarily
with deciding what the objectives of the business should be in two, five, or even
ten years ahead, and with the future policies of the business. Such planning is
concerned mainly with the organisation as a whole rather than with its individual
departments or sections.
• Tactical planning: This means planning how the overall strategies are to be achieved.
This often entails devising and operating short-term plans, for up to a year ahead.
• Activities or operational planning: Other levels of management, including
supervisors and foremen, are involved in very short-term ‘activity planning’ – which
is sometimes called ‘operational planning.’ This includes day-to-day running of
departments or sections and individual assignments; for example, how to meet a
particular month’s production quota, or deciding what each member of staff should
be doing at any given time.
In practice, much depends on the size and type of a particular business, and the size of its
management team. However, in general, a good deal of planning which managers are called
upon to do involves making routine decisions, and is concerned with everyday matters – for
example, planning the work of a team of showroom sales personnel – which will mostly be
similar work week after week.
2.4 IMPORTANCE OF PLANNING

Operational and short-term planning is important because they relate directly to the day-
to-day activities of the organisation. This type of planning is also carried out at the lower
levels of management and supervision, with the emphasis being on practical application
and implementation.
Long-term planning – both strategic and tactical – is also of vital importance, and is the
only means of setting and keeping an organisation ‘on course’ for the attainment of its
principal objectives.

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Every aspect of the organisation should be subject to planning in order:
• to make the utmost use of resources;

• to stimulate programmes for management and non-management training;
• to provide for and reach productivity, sales and financial targets;
• to ensure a reasonable return on capital and investment; and
• to guide the organisation in the attainment of its objectives.
The development of well-considered plans enables management at all levels to take a hard
look at itself and the organisation in which it operates.
2.5 RESPONSIBILITY FOR PLANNING

Operational and very short-term planning are usually carried out by the managers and/or
supervisors actually concerned with the activities involved. For example, a sales manager
formulates the plans necessary for the effective activities of the entire salesforce over the
short-term, say, a week. The sales team leaders take the responsibility for planning the
operations and activities of their respective teams over each day of the week.
Long-term tactical planning is carried out by the more senior executives in areas such as
marketing and production. Forecasts in the areas concerned are also taken into account,
and there might be, in a large organisation, the output of a special department staffed by
experts, such as operational research. In smaller organisations, senior executives and their
immediate subordinates have the responsibility for gathering the necessary forecasts through
perusing trade journals, government reports etc.
Long-term strategic planning is undertaken by the governing body with the assistance and
advice of its senior executives. Forecasts from internal and external sources are utilised as
well analysed for the past performance of the organisation, and managerial experience.
In both tactical and strategic planning, however, the actual activity is often delegated to a
‘planning committee,’ or, if the organisation is sufficiently large, to a ‘planning department.’
This means that more uninterrupted time can be allotted to the planning exercise than
would be the case if the directors or senior executives tried to formulate plans while still
engaged in their day-to-day activities. Effective planning needs the undivided attention of
the planners. Nevertheless, whosoever draws up the plans, it is the chief executive who must
assume ultimate responsibility for long-term planning – either strategic or long-term or
tactical. The approval of authority to implement plans is the chief executive’s responsibility.

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2.6 PROCESS OF PLANNING

The activity of planning starts by defining ‘ends’ – the aims and objectives of the organisation.
This activity requires an assessment to be made of the external environment of the organisation
and its internal structure, processes and resources.
Planning also involves taking steps to agree on the ‘means’ by which the organisation’s aims
and objectives will be fulfilled. This is as much concerned with decision making processes
as with the provision of resources and the allocation of time schedules.
Part of the planning process is concerned with the ‘manner’ in which plans will be carried
out, that is, the ‘conduct’ of the organisation. This aspect of planning has received greater
prominence in recent years as organisations have striven towards meeting objectives associated
with such concepts as ‘customer satisfaction’ and ‘excellence.’
Planning is a ‘closed-loop’ activity, in which the results of earlier decisions provide ‘feedback’
to the other parts of the process. Such a ‘cycle’ provides crucial information which can be
taken into account by management when assessing the earlier aims and objectives set, the
means used to achieve them, and the manner in which those means were implemented
in practice.
2.6.1 FLEXIBILITY IN PLANNING
Plans must be flexible so that they can quickly and easily be modified in the light of changing
circumstances. For example, a business manager might have decided how his/her staff will
cope while another member of the team is on holiday, and has planned the rearrangement of
work. But the day after the implementation of the new plan, another member of staff falls
ill – so he/she must modify his/her plan, and determine how the work can be rescheduled
with two staff away. Much of routine planning is an automatic process, requiring little
conscious thought on the part of the manager, because his/her plans and decisions will be
based largely on past experience with similar – or even with identical – problems. Other
planning, of perhaps a business trip or a training course, for example, might require far
more conscious thought, investigation and research before decisions are reached.

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2.7 FORECASTING
Planning is concerned primarily with activities in the future. There has to be some guidance
as to what might occur in the future. What is called forecasting is, therefore, essential if
management is to be able to carry out effectively its planning function.
To forecast is to determine – as accurately as possible – the probable course of future events

which might affect the organisation and its activities. A forecast, then, is an assessment of
the expected pattern of future events and the ways in which it might have effects on the
operations of the organisation or sections of it.
2.7.1 DETERMINING THE COURSE OF FUTURE EVENTS
It is not possible to anticipate or foresee the future exactly, but the more accurate the
forecasting the lower will be the degree of uncertainty and the greater the possibilities of
formulating reliable plans – and, in consequence, the greater will be the chances of achieving
the objectives. Forecasting is, therefore, an essential accompaniment of planning. Based on
the forecast, plans can be formulated to deal successfully with expected future events, and
to take steps to deal with any problems which are anticipated and may arise in the future,
or to avoid them before they arise.
No one can predict the state of the economy, or the possible situation of an organisation,
in ten years’ time with any great degree of certainty, but the best attempt possible must be
made, and many different methods can be used, depending on circumstances.
The accuracy of forecasts will frequently be influenced by certain considerations such as the
extent of ‘unknown’ factors as opposed to those factors which can easily be predicted because
they are based on accounting records or statements, experience or published information.
Also, it cannot always be assumed that ‘known’ factors will remain constant; for instance,
future sales of a product might not be the same as past sales of it because external influences
(some of which might not be predictable) might increase or decrease sales.
It is, of course, vital that the data on which forecasts are made are as accurate or valid and
up to date as possible. In addition, the forecast must be clear to those who will use it on
which to base plans, so that they will use it effectively. Moreover, the information in the
forecast must be relevant to the planning to be undertaken.

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2.7.2 RELATIONSHIP BETWEEN PLANNING AND FORECASTING
Forecasting is an essential accompaniment of planning in order for management to be able

to carry out effectively its planning function. Forecasting becomes fruitful only when its
findings are utilised in the formulation of plans for the future.
Forecasting should be a continuous process, and forecasts should be available at regular

intervals: monthly, quarterly, six-monthly or yearly, as circumstances require. This enables
those members of management involved in planning to compare the latest forecasts with
those on which their original plans were based, and allows them to determine whether any
modifications to their plans need to be made in view of changed circumstances and in the
light of experience gained during the plan implementation.

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24
PRINCIPLES AND PRACTICE OF MANAGEMENT ORGANISING
3 ORGANISING
3.1 INTRODUCTION
Every organisation needs the services of a number of persons to look after its different
aspects. The management sets up the objectives or goals to be achieved by its personnel.
The energy of each individual is channelized to achieve the objectives of the organisation.
The process of organisation involves the following steps:
• To identify the work to be performed;

• To classify or group the task;
• To assign these groups of activities or work to individuals;
• To organise training;
• To delegate authority and fix responsibility; and
• To coordinate these authority-responsibility relationships of various activities.
3.1.1 TYPES OF ORGANISATIONS
Basically, there are two types of organisations:
• Formal organisations: Every organisation is a formal set-up with its own policies,
rules, and procedures.
• Informal organisations: Informal groups and organisations are formed outside the
organisation. They do have written or oral norms and rules, and play a vital role
in productivity.
3.2 FEATURES OF MODERN ORGANISATION

In the distant past, organisations – social, economic, political, industrial etc. – were simple
in structure, contents, goals and functions. But in modern times they have become complex
on account of development of science and technology. However, organisations of all types
have the following features in common:
• They are bigger and employ large number of people.

• Investment in terms of financial, material and other resources is huge.
• Activities are well-planned and goal oriented along with reviews and revisions at intervals.
• They have their own specific methods, procedures, systems and sub-systems.
• Various departments/sections perform their functions in an integrated way.
• Departments/sections are well-coordinated for better results.
• Interaction among departments/sections is continuous.

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3.3 ORGANISATIONAL STRUCTURE

When the business expands from its original stage – with the consequent employment of
more personnel – some, if not all, of the specialist sub-divisions of sections will themselves
have developed into full sections. Each original small section will have grown into a full
department, comprising a number of sections. This situation will require creation of
the organisational structure, and can be illustrated as an organisation chart as shown in
Fig. 3/1 below.
Board of Directors
Managing Director Asst. to MD
Purchase Marketing Finance

HR Manager
Manager Manager Manager
Marketing
Stock Sec.
Sales Sec.
Cash Sec.
Sec. Mgr.
Sec. Mgr.
Purchase
Act. Sec.
Mgr.
Mgr.
Mgr.
Mgr.
Training Sec.
Supervisors Supervisors Supervisors
Mgr.
Fig. 3/1 Sample Organisational Structure
This chart shows responsibility and authority being delegated ‘downwards,’ but at the same
time those shown lower in the chart are accountable for their actions and decisions etc. to
the executive positions in the next box ‘upwards.’

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3.3.1 PLANNING THE ORGANISATIONAL STRUCTURE
Depending on the type and size of the organisation, the stages in the setting up of an
effective organisational structure for it are likely to be as follows:
• The ‘key’ activities of the business must be established.

• The various similar or related activities should be grouped together into ‘departments;’
the most logical grouping is by ‘function,’ that is, by the type of activity, for example,
production, marketing, finance etc.
• The activities of a particular department should be further divided, and then grouped
together into sections; for example, all those activities concerned with advertising and
publicity might be included in the advertising section of the marketing department.
• An organisation chart should then be produced to depict the proposed organisational
structure.
• Based on the estimates of the volume of work which will be performed by each
department/section, the number of personnel required must be determined.
• The specialist knowledge or talents required of departmental and sectional managers
must be determined and set down. Coupled with that action is the necessity to lay
down the extent and the limits of authority and the duties of all those personnel
who will hold managerial positions; and the authority to delegate must be provided.
• To ensure the effective coordination of all parts of the organisation, effective
procedures and systems of communication must be devised and installed.
3.3.2 TYPES OF ORGANISATIONAL STRUCTURE
Basically, there are three types of organisational structure:
• Line organisational structure: This is the simplest form of organisational structure

and can be very efficient in small and medium-size organisations. This is illustrated
in Fig. 3/1. The ‘chain of command’ is direct, and so decisions can usually be made
quickly and implemented rapidly.
• Functional organisational structure: This is the type of organisation in which it
is the function – the type of activity – which determines the areas of authority and
responsibility. An expert or specialist is placed in charge of each function, and he/
she will have direct control of that function wherever it is undertaken within the
organisation. For example, the office manager will have authority over clerical and
secretarial staff working in any department. However, this form of organisational
structure makes control more difficult as there are no clear lines of authority.
• Line and staff organisation structure: This is a combination of line organisational
and functional organisational structures. It is commonly used successfully, as shown
in Fig. 3/2 below.

27
Managing Director
Works Mgr. Sales Mgr. Accts. Mgr. HR Mgr.

L L L S
Sec. Mgrs.
Sec. Mgrs. Sec. Mgrs.
Supervisors
Supervisors Supervisors
Sales
Operators Clerks
L L People L
Employment Training
S Officer S Officer
Supervisors Supervisors
& Clerks & Clerks
L = Line Relationship: Responsibility, authority shown by: ____________________

S = Staff Relationship: Staff-advisory relationship shown by:- - - - - - - - - - - - - - - -
Fig. 3/2 Line & Staff Organisational Structure
In such an organisational structure:
• The ‘line’ managers control the primary functions, such as marketing and production,
which are directly concerned with achieving the objectives of the business;
• The ‘staff’ managers are generally involved with secondary functions, which assist
the smooth and efficient running of the primary functions.
In the organisational structure depicted in Fig. 3/2 the HR manager is directly responsible
for his/her own department, and has full authority over its staff. However, although he/she
provides services for the line managers and line supervisors with regard to recruitment of
personnel, personnel records, as well as safety and welfare activities, he/she has no authority
over the personnel working in those other departments.

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However, the relationship between the line managers and the staff manager must be clearly
defined, and cooperation between them must be encouraged by top management. There
is no value, for instance, in a line manager continually rejecting or refusing to consider or
accept the advice or assistance of the HR manager, while the HR manager must not be
permitted to usurp the authority of line managers.
3.4 DELEGATION OF RESPONSIBILITY

In management delegation means:
“To entrust a person with the responsibility for certain work, actions and
decisions: to ‘transfer’ the responsibility from one person – a manager, for
example, to a subordinate – a supervisor or foreman, for example.”
3.4.1 NEED FOR DELEGATION
Delegation of responsibility is essential in any organisation, because – except, perhaps, in

very small businesses – no one person can be responsible for, and can control every little
aspect and activity. Even the sole proprietor might have to delegate some responsibility –
for bookkeeping or accounting, for instance – to another person.
3.4.2 DELEGATING RESPONSIBILITY IN THE RIGHT MANNER
It is essential that delegation is done in the right way. The following points need to be
taken care of:
• Each subordinate should be trained both to perform the work they are expected to
do – as well as to accept any responsibilities which go with the position.
• The work in each section/department must be distributed as evenly as possible, so
that one member of the team is not idle while another has far too much to do.
• It must be carefully organised that the extent of responsibility each subordinate is
likely to shoulder is decided as per their ability and potential.
• Each subordinate should be allowed – and encouraged – to accept the full quantity
of responsibility they can carry. Naturally, this should start in a small way, but as
soon as a person has demonstrated that the first area of responsibility is being coped
with successfully, a little more should be added, and so on, until that subordinate
is carrying all the responsibility that he/she can reasonably be expected to carry.

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3.4.3 BENEFITS OF DELEGATION
The following benefits can accrue to a manager who delegates responsibility:
• It leaves him/her more time to concentrate on the more important aspects of

their work.
• The work is evenly spread among all the personnel in a section/department, and
nobody is unduly burdened.
• Subordinates get encouraged to learn more and to develop a sense of responsibility.
• Opportunity for staff development and promotion is created.
• In case of a superior not being available, the work of the organisation goes on smoothly.
3.5 AUTHORITY
Authority in organisation is the right in a position for making decision affecting others.
Authority is the right to give orders and the power to extract obedience. In general, it
includes the following rights:
• Right to make decisions on the problems, situations and issues related to activities
assigned to them;
• Right to use resources for performing assigned activities in a satisfying manner; and
• Right to give orders and instructions regarding work being performed by them and
to seek compliance to given orders.
3.5.1 DELEGATION OF AUTHORITY
Authority is to be delegated for creating the structure of organisation. It is a core element

of organising process, since organising has little meaning without delegation of authority.
Delegation of authority is:
• a process of assigning various degrees of decision making authority to subordinates;

• a process by which a manager assigns some of his/her tasks to subordinates on
selective basis and allows them to exercise authority on his/her behalf to perform
the assigned task;
• the primary formal mechanism by which a network of authority relationship is
established; and
• conferring authority from one executive of organisational unit to another to complete
a particular assignment.

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Delegation of authority:
• is crucial to creating managerial hierarchy;

• permits managers concentrate on key activities;
• facilitates decision making;
• causes subordinates to accept responsibility; and
• is based on the principle of division of work.
3.5.2 GUIDELINES FOR EFFECTIVE DELEGATION
Effective delegation of responsibility and authority can be achieved by making use of the
following guidelines:
• Establishing objectives;
• Evaluating competence of subordinates;
• Defining responsibility and authority clearly;
• Motivating subordinates;
• Establishing communication channels;
• Imparting proper training;
• Exercising supporting supervision;
• Determining standards of performance; and
• Incorporating a feedback system.
3.5.3 SPAN OF CONTROL
It refers to the number of subordinates who report to a manager/supervisor. But there is a

limit for the number of subordinates a manager can effectively supervise, though the exact
number will depend on the impact of underlying factors.
Factors that affect span of management control are:
• Quantity and quality of delegation of authority;

• Formulation of organisational plans;
• Availability of assistance from staff functions;
• Nature of work performed by subordinates;
• Types of communication network; and
• Abilities, skills and training of superiors and subordinates.

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3.6 COORDINATING
Coordinating is as essential to top management level as it is at junior management and
supervisory levels. For example, the managing director or general manager must ensure that
the efforts and activities of all the various departments of an organisation are in harmony and
in cooperation. There would be no point, for example, in the sales department endeavouring
to sell items which are not yet in production! Good relations and communications between
departmental managers must be developed and fostered so that they all work together in
harmony. At the other end of the scale, a junior manager, supervisor or foreman must
coordinate the work of his/her subordinates in his/her workgroup so that although different
people might be performing different tasks, work will, when necessary, flow smoothly and
continuously from one person to the next.

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PRINCIPLES AND PRACTICE OF MANAGEMENT STAFFING PROCESS
4 STAFFING PROCESS
4.1 INTRODUCTION
In the business world today there are small as well as large organisations. When the business
is already large or expands, there is a need for systematic manpower planning in order to
ensure that sufficient numbers of skilled and semi-skilled members of staff are employed.
4.2 MANPOWER PLANNING

The activity of ‘human resource planning’ or ‘manpower planning’ is quite complex and
can be summarized as follows:
“It is a strategy for the acquisition, utilisation, improvement

and retention of an organisation’s human resources.”
In practice, the activity of manpower planning is concerned with forecasting and estimating
the future demand for labour by an organisation. This activity is concerned with making
policies and plans to ensure that the correct number and type of employees are available
and trained as per need. We can say that it is concerned with the following:
• Recruitment and training of adequate and suitable employees;

• Retention of employees;
• Effective utilisation of the entire workforce;
• Improvement of employee performance;
• Transfer and promotion/demotion; and
• Dismissal of employees, if necessary.

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There are four categories of employees that are important in manpower planning. Each
requires different decisions to be made as detailed below:
Category Areas of decisions
Performance appraisal
Productivity
Deployment
Existing employees Equal opportunities
Education and training
Remuneration
Promotion and career development

34
Category Areas of decisions
Recruitment – sources and methods
Selection procedure
New employees Terms of employment
Induction
On-the-job and additional training
Recruitment – sources and methods
Public relations
Potential employees
Remuneration levels
Employee benefits
Dismissal for inadequate performance etc.
Retirement
Leavers
Redundancy procedure
Employee turnover
The first step in manpower planning requires a study of all levels of the existing workforce.
This will show where and how manpower is being used, and where there are excesses or
shortfalls. This process requires the carrying out of an ‘organisational and manpower needs’
analysis based on the operational requirements taken from the corporate plan.
In the next stage, a ‘manpower model’ is produced for the estimated future needs. This
model is then compared with the actual business situation.
Based on the data obtained from this analysis, the forecasts for future expansion or otherwise
can be made. Though the forecasts cannot be made with absolute certainty, reasonable
estimates for future requirements can be made.
Fig. 4/1 below shows the process of manpower planning.

35
Corporate Objectives
Market Demand Demand for Personnel
Assess Personnel Supply Labour

Markets
Existing Potential
Personnel
Estimates
Recruitment Promotion/
Plans Training Plans Succession Plans
Retirement/Redundancy
Pay/Productivity
Periodic Reviews
Fig. 4/1 Manpower Planning Process
4.3 RECRUITMENT OF PERSONNEL

The term ‘recruitment’ refers to the first stage in the process of filling of vacancies in an
organisation. These vacancies may arise on account of the following:
• Creation of a new position: It may be necessary because of increase in the workload

of existing employees or the general expansion of the organisation.
• Resignation/termination of an existing employee: First it will have to be decided
whether it is necessary to fill this vacancy. It may be possible to distribute the work
of this employee among the existing ones. It may be an opportunity to re-design
the work allotment to various existing employees.

36
4.3.1 INTERNAL RECRUITMENT
A vacancy may be filled by a person who is already working in the organisation in another
position, section or department. This may provide an opportunity for transfer or promotion
to an existing employee who might be interested in this position. The advantages of such
internal transfer or promotion are the following:
• Employees are aware that hard work may be rewarded through promotion. This
leads to greater job satisfaction among the employees.
• The skills and potential of internal candidates are already known to the manager,
and so it may be easy to transfer/promote such an employee without going through
the whole process of recruitment.
• Employees who are promoted have a good knowledge about the work and the
organisation. Hence the induction and training period for such employees may be
shorter than for newcomers.
However, there might be certain disadvantages of internal recruitment such as the following:
• The organisation will lose the opportunity of getting employees – particularly at

the managerial level – who might bring with them new ideas and innovations.
• Other employees – who are not considered – may develop feelings of jealousy and
resentment and may not cooperate with this employee.
In order to overcome these disadvantages, the management must ensure that:
• Details of vacancies are circulated to all;

• Selection is to be made in a fair and impartial way; and
• Selection should be based on merit and performance.
4.3.2 EXTERNAL RECRUITMENT
This involves the filling of a vacancy from a source outside the organisation. These sources
may include the following:
• Local schools;
• Colleges, technical colleges, and universities;
• Employment agencies;
• Recruitment consultants;
• Advertisement in newspapers;
• Posting on recruitment websites.

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4.4 RECRUITMENT PROCESS

Before a decision about recruitment is made, it is necessary to ensure that the various aspects
of a potential recruitment have been considered. For this purpose, various steps will have
to be taken.
4.4.1 JOB ANALYSIS
Job analysis is the process by means of which a description is developed of the present methods
and procedures of doing a job, physical conditions in which the job is done, relation of the
job to other jobs and other conditions of employment. Job analysis is intended to reveal
what is actually done as opposed to what should be done. Therefore, if an employee is found
doing some activity not required of that job, it should still form part of the job analysis.
The nature of job changes over a period of time. New developments take place. New
personnel are employed. All this necessitates that jobs are reviewed and analysed to suit
the changed circumstances.
Any job comprises a number of tasks. Some of these require special skill, knowledge and
training. Other tasks might be easier. In order to describe a job it is necessary first to analyse
it. This is done to find out the following things about the job:
• What different tasks are to be performed – whether it is a single task or a small

number of multiple tasks?
• How are the different tasks to be performed? It means the procedures to perform
these tasks in the best possible way.
• What qualifications (education, training, skills etc.) and personal qualities (good
eyesight, good hearing, pleasant voice etc.) should be possessed by the candidate?
• For what and to whom will the candidate be responsible?
The purpose of job analysis is not to describe an ideal but show how the constituent parts of
the business are being carried out. Job analysis enables the management – HR department
in particular – to compare different jobs. This will provide information about the status of
various jobs as well as for job evaluation and in training. The information concerning the
job can be obtained from a number of sources such as observation of workers, interviews,
questionnaire responses etc., knowledge of the materials of work and actual performance of
work. It has been found that questionnaire is well suited for clerical workers and interviewing
is suited for shop-floor workers. Working conditions and hazards are better described when
viewed by the analyst.

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4.4.2 JOB DESCRIPTION
The results of job analysis are set down in job description. It defines a particular job.
Writing job descriptions for production workers, clerical people and first time supervisors
is a fairly established practice. The two types of job descriptions differ from each other in
the following manner:
• The lower level job descriptions are generally written by the HR department, but
the managerial job descriptions are written by the incumbent executive himself/
herself or their superior.
• The lower level job descriptions are written for wage and salary administration and
so centre directly on tangible duties and day-to-day assignments i.e. the tasks to be
performed. On the other hand, descriptions for higher level jobs are more closely
related to organisation planning and so naturally are descriptions of intangible
relationships, overall responsibilities and lines of authority i.e. the results to be
achieved by the person.
A job description describes a particular job. It states the purpose of a job and its relation
with other jobs and people. A job description contains the following:
• Job title, section or department, and details of the workgroup;

• Objectives of the job, for example, for the post of supervisor of customer service
section: “To ensure that the complaints and queries of customers are promptly attended to.”
• List of duties;
• Responsibilities – for what and to whom the person will be responsible;
• Information about the relationship with people connected with the job – both
inside and outside the organisation;
• Information about the work environment – private office or open-plan office;
• Details about hours of work, paid holidays, sick leave etc.;
• Details about salary, overtime, bonus, and such other benefits.
A job description gives detailed information about the job, and even enables a candidate
to make a decision whether he/she wants to take up the job. It also prepares him/her to
perform duties with full understanding and without any doubts.

39
4.4.3 EMPLOYEE SPECIFICATIONS
Employee specification gives details about the personal qualities desirable for a candidate
to possess. It helps the organisation to decide whether a particular candidate is suitable for
the job. It seeks the following details:
• Physical qualities – age, general health etc.

• Mental qualities – alertness, patience etc.
• Skills – IT applications, technical knowledge (as per the type of job)
• Qualifications – education, experience, training etc.
• Personality – reliable, honest, hardworking, pleasant etc.
Through employee specifications the management – HR department in particular – is able

to decide whether the candidate is fit – physically, mentally, skill and qualification wise –
for the job he/she has applied for. It will also show the candidate’s ability to work as a
productive member of the team.
4.4.4 ATTRACTING SUITABLE CANDIDATES
After the relevant job analysis, job description and employee specification have been completed,
the HR department is ready to take steps to attract suitable candidates to apply for the job.
For this purpose, the advertisement has to be posted with all relevant details as given below:
• Full name of the organisation, its physical address, website (if any), and the nature
of its activities;
• Job title and its objectives;
• Details of important tasks involved;
• Important personal qualities required;
• Information on salary and other benefits; and
• Information on how to apply, and what documents are to be submitted with the
application.
4.5 SELECTION
Once the applications have been received, the information about the applicants is compared
with the requirements for the position applications have been called for. The applicants,
who fulfill the criteria, are short-listed and invited to attend a personal interview, tests etc.

40
4.5.1 EMPLOYMENT INTERVIEWS
• System of interviews: An interview is a face-to-face meeting and discussion

between an applicant and the employer’s representative(s). Depending on the type
of post, interview can be conducted by a single person – usually HR manager – or
HR manager and the manager of the department for which interviews are being
conducted. For managerial positions there is a panel of interviewers including HR
manager, departmental manager, and an internal/external interview specialist.
• Aims of interviews: The aims of an employment interview are the following:
• To confirm the information already provided by the applicant;
• To enable interviewers to compare in detail each applicant’s personal characteristics
with those provided in the application;
• To enable interviewers to assess the applicant’s behaviour, mannerisms, alertness etc.;
• To enable the interviewers to short-list the most suitable candidates from among
those who attended the interview; and
• To enable the applicants to seek relevant information about the job and the
organisation as a whole.
• Conduct of employment interviews: In order to ensure that the interview process

is successful, it is necessary to have proper planning and preparation for the same.
The following planning and preparation helps the interviewers:
• Each interviewer should go through the job description and employee specification
before conducting the interview.
• Each interviewer should make notes about the relevant details of the applicants,
and should also make a note of the additional information he/she wants to gather.
Different interviewers on the panel may have a different order of important
information they would like to seek.
• All the interviewers should decide the topics to be covered during the interview so
that duplication of questions from different interviewers may be avoided. However,
there should be scope for flexibility depending on the varying personalities and
skills of candidates.

41
• Conducting interviews for best results:

• Interviewers must understand that some candidates may be shy or nervous at the
beginning of the interview. They need to be made comfortable by starting the
interview with general conversation such as the time taken to reach the venue of
the interview, their mode of transport, their place of residence etc. As a matter
of fact, this process should start from the time they report for the interview.
They need to be greeted in a friendly way by the secretary or receptionist, and
if they have to wait for some time in case of several candidates attending the
interview, by offering them a glass of water and/or a cup of tea/coffee.
• The room in which the interview is conducted should be comfortable and quiet
i.e. away from computer printers, telephones ringing. This will ensure that there
is no disturbance during the interview process.
• The interviewers should greet them pleasantly by standing up and shaking hands,
or making some friendly and pleasant comments etc.
• For best results candidates should be encouraged to talk and give information
without frequent interruptions. The interviewers need to talk less. The focus
should be on the candidate speaking.
• If a candidate gives a wrong answer to a specific question, the interviewer should
never point out the mistake. Rather supplementary questions may be asked, or
the topic may be changed.
• Some interviewers are in the habit of ‘showing off’ in front of the other panel
members and start a lecture on a certain topic. This is absolutely unacceptable.
It is the candidate who is being interviewed and not the interviewer.
• Before the interview is brought to a close, the interviewers should be certain
that all relevant questions have been asked. At this stage, the candidate should
be given an opportunity to seek information about the job and the organisation,
and clear and precise answers are to be given.
• Finally, the candidate should be told when he/she can expect to learn the result
of the interview, and should leave the interview room in a pleasant and positive
frame of mind.

42
4.5.2 TESTS
For some posts certain tests might be used to supplement – but not to replace – the
interview. Some tests are fairly straightforward, such as:
• Work tests: They are designed to check if a candidate is as skillful as he/she has
claimed. For example, a secretary may be asked to type a letter, or a driver to drive
a motor vehicle, or a fork-lift operator to drive and maneuver a fork-lift.
• Aptitude tests: They are designed to show skill of doing simple tasks.
• Intelligence tests: They are designed to test reasoning ability.
• Personality tests: They are designed to indicate the possession or lack of certain
character traits.
• Group discussions: They are used to assess the behaviour of candidates in a group
situation, leadership skills, ability to work in a team etc.
4.5.3 APPOINTMENT
After the selection has been made, the most suitable candidate (or candidates if there
are multiple vacancies) should preferably by informed by telephone, and then a written
communication is to be sent. This letter should contain all the relevant details such as post,
date of joining, and the official to whom the candidate should report. The appointment
letter should contain, or be accompanied by, particulars of the ‘terms and conditions of
employment,’ such as hours of work, starting salary, other benefits, and perhaps even a copy
of the relevant job description.
The decision to appoint must be communicated as early as possible because a candidate

might have accepted appointment elsewhere if there is a long time gap between the interview
and the offer of appointment. Moreover, if the candidate, who is number one on the .list,
is not available, there is time to offer the post to the candidate next on the selected list.
4.5.4 THE TRIAL OR PROBATIONARY PERIOD
It is quite common for people to be offered a post on condition that they will work an
initial ‘trial’ or ‘probationary’ period. This period might be one month, three months or
even longer, depending on the seniority of the post or on account of training necessary so
that the work can be performed to the required standard.
The probationary period allows the employer to assess whether the candidate selected is
actually suitable in real-life work situation. At the same time, this period allows the new
employee time in which to decide whether he/she will be happy working for the organisation.

43
At the end of the probationary period the new employee might be called for a talk with
the departmental or HR manager during which reports on progress made can be discussed.
If both the parties are satisfied, the employee is ‘confirmed’ in the post, otherwise he/she
needs to be informed and the employment can be terminated.
4.6 INDUCTION
4.6.1 MEANING AND PURPOSE OF INDUCTION
The process of induction is meant to induct a new employee into the new social setting of
his/her work. The new employee is introduced to his/her job situation and informed about
the rules, working conditions, privileges and activities and other particulars pertaining to
the organisation.
It is important to give the new employee a good impression on the first day of work.
However, the induction programme should not end there. It is also important to have a
systematic induction programme, spread over several days, to cover all the ground in the
shortest effective time.
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Most of the information is likely to be contained in a handbook which is distributed to all

employees, and in the case of rank and file workers, the induction programme may consist
of brief explanation by a member of the HR department or the supervisor under whom
the employee will work.
In the case of supervisory or managerial employees, induction training may be more

elaborate. Some organisations show videos explaining their activities. Others arrange for
lectures and presentations on the organisation and its practices. In some organisations the
new recruits spend anywhere from a day to several months in each department to gain
first-hand experience in various types of work.
4.6.2 EFFECTIVE INDUCTION PROGRAMME
In some organisations, the induction programme is divided into phases. In the first phase,
the induction is generally done by a member of the HR department who informs the new
employee particulars relating to the organisation. In the second phase, induction is done
by the supervisor of the department in which the new employee is going to work. He/she
informs the newcomer about his/her job, duties, responsibilities, importance of his/her job
in relation to other jobs etc. Further, he/she is introduced to the rest of the work team.
The induction programme should be drawn up in consultation with all those involved.
Depending on the size and complexity of the business and the position of the new employee,
this may include:
• Senior management;
• Supervisors or line managers;
• HR officials;
• Health and safety managers;
• Employee or trade union representatives.
4.6.3 FOLLOW-UP
An informal ‘follow-up’ talk between the section/department manager and the new employee
during the first few weeks could be advantageous as it would remove any doubts and
misunderstandings the employee may have. It will also ensure that the manager concerned
is able to spot any errors or deficiencies in the new employee’s work and correct them
immediately. He/she may also give practical help and advice. This is likely to result in
establishing a good working relationship between the manager and the new employee – thus
ensuring efficiency and productivity of the new employee for the benefit of the organisation.

45
4.7 TRAINING AND DEVELOPMENT

After the candidates have been selected for various jobs, and induction programme has been
completed, there is need for the management to provide for training and development. This
is because the efficiency of an organisation depends greatly on the training and development
of personnel. Particularly these days, when the process and techniques of management have
become quite complex, there is a great need in management for arranging training and
development of its personnel.
Generally, the terms ‘training’ and ‘development’ are used as though they are synonymous.
There are differences in the contexts and techniques of employee training and development.
Training is the act of increasing the knowledge and skills of an employee for doing a particular
job. It imparts specific skills for specific purpose. It is mainly job-oriented. Training is given
to both old and new employees throughout their stay in the organisation. In contrast,
development includes the process by which executives acquire not only enhanced skills and
competency in their present jobs but also capacities for future managerial positions.
4.7.1 NEED AND BENEFITS OF TRAINING
• Training programme helps in increasing the quantity and quality of output.

• It helps each individual member to utilise and develop their full potential.
• Employees feel that they are being taken care of by the management, and this leads
to an increase in their morale.
• By training the worker is enabled to make the most economical and best use of
materials and equipment. This results in reduced cost of production.
• Trained employees need less supervision. Because of this, the supervisor can increase
his/her span of control. This results in reduced cost of supervision.
• As training helps in building the second line of competent officers, there will be
competent replacement for more responsible positions.
• The availability of trained personnel ensures long-term stability and flexibility in
the organisation.
• As managers are exposed to the latest concepts, information and techniques, they
become better qualified. By this, they increase their market value and earning power.

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4.7.2 TYPES OF TRAINING PROGRAMMES
All training programmes designed by the organisations can be of any one of the types
stated below:
• Job training: The purpose of job training is to increase the knowledge of workers
about the jobs with which they are concerned so that their efficiency and skill
of performance are improved. In job training, workers learn correct methods of
handling machines and equipment, avoiding accidents, removing bottlenecks etc.
• Refresher training: At the time of initial appointment, employees are formally
trained for their jobs, but with the passage of time, they may forget some of the
methods which were taught to them or some of the methods or all of them may
have become outdated because of technological development. Hence refresher
training is arranged for existing employees in order to enable them to refresh and
improve their knowledge and skills.
• Promotional training: Many organisations have adopted a policy of filling some
of the vacancies at higher levels by promoting existing employees. When existing
employees are promoted, they are required to shoulder new responsibilities. For this,
they require training so that they may not experience any difficulty to shoulder the
responsibilities of the new position to which they have been promoted.
4.7.3 TRAINING AND DEVELOPMENT METHODS
There are a large number of training and development programmes meant for different types
of employees at different levels. Broadly speaking, the various training and development
methods can be classified into the following two categories:
• On-the-job methods:
-- Specific job training;
-- Apprenticeship training;
-- Coaching and understudy programme;
-- Job rotation;
-- Specific projects and task forces.
• Off-the-job methods:
-- Special courses and lectures;
-- Conferences;
-- Case studies;
-- Simulation – role playing;
-- Sensitivity training.

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4.7.4 CHARACTERISTICS OF A GOOD TRAINING PROGRAMME
Many organisations, even though they have a large training staff and spend a large amount
on training programmes, don’t get good results. In order to ensure that the training
programmes are effective and the organisations get good results from them, the following
principles may be observed:
• Determination of training needs: The management should first decide the training
needs of employees and then select a method of training that is most effective.
• Relevance to job requirements: Training programmes must be related to the
requirements of the job for which they are intended.
• Allowance for individual differences: There are differences in ability, learning
capacity and interest of trainees so the management should consider these factors
while designing the training programmes.
• Training programme to be result oriented: Management should avoid ‘training for
the sake of training,’ and show greater interest in the benefits of training programmes.
• Suitable incentives: There should be incentives to the trainees to make them
undergo training programmes seriously.
• Management support: Top managers should take interest in and support the training
programmes. Subordinates cannot be expected to take the training programmes
seriously if their superiors themselves are not serious about them.
4.7.5 DESIGNING THE TRAINING PROGRAMME
Designing the training programme with clearly defined objectives is a vital step in the entire
gamut of training activities. Training is a means to achieve an end. It is not an end in itself.
Unless the objectives are clearly defined and programmes designed in such a way that it
leads to achievement of the objectives set out, it will only be a wasted effort. The linkage
between the design and objective must be carefully thought out by the HR coordinator
before announcing a programme. The following points are to be ensured for the success of
a training programme:
• The trainer: The choice of faculty is critical to the success of any training programme.
The HR coordinator must ensure that the selected trainer has the necessary general,
technical and specialised knowledge of the subject, that his/her experience and
skills are reflected in handling the training sessions, adapting his/her training style,
generating interest in the subject being dealt with and that he/she possesses the
personality characteristics and attitudes such as openness to new ideas, observation
power, a questioning mind and willingness to experiment.

48
• The trainees: It should be ensured that the trainees have the necessary background,
experience, intellectual and physical capabilities, diagnostic and application skills
and personality characteristics required. Care should be taken so as to avoid too
much disparity in the group.
• The curriculum: The curriculum should be designed for the optimal utilisation of
resources available towards the achievement of the programme objective.
• The training material: Care should be taken to ensure the relevance and suitability
of training material and the media of presentation to the subject under consideration.
Write-ups or standard handouts for a particular topic should be suitably indexed
to avoid duplication of effort.
• The methods and techniques: The training methods and techniques should
contribute to maintaining interest and high degree of participation, and be capable
of including a transfer of knowledge and skills.
• The timing and sequencing: It should be ensured that the timing and sequencing
of sessions are suitable with regard to the training objectives.
• Location: In selecting a venue for the training, the adequacy of the room ventilation,
relative freedom from noise and disturbances and overall comfort should be sought.
It should be ensured that the location is worth the cost and that the surroundings
are suitable to create a good training environment.
• The physical facilities and training equipment: The availability of certain basic
facilities (e.g. overhead/LCD projector, smart board etc.) should be ensured.
4.8 EMPLOYEE COUNSELING

Situations which can lead to disciplinary action may be avoided by taking certain steps. This
involves having a talk with the employee concerned, trying to find a solution to the problem
which is creating such a situation. This process of settling problems without resorting to
disciplinary action is referred to as employee counseling.
4.8.1 NATURE OF PROBLEMS
Some problems are related to work while others are of personal nature. Generally a manager
or supervisor is concerned with the employee’s work-related problems, but sometimes he/
she may have to deal with an employee’s personal problem also because that may have been
the cause of starting a work-related problem.

49
4.8.2 SOLVING THE PROBLEMS
• Solution to a problem can be found only through a joint discussion between the
manager and his/her subordinate. This needs to be a two-way process. Sometimes a
manager or supervisor arranges a counseling session, but at other times it is initiated
by the employee when he/she needs to share some problem.
• It is important that the manager or supervisor keeps the information related to an
employee’s counseling session confidential from other employees.
• Every problem that needs to be addressed through counseling is individual in
nature. Hence for each problem the manager or supervisor has to adopt a flexible
approach and not try to fix every problem with the same solution.
4.8.3 PROCESS OF SUCCESSFUL COUNSELING
A counseling session is likely to be successful if the following points are considered:
• The subject for discussion should be introduced in a discrete manner and not
done openly.
• The reasons for the discussion should be explained to the employee in a sympathetic
manner so that he/she has confidence to discuss the matter.
• Questions should be asked in a gentle manner so that the subordinate is able to
appreciate how the manager or supervisor is trying to help him/her.
• Quite often all the questions related to the problem may not be addressed in one
session. A few more sessions may be necessary in order to get all the facts right.
Hence a lot of patience is to be exercised.
After the problem has been ascertained, an effort has to be made by both the parties to
find a solution acceptable to both. When this happens, it is possible to have a high level of
employee motivation. This is also very effective in controlling employee behaviour.
4.9 DISCIPLINARY ACTION

Managers and supervisors of various departments always try to motivate, guide, advise, and
control their subordinates. In spite of this, occasions will arise when there is no alternative
but to take disciplinary action. Before committing to any proposed disciplinary action, a
manager/supervisor might consult the HR manager and brief him/her fully on the situation
that has arisen and seek guidance. After having the full backing of the HR manager he/she
must act firmly and confidently.

50
Depending on the severity of the offence, disciplinary action takes different forms. The
following procedure may be adopted:
• If it is a first offence, the person should be spoken to and advised. For example, if
a subordinate arrives at work late without a satisfactory explanation, a counseling
session might be beneficial.
• If the person continues behaving in the same way, for, say, a week, a formal written
warning is needed.
• If he/she still continues committing this offence, a final written warning needs to
be given by the HR manager advising him/her to improve their behaviour within
a stated time limit.
• If the employee still does not improve, he/she has to be penalized. The penalty
may be transfer to another section or location, suspension without pay, or dismissal
from job.
4.10 EQUAL OPPORTUNITY POLICY

Equality in the workplace means that there is fair treatment for each individual. Everyone
is supposed to have equal access to job opportunities, promotion and other benefits. It also
means that there should be a system of equal pay for similar work in the organisation.
There should be no discrimination on the basis of gender, race, religion or physical disability.
Today a large number of organisations have a policy referring to discrimination on the
above-mentioned grounds. A good equal opportunity policy includes age, marital status,
gender, HIV and AIDS. The policy should state clearly a commitment to equality in the
areas of recruitment, promotion, training, performance appraisal and pay, transfers, terms
and conditions, disciplinary procedures and dismissal rules, policies against harassment etc.
Policies alone are not enough. There must be a commitment to put them in practice by
specific measures, and this should be the responsibility of HR department. The policy should
be publicized to all staff and job applicants.
An important part of implementing equal opportunity policy is monitoring its effectiveness.

In the case of gender, race or disability, there are usually arrangements to collect statistics
to ensure that these people are represented in the workforce.

51
PRINCIPLES AND PRACTICE OF MANAGEMENT LEADERSHIP
5 LEADERSHIP
The organisation is made up of groups of people. An essential part of management is
coordinating the activities of groups and directing the efforts of their members towards
the goals and objectives of the organisation. This involves the process of leadership and the
choice of an appropriate form of behaviour.
5.1 MEANING OF LEADERSHIP

Leadership may be interpreted in simple terms, such as ‘getting others to follow’ or ‘getting
people to do things willingly,’ or interpreted more specifically as ‘the use of authority in decision
making.’ It is interpersonal influence which is exercised in a situation and directed through
the communication process towards the attainment of a specified goal. Tead (1935) says:
“Leadership is that combination of qualities by the possession of

which one is able to get something done by others, chiefly because
through his influence they become willing to do it.”
It is often associated with the willing and enthusiastic behaviour of followers. Terry (1960)
also thinks that leadership is “the ability of influencing people to strive willingly for
mutual objectives.”
5.2 IMPORTANCE OF LEADERSHIP

Since leadership is an inspirational process, a leader influences long-term changes in attitude.
It does not necessarily take place within the hierarchical structure, and many people operate
as leaders without role definition. Leadership is related to motivation and the process of
communication through which one person influences the behaviour of other people. The
process of leadership is not separable from the activities of the group. Effective leadership
is a two-way process.
5.3 LEADERSHIP RELATIONSHIP

• A leader may:
-- Be imposed;
-- Be formally appointed;
-- Be chosen informally; or
-- Emerge naturally.

52
• Leadership may be:

-- Attempted leadership: when an individual in the group attempts to exert
influence over other members of the group;
-- Successful leadership: when the influence brings about the behaviour and results
that were intended by the leader;
-- Effective leadership: when successful leadership results in functional behaviour
and the achievement of group goals.
• Leadership may also involve:

-- Exercise through greater knowledge, expertise or reputation;
-- Personal qualities or charisma;
-- Manner of exercising authority;
-- Adoption of a particular style of leadership.
• Dynamic form: Leadership is a dynamic form of behaviour and there are a number
of variables that affect it. According to McGregor (1987), “leadership is not a
property of individual, but a complex relationship among these variables.” He has
specified the following variables:
-- Characteristics of the leader;
-- Attitudes, needs and other personal characteristics of group members;
-- Nature of the organisation, such as its purpose, its structure, the tasks to
be performed;
-- Social, economic and political environment.
5.4 FUNCTIONS OF A LEADER

• As executive: top coordinator of the group activities and overseer of the execution
of policies.
• As planner: deciding the ways and means by which the group achieves its ends.
This may involve both short-term and long-term planning.
• As policy maker: the establishment of group goals and policies.
• As expert: a source of readily available information and skills, in spite of some
resistance on technical expertise and advice from other members of the group.
• As external group representative: the official spokesperson for the group, the
representative of the group and the channel for both outgoing and incoming
communications.
• As controller of internal relations: determining specific aspects of group structure.
• As purveyor of rewards and punishment: having control over group members by
the power to provide rewards and apply punishments.

53
• As arbitrator and mediator: controlling interpersonal conflicts within the group.

• As exemplar: a model of behaviour for members of the group, setting an example
of what is expected.
• As symbol of the group: enhancing group unity by providing some kind of cognitive
focus and establishing the group as a distinct entity.
• As substitute for individual responsibility: relieving the individual members of
the group from the necessity of, and responsibility for, personal decision.
• As ideologist: serving as the source of beliefs, values and standards of behaviour
for individual members of the group.
• As father figure: serving as a focus for the positive emotional feelings of individual
members and the object for identification and transference.
• As scapegoat: serving as a target for aggression and hostility of the group, accepting
blame in case of failure.
It is important to understand that leadership resides in the functions and not a particular
person. The various functions of leadership can be shared among members of the group.
If a member provides a particular function which is relevant to the activities of the
group, and accepted by group members, then in those circumstances this could become a
leadership function.
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5.5 LEADERSHIP STYLES

Management does not take place in a vacuum. There must be a place in which it happens –
people to carry out management tasks, and goals and objectives to be achieved through
people who implement management activities.
Leadership styles vary from the democratic to the dictatorial. Between the two, there are
a good number of styles that leaders practice when the need arises. A leader may move
towards democracy or dictatorship, which are two opposite poles. There is no fixed style to
which a leader should cling because leadership styles are situational. A prevailing situation
calls for an appropriate style.
5.5.1 SITUATIONAL LEADERSHIP STYLE
The situational approach to leadership depends on various factors that have impact on
leadership effectiveness. These factors include the history of the organisation, the community
surrounding the organisation, the physical circumstances within which the organisation exists,
the communication pattern in the organisation, the structure of interpersonal relationships,
the expectations of staff, the personalities of group members etc. The behaviour of the
leader and the staff may be affected by the situation, the type of the organisation, group
effectiveness, the problem and its complexity, the time pressure which may result in staff
not being involved in decision making.
Hersey and Blanchard (1976) defined leadership style as:
“a constant pattern of behaviour which the leader exhibits, as perceived by

others, when he/she is attempting to influence the activities of the group.”
They believed that there is not a particular leadership style that is more effective than the
other. Rather the effective style of leadership is contingent upon the situation.
In using the situational style of leadership, it is indicated that often one leadership style
will not work in another situation. Different situations call for leaders to identify styles
that can best help to achieve goals and objectives in particular circumstances, situations
and times. This means that the situational leader needs to use an appropriate style in any
required situation.

55
5.5.2 THE DEMOCRATIC OR PARTICIPATIVE LEADERSHIP STYLE
The democratic leadership style, which is also participative by nature, is popular among
the leaders because it is people-oriented. If there is a decision to make, all matters are
discussed by the entire group. The leader only facilitates input. He/she uses the decisions
of the members to enrich his/her own. The style is involved in most, if not all, activities.
However, the leader makes it clear that if staff cannot come to a decision, he/she retains
the right to do so.
Under this style of leadership, the staff is always well informed about what is taking place
at the workplace. Both delegation and genuine teamwork are practised in order to achieve
results together. Mullins (2004) explains a democratic leadership style as implying that the
job will be done automatically if interpersonal relationships are on a sound footing.
This is a team leadership style in which a leader integrates concern for production with
concern for people at a high level. Team work is emphasised and it is goal-oriented.
To sum up, the democratic leadership style emphasises the group and leader participation in
the achievement of goals and objectives of the organisation. The democratic leader derives
power and authority from his/her followers. He/she, on the other hand, operates by tapping
skills and ideas from the organisation members, remembering to delegate responsibility to
them. But this leader has the authority to make the final decision even if all members do
the ground work leading to that decision.
5.5.3 THE DICTATORSHIP LEADERSHIP STYLE
This leadership style can be defined as coercive style forcing people to act as they are told.
According to Allais (1995), dictatorship is seen as a style in which a leader retains as much
power and decision making authority as possible. It is leader-centred and cares less about
the followers.
Where dictatorship reigns, if the staff reacts, their reactions are taken personally and
emotionally. The dictatorship leadership style, therefore, can be equated to authoritarian
leadership style or autocratic leadership style. This leader uses punishment rather than reward
to discipline the staff and he/she calls for more things done their own way. They do not
care about other people’s feelings.

56
To summarise, the dictatorship leadership style generally does not allow workers to think
for themselves. This style is also an easy alternative for those leaders who do not want to
spend time working through people. If a dictator decides to work through people, he/she
directs, coerces and controls closely.
5.5.4 THE LAISSEZ-FAIRE LEADERSHIP STYLE
The laissez-faire leadership style is sometimes called the free-reign or individual-centred

leadership style. This style makes the presence of the leader felt but gives workers freedom
to make individual or group decisions. It looks like it is democratic but most of the time
the leader appeals to personal integrity, which results in some individuals being totally
trusted. This is because they are given little or no direction. Robbins and DeCenzo (2001)
concur that the laissez-faire leader generally allows employees complete freedom to decide
and complete work in whatever way they see fit, while the leader provides material for use
and answers questions.
Laissez-faire leader has no authority. He/she just watches what is going on in the organisation.
In such an organisation there may be chaos if the leader stays apart from the rest of the
workers. However, if the workforce is responsible and conscious about their duties, they
are motivated to work freely and they determine their own goals.
Some employees cannot work under this style of leadership as they need more direction.
They may even feel that the leader does not care for them and what they do, as there is
no control. On the other hand, some workers cannot work under this style of leadership
because they conclude that nobody cares.
To sum up, laissez-faire leadership style connotes leading by abdicating the leadership role.
The leader has trust in the workers to the extent that if they are not conscious about their
work, the organisation will suffer.

57
PRINCIPLES AND PRACTICE OF MANAGEMENT MOTIVATION
6 MOTIVATION
6.1 MEANING AND IMPORTANCE
Motivation is the will to act. What we call ‘motives’ are the reasons why people act in
certain ways. Motivation is a prime factor that contributes to the success and survival
of organisations.
According to Shartle (1956), “motivation is the reported urge or tension to move in a given
direction or to achieve a certain goal.”
Jucius (1975) states:
“Motivation is the act of stimulating someone or one’s own self to get a

desired course of action, to push the right button to get desired action.”
Filippo (1961) has rightly said that “motivation is the process of attempting to influence
others to do your will through the possibility of gain or reward.”
The process of motivation is applicable to all cadres of employees – workers, supervisors,

managers – and in all walks of life. Nobody works properly without adequate motivation.
Motivation is not only overt but also covert in nature.
6.2 THEORIES OF MOTIVATION

There are various theories of motivation to work advocated by psychologists and sociologists.
6.2.1 MASLOW’S NEED HIERARCHY THEORY
The theory by Abraham Maslow (1943) argues that individuals are motivated to satisfy a
number of different kinds of needs, some of which are more powerful than others. Maslow
argues that until these most powerful needs are satisfied other needs have little effect on an
individual’s behaviour. In other words, we satisfy the most powerful needs first and then
progress to the less powerful ones. As one need gets satisfied, and therefore, less important
to us, other needs come up and become motivators of our behaviour.
Maslow represents this propensity (being more powerful than others) of needs as a ‘hierarchy,’
in Fig. 6/1 given below. The most powerful needs are shown at the bottom of the pyramid,
with powerfulness decreasing as one makes progress upwards.

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Self-
actualisation
Esteem
Social
Safety & Security
Physiological
Fig. 6/1 Maslow’s Need Hierarchy
• Self-actualisation needs: reaching your potential, doing your own thing.

• Esteem needs: respect from others, self-respect, recognition.
• Social needs: application, acceptance, being part of something.
• Safety and security needs: physical safety, psychological safety.
• Physiological needs: hunger, thirst, rest.
• Need mix: An important premise of the need hierarchy is that as one need is
basically fulfilled, the next most important need becomes dominant and dictates
individual behaviour. This theory cannot be viewed as an all-or-nothing framework;
we should regard the hierarchy as useful in predicting behaviour on a high or low
probability basis.

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6.2.2 ALDERFER’S ERG THEORY
Alderfer’s (1969) ERG Theory is an important development over Maslow’s Need Hierarchy.
He states that human behaviour is primarily caused to fulfil three important needs:
• Existence needs: They correspond to Maslow’s physiological – and to some extent

safety and security – needs. They refer to the inherent urge to fulfil the minimum
requirement for a fair existence in the world.
• Relatedness needs: They should be roughly equated with social needs of Maslow’s
need hierarchy. They include the desire to interact and socialise with others so as
to get affection from them.
• Growth needs: They are similar to Maslow’s esteem and self-actualisation needs.
They urge the person to get recognition from others for his/her competencies,
including the desire to create something on their own and to reach their full
potential of development.
There are four significant differences between ERG Theory and Maslow’s need hierarchy:
• It recognises that human needs at more than one level may be active at any point
of time. This means that one may feel the pressure for satisfying both his/her
existence and relatedness needs at the same time.
• There can be progression as well as regression in the movement from the base to
the top of the hierarchy.
6.2.3 THE ACHIEVEMENT THEORY OF MOTIVATION
McClelland (1961), another psychologist, has suggested that human beings in general have
three social needs:
• The need for affiliation;

• The need for power; and
• The need for achievement.
He has stated that people differ from one another according to which one of these three
needs is more important:
• The need for affiliation: Like Maslow’s social needs, the need for affiliation is a
desire to have human companionship and acceptance. People with a strong need for
affiliation, compared to the other two, are likely to prefer – and perform better – a
job that details a lot of social interaction and offers opportunities to make friends.

60
• The need for power: The need for power might be defined as the desire to be
influential in a group and to control one’s environment. People with a strong need
for power are likely to have superior performance, and they normally aspire to hold
positions of authority.
• The need for achievement: The need for achievement, the best known of the three,
reflects the desire to accomplish a goal or task more effectively than in the past.
According to McClelland, people with a high need for achievement will have the
following behavioural characteristics:
-- They formulate a concrete goal in such a way that it stretches their abilities
and efforts.
-- They select a moderate goal.
-- They demonstrate a strong commitment to the goal.
-- They like to take personal responsibility for the outcome.
-- They actively explore their environment to create opportunities for achievement.
-- They often experiment with novel and instrumental activities in order to reach
their goal.
6.2.4 HERZBERG’S MOTIVATION-HYGIENE THEORY
Herzberg (1959) argued that certain factors lead to job satisfaction while others lead to job
dissatisfaction. He identified these as ‘motivator’ and ‘hygiene’ factors respectively:
• Motivators: According to Herzberg, typical job motivators are:

-- The degree of career achievement;
-- The intellectual challenge of work;
-- Recognition of work by others;
-- The actual value of the work;
-- The actual level of job responsibility; and
-- The opportunity for promotion.
• Hygiene factors: Herzberg identified hygiene factors as:

-- The restriction of management policies and procedures;
-- Technical/administrative aspects of supervision;
-- Salary structures;
-- Job conditions;
-- Relationship with management; and
-- Work environment.

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Herzberg’s motivation-hygiene theory is generally well-received by practising managers

because of its relatively simple distinction between factors including positive job satisfaction
or those causing reduced job satisfaction. Herzberg suggests that physiological, safety, social,
and to some degree, esteem and self-actualisation needs can be satisfied with hygiene factors.
The remainder of the esteem and self-actualisation needs can be satisfied with motivators.
6.2.5 THE EQUITY THEORY OF MOTIVATION
Adams (1963) argues that when individuals perceive a discrepancy between the effort put in
and the rewards obtained for the effort, they resort to various means to restore the balance
between the two. The imbalances can occur in the following ways:
High Effort Low Reward
Low Effort High Reward
Actually it is the first type of imbalance that creates motivational problems at work rather
than the second. When the effort put in is seen as more than the reward obtained, the
individual concerned tries to increase his/her reward and if they fail in their efforts, they
reduce efforts to restore the balance. According to the Equity Theory, demotivating apathy
and non-involvement in work are the result of such perceived imbalance between effort
and reward.
People’s imbalance between effort and reward arises through comparisons between one’s own
balance in this respect and the balance in the case of others similarly placed doing similar
jobs in one’s own organisation or in other organisations.

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To To
Need Effort achieve obtain
goal rewards
Degree of
satisfaction
Fig. 6/2 The Equity Theory
6.2.6 EXPECTANCY THEORY
It was developed by Victor Vroom (1964). His motivation formula is a simple yet powerful
one that can be expressed as follows:
Motivation = Valence × Expectancy
• Valence: A person’s preference for a particular outcome can be expressed as a valence.

A person who feels attracted towards a goal will strive harder to achieve it.
• Expectancy: A perception of the probability that a specific outcome will follow
from a specific act is termed expectancy.
Vroom has stated that the motivational force of an individual is a function of his valence
and expectancy. This motivational model, unlike the Maslow and Herzberg models, stresses
individual differences in motivation, and explains how goals influence individual effort.
It made the managers to realise that motivation of subordinates will not improve their
performance if their ability is low or perceptions of expectations are inaccurate.

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6.2.7 MCGREGOR’S THEORY ‘X’ AND THEORY ‘Y’
McGregor (1987) postulated motivational ideas in ‘Theory X’ and ‘Theory Y.’ He noted
that the way an organisation runs depends on the beliefs of its managers. ‘Theory X’ gives
a negative view of human behaviour. It also assumes that most people:
• are basically immature;

• need direction and control;
• are incapable of taking responsibility;
• are viewed as lazy;
• dislike work;
• need a mixture of financial inducements; and
• need to be given threats of loss of their jobs to make them work (‘carrot and stick’
mentality).
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‘Theory Y,’ the opposite of ‘Theory X,’ argues that people want to fulfil themselves by
seeking self-respect, self-development, and self-fulfillment at work as in life in general. The
six basic assumptions of ‘Theory Y’ are:
• Work is as natural as play or rest;

• Effort at work need not depend on threat of punishment;
• Commitment to objectives is a function of rewards associated with their achievement;
• The average human being learns, under proper conditions, not only to accept but
also to seek responsibility;
• High degree of imagination, integrity and creativity are not restricted to a narrow
group but are widely distributed in the population;
• Under the conditions of modern industrial life, the intellectual potentials of the
average human being are being only partly utilised.
The manager, whose assumptions about people fall closer to ‘Theory X,’ in order to achieve
the organisational objectives, will tend to coerce people in his/her managerial approaches
towards them. On the other hand, the manager, whose assumptions fall closer to ‘Theory
Y,’ will tend to encourage his/her people to develop and utilise their capabilities, knowledge,
skills and ingenuity in trying to accomplish the organisational objectives.
6.3 IMPACT OF MOTIVATION THEORIES

All motivation theories appear to approach motivation as a three-phased phenomenon
composed of an individual’s desire for something, his/her perception of the path that will
lead to attainment or satisfaction of that desire, and their belief that following that path
will ultimately reward them for their efforts. However, one cannot expect an organisation
to satisfy the totality of an individual’s needs during working hours.
6.4 ADVANTAGES OF MOTIVATED EMPLOYEES

There are a number of advantages if the employees are motivated.
Motivated employees:
• Perform well and achieve targets;

• Need less supervision and guidance;
• Motivate others in the organisation;
• Are creative and innovative; and
• Attempt to solve problems.

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6.5 MOTVATIONAL FACTORS

Motivational factors which influence the employees can be divided into two categories –
financial and non-financial.
They are:
• Financial:
-- Pay
-- Interest-free loan
-- Housing
-- Subsidised canteen facility
-- Uniforms
-- Overtime wages
-- Leave travel allowance
-- Medical facilities
-- Transport
-- Education subsidy for children
-- Recreational facilities etc.
• Non-financial:
-- Recognition
-- Appreciation
-- Humane treatment
-- Higher responsibilities
-- Challenging job
-- Encouragement
-- Job security etc.
It is the primary duty of employers to provide the right type of motivation to the employees
to boost up the production. A motivated workforce means enhanced productivity in any
organisation.

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PRINCIPLES AND PRACTICE OF MANAGEMENT COMMUNICATION
7 COMMUNICATION
7.1 MEANING OF COMMUNICATION
Communication is the process by which we give, receive or exchange information with
others. Communication means interacting with others:
• to promote understanding;
• to achieve a result of some kind; and
• to pass information to another person so that he/she can take action.
It can involve speaking, listening or writing. This information does not necessarily need to be
hard facts. Sometimes just a shrug of the shoulder can act as our means of communication.
Communication, in the context of management, can be defined thus:
“It is the conveying of a message or an idea from one party to another in

such a manner that both parties understand the identical meaning.”
7.2 IMPORTANCE OF COMMUNICATION

Effective and rapid communication is a vital ‘tool’ of management:
• Without communication, nothing could happen in an organisation;

• No information or instructions could be given or received;
• There could be no contact between members of management and their subordinates;
• There could be no contact with customers, clients or suppliers.
Ann Dobson (2000) has rightly said:
“Nowhere is effective communication more important than at work. Vital

information needs to be given, received, exchanged and understood hundreds
of times in every working day. Many business transactions go wrong simply
because of poor communication between the people concerned.”

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7.3 FEATURES OF EFFECTIVE COMMUNICATION

Effective business messages have the following features:
• Clear: Business communication should be clear and self-explanatory about why it

has been given.
• Complete: The information given should be complete and should not have any
scope for questions.
• Correct: The information provided should be correct and based on facts. Facts
should be given rather than impressions.
• Save reader’s time: The communication should be such that the reader saves time
in understanding the message.
• Create goodwill: The pleasant, correct and clear message will result in creating
goodwill for the sender of the message.
• Clarify and condense information: Business messages should frequently use tables,
charts, photos or diagrams to clarify or condense information, to explain a process,
or to emphasise important information.
• State precise responsibilities: Business messages are directed to specific audience.
Therefore, you must clearly state what is expected of, or what you can do for, that
particular audience.
• Persuade and recommend: Business messages are frequently given to customers, clients,
management or subordinates to accept the suggestions and recommendations given.
Clear
Create Goodwill Complete
Clarify & Condnese Correct
State Precise Responsibility Save Reader’s Time
Persuade &
Recommend
Fig. 7/1 Features of Effective Communication

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7.4 TYPES OF ADMINISTRATIVE COMMUNICATION

There are two types of administrative communication:
• Internal communication: communication between the employees of an organisation –

from managers to subordinates, between managers, from subordinates to supervisors/
managers, between members of a workgroup.
• External communication: communication with contacts outside the organisation –
with existing or potential clients, customers, suppliers etc.
7.5 TYPES OF INTERNAL COMMUNICATION

Basically, there are two types of internal communication in management (as shown in
Fig. 7/2):
• Vertical – downward and upward

• Horizontal – sideways
Internal communication
Channel Direction Method
Formal Upward Oral
Informal Downward Written
Sideways
Fig. 7/2 Internal Communication
These can be achieved through two methods:
• Oral
• Written

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Effective internal communication will ensure the following:
• With effective communication, every member of management and every other

employee should receive precise and accurate information, to ensure that every
person working for the organisation knows exactly what they are expected to do,
when and where, for what and for whom, they are responsible. Misunderstandings
and misinterpretations – which can result in wastage of time, effort, labour or loss
of profit – can therefore be greatly reduced or even eliminated.
• No organisation exists in a ‘vacuum;’ change in trading conditions, in economy, in
law and in attitudes, and in fashions and consumer demand, as well as technological
developments, occur continuously. For an organisation to prosper – and indeed to
survive – its management must not only be able to react quickly in the right way to
change, but must also be able to pass clear instructions to all those people concerned.
Instructions and information must get quickly from managers to supervisors to
their subordinates, so that the changes and new methods can be interpreted and
implemented without delay, particularly if new or existing employees need training
or re-training.
• Effective two-way communication will help to promote good understanding between
management and other employees, and that in turn can help to reduce disputes.
Effective communication should not concentrate only on passing instructions ‘down
the line’ and on receiving reports at higher levels; it should also be concerned
with a two-way flow of information. The modern workforce (both managerial and
non-managerial) is no longer content to blindly accept ‘instructions’ from above.
Employees want – and need – to know how decisions taken and instructions given
might affect their livelihood and job security.
• Readily available and accurate information about the organisation, its prospects
and achievements and any problems it faces, generate a healthy interest in the
organisation among its personnel – which is by itself a form of motivation.
7.5.1 VERTICAL COMMUNICATION
In an organisation communication must work in both directions – ‘upwards’ as well as

‘downwards.’ When managers pass on information or instructions to subordinates, they are
engaged in ‘downward’ communication. When subordinates are giving suggestions, feedback
or complaints to managers or supervisors, they are engaged in ‘upward’ communication.
This up and down communication is the vertical communication.

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The following points are significant:
• It is important for employees to be able to make known quickly to those of their

seniors concerned any complaints or grievances they might have, and of course, to
have faith that attention will be paid to them and that action will be quickly taken.
In this way, minor grievances will not grow into major ones because of resentment
about the management’s apparent lack of interest.
• There is usually personal contact at the lower end of the communication network –
that is, between junior managers, supervisors, foremen and their subordinates – and
therefore with goodwill and understanding from both sides many minor grievances
should be quickly resolved. However, if circumstances require it, managers, supervisors
and foremen must not hesitate to communicate problems ‘upwards’ to those of their
seniors who have the authority to make decisions and to take the action necessary
in the circumstances.
• To enable top management to coordinate the activities of the entire organisation and
to react quickly to circumstances which arise, what are called ‘lines of communication’
must be established, and operated efficiently.
• Another very important reason for establishing lines of communication ‘upwards’
is that they encourage a flow of ideas and suggestions on a wide range of matters,
which might be beneficial to the organisation, ‘up’ to those who are able to discuss
and consider them, and make decisions concerning them.
• It is not sufficient to merely establish lines of communication; they must be examined
from time to time to ensure that they are being used as they were planned to be used.
• Wherever possible or feasible, a system of ‘feedback’ should be built into the
communication network so that the senders of communication can check that their
messages are being received, understood and acted upon.
7.5.2 HORIZONTAL COMMUNICATION
In addition to vertical communication, there must also be ‘horizontal’ – sideways –

communication within an organisation. By this we mean a flow of information between
personnel of about equivalent status in different departments of an organisation, for example,
between its sales manager and its production manager.

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The following points are significant:
• Horizontal communication can only be effective if there is cooperation between

the various departments and their senior executives (whose attitudes are likely to
affect the attitudes of all their subordinates). Top management must encourage the
spirit of cooperation and coordination among executives to avoid loss of efficiency
in the organisation as a whole.
• If there are personality clashes and jealousies among departmental (or even sectional)
managers, cooperation might be minimal and there might be a reluctance to pass
on information, or the deliberate withholding or delaying of information.
• It is important to note that horizontal communication is concerned with the flow
of information, and NOT with the flow of instructions or authority. For example,
a salesperson could perhaps ‘request’ a member of the accounts department to make
a check on a customer’s creditworthiness, but he/she would have NO authority to
instruct the person to make the check, or to demand that it be made.
• It would be most tactless for the manager of one department to communicate directly
with a subordinate in another department without the knowledge and consent of
that subordinate’s head. And it could cause trouble if there were an attempt by a
manager to give instructions to an employee of another department.
7.6 EFFECTIVE EXTERNAL COMMUNICATION

An organisation needs to have a very effective system of external communication in order
to deal with clients/customers – existing as well as potential – and various other agencies,
organisations, individuals etc.
Effective and efficient two-way communication is important for:
• maintaining good public relations;

• ensuring that customers/clients are satisfied with the standard of goods or services
provided;
• ascertaining that what is being provided is what customers/clients really want;
• ensuring that any customer/client complaints are quickly and satisfactorily dealt
with; and
• ensuring that customers/clients are kept apprised of new and/or improved products
or services (e.g. through advertising and publicity).
In addition, communication might also have to be maintained with shareholders, trading

establishments, trade associations, government departments, professional firms, banks and
other financial institutions, and with a wide variety of other people and/or organisations.

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7.7 BARRIERS TO COMMUNICATION

There are several barriers to effective communication.
7.7.1 BARRIERS TO EFFECTIVE LISTENING
Here are some barriers to effective listening:
• We think faster than we can speak, and jump to conclusions without first listening
to the speaker.
• We may become distracted and not pay attention to the speaker.
• If the speaker continues talking at length, we may lose patience, and show disinterest
in what he/she is saying.
• We react emotionally to the speaker.
• We tend to interrupt and don’t allow the speaker to have his/her complete say.
• We set limits and respond: “It won’t work,” or “We have always been doing it this way.”
7.7.2 BARRIERS TO RESOLVING CONFLICT
Sometimes we do not confront the problem immediately, and let it simmer, though at times
unintentionally. Other obstacles to conflict resolution may include the following:
• Judging the problem at its surface value before analysing its root cause;
• Searching for a single solution without looking at various alternatives;
• Assuming and asserting that ‘our’ solution is the only viable solution without giving
a thought to options presented by others; and
• Deciding not to involve ourselves as “It’s their problem!”
7.7.3 HOW TO OVERCOME BARRIERS TO RESOLVING CONFLICT
We often create obstacles to resolving conflict when solutions are simple. If we determine
that the conflict could be negotiated, and we are willing to do so, then it will be useful to
list some options toward resolution. This ‘brainstorming’ technique provides the basis for
negotiating. Often ‘crazy’ ideas lead to acceptable ones.
From this point you decide what you can give up, and you find out what the other person
can concede. Negotiating a conflict need not be an ‘either/or’ solution. Both parties in the
conflict can win something if there is real effort to resolve the problem.

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Ask yourself these questions as you move toward resolution:
• Is it worth fighting for?

• Can it be negotiated?
• Do I want to win the argument more than win a relationship?
7.8 OVERCOMING BARRIERS

In order to overcome barriers to effective communication and understand the true meaning of
the message that comes through a particular communication, we need to filter the messages.
7.8.1 IDENTIFYING COMMUNICATION FILTERS

There are three types of filters which only allow a portion of the message to get through. As
a result, we only receive part of the message, and often, only the part that we want to hear.
• Attention filters:
• Noise: other people talking, telephones ringing, traffic, music.
• Environment: too hot or cold, poor lighting.
• Interruptions: people, telephones.
• Timing: trying to talk to someone when they are about to go somewhere or are
in the middle of a job.

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• Emotional filters:
These are inherent in the speaker and probably unknown to the other person:
• Prejudice: dislike of the other person, the way they are dressed, the message itself.
• Status: The other person is higher or lower in organisation hierarchy, which can
affect the way in which you speak and listen to them.
• Experience: If previous communication with a person resulted in an unpleasant
experience, you will be wary when approaching them the next time, not wishing
to repeat the experience.
• Assumptions: assuming what the message will be and thus not listening properly.
• Values and beliefs: We all have our codes regarding morals, religion, politics,
and so on. If the message transgresses these standards, we are likely to switch off.
• Word filters:
• Criticism: “That was the wrong way to deal with the problem!”
• Moralizing: “You shouldn’t have done that!”
• Ordering: “The report must be on my table by tomorrow morning without fail.”
• Threatening: “If you don’t change your ways, you will face disciplinary action.”
• Advising: “I suggest that you….”
• Logical argument: You cannot argue with logic.
• Reassuring: “Don’t worry; you will be able to manage.”
• Diverting: “It is OK, but as I said….”
• Jargon: If the listener is not familiar with the jargon (unfamiliar words or
phrases), they will not be interested in listening to the entire message.
7.8.2 REDUCING THE FILTERS
Even one filter can distort communication. However, being aware that they exist is half the
battle won in reducing the effect of filters.
Even if it is not possible to eliminate attention filters, it is possible to reduce them. If the
proposed conversation is likely to take more than a few minutes, find somewhere quiet
to hold it and ensure that there are no interruptions. If someone approaches you at an
inconvenient time, politely tell them so and suggest meeting later.
You cannot control others’ emotions but you can curb your own when conversing with
them. If you feel emotional filters are likely to become barriers, have a brief conversation
and stick to the point. Be careful in choosing your words. Try to put yourself in the other
person’s position and think how you would feel if the other party were using the words
that could hurt you.

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PRINCIPLES AND PRACTICE OF MANAGEMENT MANAGERIAL CONTROL
8 MANAGERIAL CONTROL
8.1 NEED FOR CONTROL
The planning of various activities does not ensure automatic implementation of policies.
Control is the process which enables management to get its policies implemented and take
corrective action if performance is not according to the pre-determined standards. If planning
is the beginning of the management process, controlling may be said to be the final stage.
8.2 TYPES OF CONTROL

There are three types of control:
• Preliminary control: It is achieved through policies and procedures. Implementation

of Quality Assurance System is an effective step in this direction.
• Concurrent control: It is the least of the operating control which means that
operational managers are responsible for ensuring that the products and services
being offered by the company are available for sale at the right time, in the right
quality and quantity at an appropriate cost.
• Feedback control: It is carried out after gathering some data, analysing and returning
for corrective action.
Preliminary Concurrent
Control Control
Managerial
Control
Feedback Control
Fig. 8/1 Types of Managerial Control
Managers at different levels need to exhibit different degrees of concern for ensuring each of
the above types of control. Information can be obtained for analysis in the following ways:
• Personal observations
• Oral reports
• Written reports

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In finance, the following key ratios are used for control purposes:
• Debt equity
• Sales to inventory
• Current assets to current liabilities
• Quick ratio etc.
8.3 ELEMENTS OF MANAGERIAL CONTROL SYSTEM

Managerial control can be defined as the process to verify:
• the advancement status of the planned objectives; and

• efficiency of the organisation through the analysis of the resources costs and proceeds.
Managerial control systems are methods of collecting information that are used to guide and
direct the behaviour of staff members in order to achieve a company’s goals. The following
are the main elements of a managerial control system:
• Planning: It involves decisions with respect to scope, time and cost, and human
resources of a project. Planning ensures that objectives and targets are identified.
The questions to be addressed at this stage are:
-- What precisely is to be done?
-- What is the purpose?
-- What resources are required?
-- What risks are involved?
• Establishing standards: Standards of performance need to be established. These

standards are to be measurable. A control standard is a target against which
performance will be compared. Such standards need to be consistent with the
organisation’s goals. They should also identify what the performance indicators are.
These standards must be known to all in the organisation.
• Monitoring performance: A monitoring mechanism needs to be set up. The formal
and informal communication within an organisation includes meetings, and day-to-
day contacts among managers. All these formal and informal communications are
crucial in understanding and improving the control process. For this purpose, the
system of feedback is necessary after the completion of each stage – environmental
scanning, planning. Feedback is compiled in the form of reports. This is followed
by decision making procedures and implementing them.

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• Comparing performance against standards: It involves measurement of performance

in relation to standards and targets set. Actual performance may be higher or lower than
the standard. It may even be identical. This process involves continuous monitoring
and forecasting. Deviations must immediately receive management attention.
• Taking corrective action: If deviations from established standards are found in
actual performance, corrective action needs to be taken. It involves considering
what must be done to rectify the situation.
This means the management has to look at some factors such as:
-- What action is to be taken?
-- Who is authorised to take this decision?
-- What steps are to be taken in this process?
-- What time frame is required?
Elements of Managerial Control

System
Planning
Establishing Standards
Monitoring Performance
Comparing Performance against

Standards
Taking Corrective Action
Fig. 8/2 Elements of Managerial Control System

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8.4 CONTROL STRATEGIES

The following types of control strategies might be put in place in different kinds of
organisations:
• Personal centralized control: Personal control is exercised through informal

meetings that take place at all levels between the officials. These meetings help them
to establish greater coordination and communication among all. This approach is
found mostly in small organisations which are owner managed. Control consists of
personal inspection in order to see that decisions are being carried out.
• Bureaucratic control: Bureaucratic control is characterised by formal and mechanistic
structural arrangements. Organisations that use it tend to rely on strict rules and
have a rigid hierarchy. These types of controls are found mainly in public sector
enterprises as well as some large organisations. Bureaucratic control also makes use
of accounting control such as budgetary and auditing control.
• Output control: Output control relates to the performance of employees in
quantitative and qualitative terms. Performance measures are established to determine
profitability, productivity and quality of the product/service. Often stiff targets are
set especially in terms of productivity. These targets act as controls for subordinates.
• Cultural control: Cultural controls are exercised in order to uphold, manage and
improve the work culture in an organisation. These controls help in regulating the
behaviour of employees. These controls are mostly found in organisations which offer
professional services. When such an organisation has a staff of professional people,
who have excellent skills and ability, they are given freedom of action. Examples
are: work in law firms or advertising agencies, and work related to management
development in human resource department.
Personal
Bureaucratic
Centralized
Control
Control
Control
Strategies
Output Cultural
Control Control
Fig. 8/3 Control Strategies

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PRINCIPLES AND PRACTICE OF MANAGEMENT DECISION MAKING
9 DECISION MAKING
9.1 INTRODUCTION
A manager is required to make decisions in various situations. Decision making is the
foremost aspect of management. The method of decision making is quite often responsible
for far-reaching consequences. “Decisions are basic to management,” says George Terry
(1993). He further emphasises that:
“To make management more meaningful, decisions must be made. They are
mandatory for planning, actuating and controlling to have significance.”
Decision making may be defined as the solution from among alternatives of a course of
action. According to Koontz and Weihrich (1989), a plan cannot be said to exist unless a
decision – a commitment of resources, direction, or reputation – has been made. A decision
is the outcome of hunch, intuition, reasoning and planning. It is made to achieve goals.
Though decision making has its own limitations – as no manager can simultaneously plan
the future, invent the video monitor, and prepare the budget – he/she can definitely make
a significant contribution to the way in which activities of the organisation are to proceed
further. It is the manager who has to make key decisions, which take development from
the mere oratorical to the real.
9.2 FEATURES
Decision making has a number of important features:
• Decisions are made to achieve identifiable goals.

• They imply the existence of a set of alternatives to choose from.
• The process of decision making is extremely dynamic.
• Decisions are made in relation to the environment.
• It is implied that a decision maker has the authority to do so.
• When a decision has been made, the matter does not end there. Decision making
is an ongoing process.
• Decisions are not made in haste. The process is intellectual or rational.

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9.3 SCOPE
The role of the manager can be seen as a role concerned with three main classes of decisions:
• Decisions regarding the allocation of resources within the system – the organisation
function of management;
• Decisions regarding taking the organisation in a well-defined specific direction – the
directive function of management; and
• Decisions relating to monitoring or checking – the control function of management.
9.4 PURPOSE
An organisation makes an effort to respond to challenges and pressures of the environment,
and decides to cope with it. This ensures that there is some sort of equilibrium. Management
as such is concerned with making decisions and implementing them. The function of a
decision is to ensure that the organisation determines the right course at the right time in
response to the circumstances. Tannenbaum (1949) suggests that managers are really concerned
with decision making for three main purposes – organisation, direction and control. In
the ‘organisation’ aspect it is determined what ‘parts’ there shall be in the system and what
relationships shall exist between them. ‘Direction’ provides for the purpose of action and
the methods and procedures to be followed in achieving them. ‘Control’ ensures that the
purposes of action are attained.
In the past, the manager alone was responsible for making all the decisions. But now the
size and complexity of the organisation has changed the whole concept. The managerial
functions of the manager – forecasting, planning, commanding and controlling – have
become specialised and fall within the compass of the professional. As the size of his/her
staff increases, the manager has to concern himself/herself more with setting up standards
of performance for the members of his/her staff.
9.5 TYPES
The decision making task of a manager involves making various types of decisions:
• Institutional decisions: They relate to scheduling or policy making covering various

programmes and activities.
• Strategy decisions: They involve the implementation of institutional decisions. A
manager has to decide who should be involved in what, when and how.
• Programmed decisions: These decisions are structured and are applied to routine
problems and repetitive work.
• Non-programmed decisions: They deal with problems that result from unusual and
unstructured situations. They are aimed at the problems that are not well defined.

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• Initiative or forced decisions: They involve decisions which are based on the
manager’s own initiative or which have been forced upon him/her for various reasons.
• Decision making under certainty, uncertainty and risk conditions: They deal with
unexpected and risky situations where the result of a certain decision is full of risk.
• Personal decisions: They are based on the personal circumstances of a manager.
• Individual or group decisions: They deal with situations which have been discussed
either individually with the team members or with the whole group.
9.6 PROCESS
Decisions do not occur in a vacuum. There is an orderly process to decision making.
Griffiths (1959) states:
“Decision making is the process which one goes through in order

to be able to pass judgment and terminate a controversy.”
This process passes through a series of steps.
9.6.1 RECOGNIZING, DEFINING AND LIMITING THE PROBLEM
The first step in decision making is to find the real problem and to define it. One’s knowledge
about the areas of the problem has a direct bearing on his/her perception of the problem.
One has also to determine the conditions for its solutions, and go through the objectives
for the solution. The objectives should be focused on performance and results. They should
have a balance between the immediate future and long-range goals. It is also necessary to
spell out the rules that limit the solution because in many cases the right decision will
require a change in accepted policies or practices.
9.6.2 ANALYSING, DIAGNOSING AND EVALUATING THE PROBLEM
The next step is to analyse the problem by classifying it and finding the facts. A decision
maker must ask himself/herself:
• What does the problem mean to me?

• What does it mean to the organisation?
• What do I want to do about it?
• Is this a problem on which a decision needs to be made?

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Classification of the problem helps in determining who must make the decision, who must
be consulted in making it and who must be informed. This will ensure that decision is not
endangered, and that it is clear who has to do what in order to convert the decision into
effective action.
9.6.3 ESTABLISHING CRITERIA
A decision maker functions within a framework of values – personal values, cultural values
and the values of the organisation itself. One must consider legal and social values before
coming to the final decision with regard to important problems. Hence a manager has to
look for solutions the standards of which will be acceptable as per social norms. Griffiths
(1959) rightly states: “In a sense, a decision on criteria and standards must be made prior
to the major decision.”
9.6.4 DISCOVERING ALTERNATE SOLUTIONS
The process of decision making involves considering several alternative solutions. They are the
means of compelling us to look at our basic assumptions, examine them and test their validity.
A central problem for organisational decision makers is to choose between maintaining the
system of action ‘as is.’ Or changing them in desirable and feasible directions by desirable
and feasible amounts. In fact, the phase of search for solutions places emphasis upon how
creative the individual has to be in looking for solutions. Though alternative solutions may
not ensure making the right decision, they prevent us from making the decision what we
would have known to be the wrong one if we had given a serious thought to the problem.
9.6.5 COLLECTING DATA
In getting the facts, the manager has to ask: “What information do I need for this particular
decision?” He/she has to decide about the relevance and validity of data available. He/she
may not be able to get all the facts they should have. A large number of decisions are based
on insufficient knowledge. This happens because either the information is not available or
to get it one may have to spend a lot of time or money. Decision making is not hindered
by incomplete information if the decision maker knows what information is lacking. This
will help in judging how much of a risk the decision involves. Moreover, sometimes there
is no time for collecting data. For example, it there is a total breakdown in the electricity
supply system of the organisation, the manager cannot wait for the procedural delays of
calling for tenders etc. He/she has to make an immediate decision to get the electricity
supply restored whatever it may cost.

83
9.6.6 SELECTING THE SOLUTION
Before deciding upon the best solution from among the alternatives available one must
consider the following criteria:
• Risk: A manager has to examine the risk involved in making a particular decision.
In order to minimize the risk factor he/she must consider the possible consequences
of a decision.
• Economy of effort: Sustained effort, avoidance of frequent changes in plans and
delegation of responsibilities (coupled with authority) as per the aptitude and
capability of staff go a long way in making a suitable decision.
• Timing: Too long procrastination or haste does not contribute to effective decision
making. While a delayed action does not bear fruit, a decision made in haste may
prove to be dangerous. Any decision has to be timed well.
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84
• Limitations of resources: One must consider the limitations of human beings

who will carry out the decision. What they can or cannot do depends upon their
vision, competence, skill and understanding. A manager must provide for raising
the ability and standard of people, or new people may have to be found. He/she
must ask himself/herself:
-- Do I have the means of carrying out my decisions?
-- Do I have the people who will do so?
• In addition to the above, a manager can use the following three basis approaches
while selecting from among various alternatives:
-- Experience: Experience plays a large part in decision making. However, reliance
on past experience as a guide for future action can be dangerous. Lessons of
experience may not be applicable to new problems. As a matter of fact, good
decisions must be evaluated against future events, while experience belongs to
the past. On the contrary, if we analyse experience carefully and understand the
basic reasons for success or failure, then experience can be a powerful tool for
decision analysis.
-- Experimentation: An easy way is to try out one of the alternatives but it is
likely to be very expensive in terms of expenditure on capital and personnel. At
the same time, there are many decisions that cannot be made unless the best
course of action is ascertained by experiment.
-- Research and analysis: In this approach, one must comprehend the problem,
search for relationships among the variables and premises. However, this type
of analysis and study is likely to be cheaper than experimentation.
9.6.7 CONVERTING THE DECISION INTO EFFECTIVE ACTION
Any decision has to be made effective in action. A manager’s decision is always a decision
what other people should do. For this, it is not enough that they buy it. They must make
it their own. Since the subordinates are affected by their superiors’ decisions, they try to
influence them. They can easily sabotage any programme they are not convinced about.
Hence it is essential that the perceptions of the personnel be taken into account. In some
respects, they behave like competitors who seek recognition for their ideas and skills. In
practical matters, the question almost gets settled, but it is a person and not an opinion
that wins. The manager is not only choosing among alternatives, he/she is inescapably
choosing among advocates as well. However, a manager can carry the people along with
him/her if he/she is able to communicate effectively in clear terms with those who are to
implement a decision.

85
Peter Drucker (1993) says:
“To convert a solution into action requires that people understand

what change in behaviour is expected of them, and what change to
expect in the behaviour of others with whom they work.”
The following flow chart represents the process of decision making:
Process of Decision Making
Analysing the Problem
Risk
Establish Criteria
Economy of Effort
Discover Alternatives Timing

Limitation of
Collect Data Resources
Experience
Selecet the Best Solution Experimentation
Research &
Convert into Action Analysis
Fig. 9/1 Process of Decision Making
9.7 EFFECTIVE DECISION MAKING

Various other factors influence decision making.
9.7.1 PERSONAL VALUES AND ORGANISATION CULTURE
The intellectual make-up, education, experience and personal values of a manager influence
the direction of the organisation. A manager with healthy attitude will naturally be more
successful than the one with negative disposition. Emotional and motivational factors
coupled with courage on the part of the manager to make and implement the decision are
also important. Similarly, the pattern of behaviour, shared beliefs, and values of the members
of an organisation do influence decision making.

86
9.7.2 INVOLVING THE STAFF
Decisions cannot usually be made in a closed system environment. One of the myths
about decision making is that the top manager makes decisions. On the contrary, all levels
of personnel participate in the process to some degree. People within the organisation are
a part of the social system, and their thinking and attitudes must be taken into account
whenever a manager makes a decision. During discussions with the staff, it is essential to
understand that there has to be dissent and disagreement. Dissent is needed, but a manager
must make it productive.
Peter Drucker (1993) advises:
“If you can bring dissent and disagreement to a common understanding of

what the discussion is all about, you create unity and commitment.”
However, it is often neither advisable nor feasible to democratize the decision making process
to the extent that for all decisions a vote is taken. At some point, a decision has to be made.
9.7.3 GROUP DECISION MAKING
In modern organisations decisions are often made by groups of individuals, such as by

committees or teams. The committee system is the best means of making decisions collectively
and for ensuring accountability.
It:
• provides a suitable structure for introducing problems;

• is a testing ground on which proposals can be assessed in terms of feasibility; and
• provides a forum where justifications of action can be tested.
9.7.4 DECENTRALIZED AUTHORITY
An effective manager should have the ability to see the value and consequences of ideas
suggested by subordinates. For this, it is necessary to have some sort of decentralization:
• Decentralization must occur whenever a manager supervises personnel who are highly
specialised, as he/she may not have the competence to make their decisions – for
example, supervision of technicians if the manager is not a competent person to
do so.
• Most managers may not be able to handle all the problems – for example, maintenance
of plant and machinery;

87
• The subordinates must primarily make decisions about problems arising out of local
circumstances – for example, sensitivity to certain products.
• Sometimes decentralization becomes necessary because of internal power arrangements.
For example, if a subordinate receives contradictory instructions from two or more
bosses, he/she finds himself/herself in an unenviable position of making or not
making a decision.
Personal Values and

Involving the Staff
Organisation Culture
Effective
Decision
Making
Group Discussion Decentralized

Making Authority
Fig. 9/2 Effective Decision Making
Decision making in management is a difficult process. But if a manager has a good

understanding of the whole process and concepts, it will help him/her in seeing the job
through in most situations.

88
PRINCIPLES AND PRACTICE OF MANAGEMENT REFERENCES
REFERENCES
• Allais, C., Leadership and school management, in MacKay, V. (ed.),”A sociology of
education,” Kogan Page, London, 1995.
• Alderfer, Clayton, An Empirical Test of a New Theory of Human Need, Psychological
Review, 1969.
• Adams, J. Stacey, Toward an understanding of inequity, Journal of Abnormal and
Social Psychology, 67(5), 422–436, 1963.
• Dobson, Ann, Communicate at work, Jaico Publishing House, New Delhi, 2006.
• Drucker, P., Management, Pan Books, 1979.
• Drucker, P., Management of the Nonprofit Organisation, Macmillan, New Delhi, 1993.
• Filippo, Edwin B., Principles of Personnel Management, McGraw-Hill, New York,
1961.
• Fayol, Henri, Industrial and general administration, translated by J.A. Coubrough,
Sir Isaac Pitman & Sons, London, 1930.
• Griffiths, D., Administrative Theory, Appleton, New York, 1959.
• Herzberg, Frederick, The Motivation to Work, John Wiley, New York, 1959.
• Hersey, P. & K.H. Blanchard, Situational Leadership, Columbus, Ohio State University
Center for Leadership Studies, 1976.
• Jucius, Michael J., Personnel Management, Homewood, 1975.
• Koontz, Harold, the Management Theory Jungle, in “Journal of the Academy of
Management”, December 1961.
• Koontz Harold & H. Weihrich, Essentials of Management, McGraw-Hill, 1989.
• Maslow, A.H., A Theory of Human Motivation, Psychology Review, 50(4), 1943.
• McClelland, David C., The Achieving Society, The Free Press, New York, 1961.
• Mullins, Laurie J., Management & Leadership, Pearson, Essex, 2004.
• McGregor, D., The Human Side of Enterprise, Penguin, 1987.
• Robbins, S.P. & D.A. DeCenzo, Fundamentals of management: essential concepts and
applications, Prentice-Hall, New Jersey, 2001.
• Stoner, J.A.F., & R.E. Freeman, Management, Prentice-Hall International, London,
1987.
• Shartle, Caroll, Executive Performance and Leadership, Prentice-Hall, New Jersey, 1956.

89
PRINCIPLES AND PRACTICE OF MANAGEMENT REFERENCES
• Tannenbaum, R., The Manager Concept: A Rational Synthesis, in “Journal of Business,”

1949.
• Terry, George R., Authentic Leadership: Courage in Action, Jossey-Bass, San Francisco,
1993.
• Terry, George R., Principles of Management, Richard Irwin, Homewood, 1960.
• Taylor, F.W., the Principles of Scientific Management, Harper & Brothers, London,
1911.
• Tead, Ordway, The art of leadership, McGraw-Hill, 1935.
• Vroom, Victor, Work and motivation, John Wiley and Sons, 1964.

90
PRINCIPLES AND PRACTICE OF MANAGEMENT ABOUT THE AUTHOR
ABOUT THE AUTHOR

Dr. Manmohan Joshi, M.A., M.Ed., Cert. EA, Dip. HRD, Dip. Mgmt. (UK), MBA,
Ph.D. (Mgmt.), has over 45 years’ teaching, training and administrative experience. He
has worked as Principal of large and reputed educational institutions in India, Kuwait and
the Sultanate of Oman.
For his work on Innovative Practices in Value Education he was awarded by the National
Council of Educational Research and Training, India.
He is also the recipient of the Best Teacher Award from the Govt. of Tamilnadu as well as
the Central Board of Secondary Education, India.
He has presented papers at various national and international conferences under the auspices
of UNESCO. He has also conducted various workshops for teachers, students, parents
and administrators. The topics covered a wide area viz., Leadership and Team Building,
Value Education, Administration Skills, Choosing a Career, Effective Decision Making in
Administration, Effective Communication Skills, Interpersonal Relationships, Continuous
Comprehensive Evaluation, Skills in Dealing with Managers, Secretarial Skills. He has also
authored several books on different subjects.
He has also worked as Acting Chief Executive & Consultant for a reputed Training Institute
in the Sultanate of Oman.
He is now Head-Content Development at Acharya Education Services, Bangalore, India, and

conducts workshops and training programmes for college professors, teachers and teacher
educators. He is actively involved in teaching students of MBA as well as Law.
He can be contacted through e-mail: [email protected]

91

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Masters in Management Stand out from the crowd

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2 Planning and forecasting 19

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About the author 91

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Moreover, many of us think of a manager as paper-pushing and issuing instructions,

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Mullins (2004) has stated:

“It is through the process of management that the efforts of the

1.2.2 HUMAN ASPECT OF MANAGEMENT

Peter Drucker (1979) has said:

“Management is tasks. Management is discipline. But management is

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• need adequate training to perform their work effectively;

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The importance of management can be highlighted in the following:

• Achievement of group goals;

1.3 EVOLUTION OF MANAGEMENT THOUGHT

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1.4 THE SCIENTIFIC MANAGEMENT THEORY

However, this theory had two features:

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1.5 CLASSICAL ORGANISATION THEORY

• Fixed and official jurisdictional areas;

Fayol believed that management had some principal rules:

• To forecast and plan;

He developed fourteen principles of administration to go along with management’s five

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1.6 NEO-CLASSICAL THEORY OF HUMAN RELATIONS MOVEMENT

• Involving direct contact between those involved;

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These steps show concern for both production and people.

1.6.1 MCGREGOR’S THEORY ‘X’ AND THEORY ‘Y’

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1.6.2 EVALUATION OF NE0-CLASSICAL THEORY

The following critical evaluation has been done by social thinkers:

1.7 CONTEMPORARY THEORIES

1.7.2 SYSTEMS THEORY

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1.7.3 TEAM BUILDING THEORY

1.7.4 MANAGEMENT BY OBJECTIVES (MBO)

Drucker’s contribution has made tremendous impact on management practices.

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1.8 MANAGEMENT PROCESS

1.9 FUNCTIONS OF MANAGEMENT

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Fig. 1/1 Functions of Management

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2 PLANNING AND FORECASTING

2.2 PRINCIPLES OF PLANNING

• The purpose of a plan must be determined. Goals to be achieved must be clearly

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2.3 TYPES OF PLANNING

2.4 IMPORTANCE OF PLANNING

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Every aspect of the organisation should be subject to planning in order: