Principles of Management - POM - MBA .ppt

SUBJECT :- PRINCIPLES OF
MANAGEMENT
SUBJECT CODE:-BBACC101
FACULTY NAME:-Vivek Birla

Fundamentals of Management: Introduction and Concepts
• Management is the science and art of getting people together to accomplish desired goals and objectives by
coordinating and integrating all available resources efficiently and effectively.
• Management can be defined as all the activities and tasks were undertaken for the purpose of archiving an
objective or goal by continuous activities like; planning, organizing, leading and controlling.
• Management is the combined or interchanged process of planning, decision making, organizing, leading,
motivation and controlling the human resources, financial, physical, and information resources of an
organization to reach its goals in an efficient and effective manner.
• The term ‘management’ has been used in different senses. Sometimes it refers to the process of planning,
organizing, staffing, directing, coordinating and controlling, at other times it is used to describe as a
function of managing people. It is also referred to as a body of knowledge, a practice and discipline. There
are some who describe management as a technique of leadership and decision-making while some others
have analyzed management as an economic resource, a factor of production or a system of authority

Definitions
• Various definitions of management are discussed as follows:
• (i) Art of Getting Things Done
• Mary Parker Follett
• “Management is the art of getting things done through others.” Follett describes management as an art of directing the
activities of other persons for reaching enterprise goals. It also suggests that a manager carries only a directing function.
• Harold Koontz
• “Management is the art of getting things done through and with people in formally organized groups.” Koontz has
emphasized that management is getting the work done with the co-operation of people working in the organization.
• J.D. Mooney and A.C. Railey
• “Management is the art of directing and inspiring people.” Management not only directs but motivates people in the
organization for getting their best for obtaining objectives.
• (ii) Management as a Process
• Some authors view management as a process because it involves a number of functions. Management refers to all Involves
different a manager does. Various functions which are performed by managers to make the efficient use of the available
material and human resources so as to achieve the desired objectives are summed up as management. Thus, the functions of
planning, organizing, staffing, directing, co-coordinating and controlling fall under the process of management.

Contd...
• Henry Fayol
• “To manage is to forecast and plan, to organize, to command, to co-ordinate, and to control.” Fayol described
management as a process of five functions such as planning, organizing, commanding, coordinating and controlling.
Modern authors, however, do not view co-ordination as a separate function of management.
• George R. Terry
• “Management is a distinct process consisting of activities of planning, organizing, actuating and controlling,
performed to determine and accomplish stated objectives with the use of human beings and other resources.”
Though Terry has described four functions to be a part of management process but managerial functions are
classified into five categories.
• (iii) Management as a Discipline
• Sometimes the term ‘management’ is used to connote neither the activity nor the personnel who performs it, but as a
body of knowledge, a practice and a discipline. In this sense, management refers to the principles and practices of
management as a subject of study. Management is taught as a specialized branch of knowledge in educational
institutions. It has drawn heavily from Psychology, Sociology, and Anthropology etc. A person acquiring degree or
diploma in management can try for a managerial job.

Contd....
• (iv) Art and Science of Decision-Making and Leadership
• Decision-making and guiding others is considered an important element of management. A manager has to take various
decisions every day for properly running an enterprise.
• Donald J. Clough
• “Management is the art and science of decision-making and leadership.” The author views management as an art and
science of decision-making. The quality of decisions determines the performance of a manager. He has also to provide
leadership to subordinates for motivating them to undertake their work.
• Rose Moore
• “Management means decision-making.” Decision-making cannot be the only function of management even though it is
very important.
• Stanley Vance
• “Management is simply the process of decision-making and control over the action of human beings for the express
purpose of attaining predetermined goals.” Stanley Vance has emphasized decision-making and control over the actions
of employees for reaching the enterprise goals.
• (v) An Art of Increasing Productivity
• Some authors are of the view that the science of management is used to increase productivity of the enterprise.
• John F. Mee

Characteristics of Management
• Universal
• Goal oriented
• Continuous process
• Multi dimensional
• Group activity
• Dynamic function

Objectives of Management
• Proper Utilization of Resources
• The main objective of management is to use various resources of the enterprise in a most economic way. The proper use of men,
materials, machines and money will help a business to earn sufficient profits to satisfy various interests. The proprietors will want more
returns on their investments while employees, customers and public will expect a fair deal from the management. All these interests will
be satisfied only when physical resources of the business are properly utilized.
• Improving Performance
• Management should aim at improving the performance of each and every factor of production. The environment should be so congenial
that workers are able to give their maximum to the enterprise. The fixing of objectives of various factors of production will help them in
improving their performance.
• Mobilizing Best Talent
• The management should try to employ persons in various fields so that better results are possible. The employment of specialists in
various fields will be increasing the efficiency of various factors of production. There should be a proper environment which should
encourage good persons to join the enterprise. The better pay scales, proper amenities, future growth potentialities will attract more
people in joining a concern.
• Planning for Future
• Another important objective of management is to prepare plans. No management should feel satisfied with today’s work if it has not
thought of tomorrow. Future plans should take into consideration what is to be done next. Future performance will depend upon present
planning. So, planning for future is essential to help the concern.

Scope of Management
• Management is an all pervasive function since it is required in all types of organized endeavour. Thus, its scope is
very large.
• The following activities are covered under the scope of management:
• (i) Planning,
• (ii) Organization
• (iii) Staffing.
• (iv) Directing,
• (v) Coordinating, and
• (vi) Controlling.
• The operational aspects of business management, called the branches of management, are as follows:
• Production Management
• Marketing Management
• Financial Management.
• Personnel Management and
• Office Management

Nature of Principles of Management
• The nature of principles of management can be described in the following points:
• 1. Universal applicability i.e. they can be applied in all types of organizations, business as well as non-business,
small as well as large enterprises.
• 2. General Guidelines: They are general guidelines to action and decision making however they do not provide
readymade solutions as the business environment is ever changing or dynamic.
• 3. Formed by practice and experimentation: They are developed after thorough research work on the basis of
experiences of managers.
• 4. Flexible: Which can be adapted and modified by the practicing managers as per the demands of the situations as
they are man-made principles.
• 5. Mainly Behavioural: Since the principles aim at influencing complex human behaviour they are behavioural in
nature.
• 6. Cause and Effect relationship: They intend to establish relationship between cause & effect so that they can be
used in similar situations.
• 7. Contingent: Their applicability depends upon the prevailing situation at a particular point of time. According to
Terry, “Management principles are ‘capsules’ of selected management wisdom to be used carefully and discretely”.

Significance of the Principles of Management
•
• 1. Providing managers with useful insights into reality: Management principles guide managers to take right
decision at right time by improving their knowledge, ability and understanding of various managerial situations
and circumstances.
• 2. Optimum utilization of resources and effective administration: Management principles facilitate optimum
use of resources by coordinating
• the physical, financial and human resources. They also help in better administration by discouraging personal
prejudices and adopting an objective approach.
• 3. Scientific decisions: Decisions based on management principles tend to be more realistic, balanced and free
from personal bias.
• 4. Meeting the changing environmental requirements: Management principles provide an effective and
dynamic leadership and help the organization to implement the changes.
• 5. Fulfilling social responsibility: Principles of management not only help in achieving organizational goals
but also guide managers in performing social responsibilities. Example : “Equity” and “Fair” remuneration.
• 6. Management training, education and research: Management principles are helpful in identifying the areas
in which existing and future managers should be trained. They also provide the basis for future research.

Management as art
• To understand Management as an art form, we should first understand the meaning of art. Art is defined as the
ability to use information and skills to get the desired results. Artists have the ability to come up with unique
solutions and art forms for complicated problems.
• The analogy stands upright in Management as managers come up with unique and creative solutions to business
challenges. There are no predefined solutions to business problems, and using hundreds of ways to build new
processes is a normal part of Management.
• To understand in-depth, let’s analyze critical factors that are common in Management and art –
• Prior theoretical knowledge – Every art form and artist uses predefined expertise and data to build upon their
ideas. Theories in public speaking, acting school basics for actors, knowledge of tones in music, etc. are all
examples of theoretical knowledge which is used in specific art forms. Similarly, in Management, professionals
are given workflows and blueprints to analyze, test, and execute business ideas.
• Personalized approach – Every artist has its own view of building forms of art. For example, every musician
has its own style; every painter prefers a specific niche, etc. Similarly, in Management, every professional has
its own way of approaching problems and suggesting solutions.
• Involves a lot of creativity – Every art form is heavily dependent on creativity. Creative thinking produces
beautiful art and is unique to the best artists. Similarly, in Management, innovative solutions have given birth to
amazing companies and benchmark management principles that are used worldwide.

Management as Science
Let’s start with the definition of science. Science is an organized collection of knowledge that has an
explanation on the basis of facts for every phenomenon. The concepts and hypotheses of science are
all defined with principles, and a similar thing is practiced in Management. Like art, Management
also shares key factors with science, which can quickly help us term Management as a science.
• Let’s discuss the common factors –
• Systematic structure – Subjects of science like Chemistry and physics have defined systematic principles
and divisions. Each subsection has another set of principles that help you experiment with new things in a
particular domain. Similarly, Management has a systematic structure of divisions and principles. Every
principle can be used as a reference while experimenting with new things.
• Universal validity – The concepts and basic principles of Management have universal validity. For
example, the principles used in finance management are similar in every company, and the rules are valid
universally. These sets of principles do not change with situations and applications.
• Experiments – Concepts and principles of science are predefined and are always experimented with trial
and error to justify them and bring new inventions. Similarly, concepts in Management are often tested to
improve business practices.

Management as a profession
• A profession is a form of occupation in which a person renders his/her services after acquiring expertise in a
particular domain. The professional is remunerated by the company for which he/she renders the services.
• The profession involves a contract between a company and the professional for a specific period, and the
entry factors for the role are limited by various factors.
• The significant factors of professions which are familiar to Management are
• Formal Education and systems – Like any profession, Management contains formal levels of education
and building systems to reach desired positions. To join the Management of large corporations, students
join and excel in degrees like BBA, MBA, etc.
• Restricted entry – Entry to any management role is possible only for candidates with certain set entry
criteria. These criteria include educational qualifications, experience, efficiency, knowledge of specific
software, etc.
• Code of conduct and associations – Management, like any other profession, contains a code of conduct
and ethics that every manager has to abide by. The presence of various management associations is there,
which regulates and certifies managers for specific skills.

What is Administration?
• Management and administration may seem the same, but there are differences between the two. Administration has to do with the setting up of
objectives and crucial policies of every organization. What is understood by management, however, is the act or function of putting into practice
the policies and plans decided upon by the administration.
• Administration is a determinative function, while management is an executive function. It also follows that administration makes the important
decisions of an enterprise in its entirety, whereas management makes the decisions within the confines of the framework, which is set up by the
administration.
• Administration is the top level, whereas management is a middle level activity. If one were to decide the status, or position of administration,
one would find that it consists of owners who invest the capital, and receive profits from an organization. Management consists of a group of
managerial persons, who leverage their specialist skills to fulfill the objectives of an organization.
• Administrators are usually found in government, military, religious and educational organizations. Management is used by business enterprises.
The decisions of an administration are shaped by public opinion, government policies, and social and religious factors, whereas management
decisions are shaped by the values, opinions and beliefs of the mangers.
• In administration, the planning and organizing of functions are the key factors, whereas, so far as management is concerned, it involves
motivating and controlling functions. When it comes to the type of abilities required by an administrator, one needs administrative qualities,
rather than technical qualities. In management, technical abilities and human relation management abilities are crucial.
• Administration usually handles the business aspects, such as finance. It may be defined as a system of efficiently organizing people and
resources, so as to make them successfully pursue and achieve common goals and objectives. Administration is perhaps both an art and a
science. This is because administrators are ultimately judged by their performance. Administration must incorporate both leadership and vision.
• Management is really a subset of administration, which has to do with the technical and mundane facets of an organization’s operation. It is
different from executive or strategic work. Management deals with the employees. Administration is above management, and exercises control
over the finance and licensing of an organization.
• Therefore, we can see that these two terms are distinct from one another, each with their own set of functions. Both these functions are crucial,
in their own ways, to the growth of an organization.

• Skills of Managers in the Organizational Hierarchy:
• Following are the managerial skills:
• (i) Technical Skill:
• It is knowledge of and proficiency in activities involving methods, processes, and procedures. Thus, it involves
working with tools and specific techniques. For examples, mechanics work with tools, and their supervisor
should have the ability to teach them how to use these tools. Similarly, accountants apply specific techniques
in doing their job.
• (ii) Human Skill:
• It is the ability to work with people; it is cooperative efforts; it is teamwork; it is the creation of an
environment in which people feel secure and free express their opinions.
• (iii) Conceptual Skill:
• It is the ability to see the ‘big picture’ to recognize significant elements in a situation, and to understand the
relationships among the elements.
• (iv) Design Skill:
• It is the ability to solve problems in ways that will benefit the enterprise. To be effective, particularly at upper
organizational levels, managers must be able to do more than see a problem. They must have, in addition, the
skill of a good design engineer in working out a practical solution to a problem.

Role of a Manager:
• Non-business executive sometimes say that the aim of business managers is simple-to make a profit. But
profit is really only a measure of a surplus of sales rupees over expense rupees. In a very real sense, in all
kinds of organizations, whether business or non-business, the logical and publicly desirable aim of all
managers should be a surplus.
• Thus, managers must establish an environment in which people can accomplish group goals with the least
amount of time, money, materials, and personal dissatisfaction or in which they can achieve as much as
possible of a desired goal with available resources.
• In a non-business enterprise such as a police department, as well as in units of a business (such as an
accounting department) that are not responsible for total business profits, managers still have goals and
should strive to accomplish them with the minimum of resource or to accomplish as much as possible with
available resources.

• Interpersonal Roles:
• (1) The figure head role (performing ceremonial and social duties as the organisation’s representative
• (2) The leader role and
• (3) The liaison role (communicating particularly with outsiders).
• Informational Roles:
• (1) The recipient role (receiving information about the operation of an enterprise)
• (2) The disseminator role (passing information to subordinates) and
• (3) The spokesperson role (transmitting information to those outside the organisation).
• Decision Role
• (1) The entrepreneurial role.
• (2) The disturbance handler role.
• (3) The resource allocator role.
• (4) The negotiator role.
•

Contribution of Taylor and Fayol’s
• Fayol’s Principles of Management
• About Henry Fayol: Henry Fayol (1841-1925) got degree in Mining Engineering and joined French Mining
Company in 1860 as an Engineer. He rose to the position of Managing Director in 1988. When the
company was on the verge of bankruptcy. He accepted the challenge and by using rich and broad
administrative experience, he turned the fortune of the company. For his contributions, he is well known as
the “Father of General Management”.
• Principles of Management developed by Fayol
• 1. Division of work: Work is divided in small tasks/job and each work is done by a trained specialist which
leads to greater efficiency, specialization, increased productivity and reduction of unnecessary wastage and
movements.
• 2. Authority and Responsibility: Authority means power to take decisions and responsibility means
obligation to complete the job assigned on time. Authority and responsibility should go hand in hand. Mere
responsibility without authority, makes an executive less interested in discharging his duties. Similarly
giving authority without assigning responsibility makes him arrogant and there is fear of misuse of power.

• 3. Discipline: t is the obedience to organizational rules by the subordinates. Discipline requires good
supervisors at all levels, clear and fair agreements and judicious application of penalties.
• 4. Unity of Command: t implies that every worker should receive orders and instructions from one superior
only, otherwise it will create confusion, conflict, disturbance and overlapping of activities.
5. Unity of Direction: Each group of activities having the same objective must have one head and one plan.
This ensures unity of action and coordination.
• 6. Subordination of Individual Interest to General Interest: The interest of an organization should take
priority over the interest of any one individual employee.
• 7. Remuneration of Employees: The overall pay and compensation should be, fair to both employees and the
organization. The wages should encourage the workers to work more and better
• 8. Centralization and Decentralization: Centralization means concentration of decisions making authority in
few hands at top level. Decentralization means evenly distribution of power at every level of management.
Both should be balanced as no organization can be completely centralized or completely decentralized.
• 9. Scalar Chain: The formal lines of authority between superiors and subordinates from the highest to the
lowest ranks is known as scalar chain. This chain should not be violated but in emergency employees at same
level can contact through Gang Plank by informing their immediate superiors.

• 10. Order: A place for everything and everyone and everything and everyone should be in its designated
place. People & material must be in suitable places at appropriate time for maximum efficiency.
• 11. Equity: The working environment of any organization should be free from all forms of discrimination
(religion, language, caste, sex, belief or Basis Unity of Command Unity of Direction nationality) and
principles of justice and fair play should be followed. No worker should be unduly favoured or punished.
• 12. Stability of Personnel: After being selected and appointed by rigorous procedure, the selected person
should be kept at the post for a minimum period decided to show results.
• 13. Initiative: Workers should be encouraged to develop and carry out their plan for improvements.
Initiative means taking the first step with self-motivation. It is thinking out and executing the plan.
• 14. Espirit De Corps: Management should promote team spirit, unity and harmony among employees.
Management should promote a team work.

Taylor’s Scientific Management
• Fredrick Winslow Taylor (1856-1915) was a person who within a very short duration (1878-1884) rose from ranks of an
ordinary apprentice to chief engineer in Midvale Steel Company, U.S.A. Taylor conducted a number of experiments and
came to conclusion that workers were producing much less than the targeted standard task. Also, both the parties –
Management and workers are hostile towards each other. He gave a number of suggestions to solve this problem and
correctly propounded the theory of scientific management to emphasize the use of scientific approach in managing an
enterprise instead of hit and trial method. For his contributions, he is well known as the “Father of the Scientific
Management”. Scientific Management attempts to eliminate wastes to ensure maximum production at minimum cost.
• Principles of Scientific Management
• (1) Science, not rule of Thumb: There should be scientific study and analysis of each element of a job in order to replace
the old rule of thumb approach or hit and miss method. We should be constantly experimenting to develop new techniques
which make the work much simpler, easier and quicker.
• (2) Harmony, Not discord: It implies that there should be mental revolution on part of managers and workers in order to
respect each other’s role and eliminate any class conflict to realize organizational objectives.
• (3) Cooperation not individualism: It is an extension of the Principle of Harmony not discord whereby constructive
suggestions of workers should be adopted and they should not go on strike as both management and workers share
responsibility and perform together.
• (4) Development of each and every person to his or her greatest Efficiency and Prosperity: It implies development of
competencies of all persons of an organization after their scientific selection and assigning work suited to their temperament
and abilities. This will increase the productivity by utilizing the skills of the workers to the fullest possible extent

Unit 2 Planning: Concept, Objectives and Nature
• Planning is the fundamental management function, which involves deciding beforehand, what is to be
done, when is it to be done, how it is to be done and who is going to do it. It is an intellectual process which
lays down an organization’s objectives and develops various courses of action, by which the organization
can achieve those objectives. It chalks out exactly, how to attain a specific goal.
• Planning is nothing but thinking before the action takes place. It helps us to take a peep into the future and
decide in advance the way to deal with the situations, which we are going to encounter in future. It involves
logical thinking and rational decision making.
• Planning is the first primary function of management that precedes all other functions. The planning
function involves the decision of what to do and how it is to be done? So managers focus a lot of their
attention on planning and the planning process.

Objectives of Planning
• The objectives of planning are many and varied. These aims are not the same for all countries, not are they
same for the same country at all times.
• Some major objectives of economic planning are:
• (a) An improvement in the standard of living of the people through a sizable increase in national income within
a short period of time;
• (b) A large expansion of employment opportunities for the removal of unemployment and for creating jobs and
incomes
• (c) A reduction in all types of social, economic and regional inequalities
• (d) An efficient utilisation of the country’s resources for faster growth
• (e) Removal of mass poverty within a definite time limit through land reform, employment creation, and
provision of educational and medical facilities;

Nature of Planning
• Planning is primary function of management
• The functions of management are broadly classified as planning, organisation, direction and control. It is thus the first function of
management at all levels. Since planning is involved at all managerial functions, it is rightly called as an essence of management.
• Planning focuses on objectives
• Planning is a process to determine the objectives or goals of an enterprise. It lays down the means to achieve these objectives. The
purpose of every plan is to contribute in the achievement of objectives of an enterprise.
• Planning is a function of all managers
• Every manager must plan. A manager at a higher level has to devote more time to planning as compared to persons at the lower level.
So the President or Managing director in a company devotes more time to planning than the supervisor.
• Planning as an intellectual process
• Planning is a mental work basically concerned with thinking before doing. It is an intellectual process and involves creative thinking
and imagination. Wherever planning is done, all activities are orderly undertaken as per plans rather than on the basis of guess work.
Planning lays down a course of action to be followed on the basis of facts and considered estimates, keeping in view the objectives,
goals and purpose of an enterprise.
• Planning as a continuous process
• Planning is a continuous and permanent process and has no end. A manager makes new plans and also modifies the old plans in the
light of information received from the persons who are concerned with the execution of plans. It is a never ending process.

Contd...
• Planning is dynamic (flexible)
• Planning is a dynamic function in the sense that the changes and modifications are continuously done in the planned course of action on
account of changes in business environment.
• As factors affecting the business are not within the control of management, necessary changes are made as and when they take place. If
modifications cannot be included in plans it is said to be bad planning.
• Planning secures efficiency, economy and accuracy
• A pre- requisite of planning is that it should lead to the attainment of objectives at the least cost. It should also help in the optimum
utilisation of available human and physical resources by securing efficiency, economy and accuracy in the business enterprises. Planning
is also economical because it brings down the cost to the minimum.
• Planning involves forecasting
• Planning largely depends upon accurate business forecasting. The scientific techniques of forecasting help in projecting the present trends
into future. ‘It is a kind of future picture wherein proximate events are outlined with some distinctness while remote events appear
progressively less distinct.”
• Planning and linking factors
• A plan should be formulated in the light of limiting factors which may be any one of five M’s viz., men, money, machines, materials and
management.
• Planning is realistic
• A plan always outlines the results to be attained and as such it is realistic in nature.

Limitation of Planning
• Planning is needed both in the business and non-business organizations. Some people think that planning is
based on the future anticipations and nothing can be said with certainty about future. Therefore, it is a
useless process.
• In fact, these people point towards the difficulties in the way of planning. If planning has to be successful
and purposeful, the managers should be aware of these difficulties and limitations of planning.
• Following are the limitations of planning:
• (1) Planning Creates Rigidity
• Although the quality of flexibility is inherent in planning, meaning thereby that in case of need changes can
be brought in, but it must be admitted that only small changes are possible. Big changes are neither possible
nor in the interest of the organization.
• Since it is not possible to introduce desired changes according to the changed situations, the organization
loses many chances of earning profits. For this limited flexibility in planning, both the internal as well as
external factors are responsible. These facts are called internal and external inflexibility.

• They are the following:
• (i) Internal Inflexibility
• At the time of planning the objectives of the organization, its policies, procedures, rules, programmes, etc.
are determined. It is very difficult to bring in changes time and again. It is known as internal inflexibility,
• (ii) External Inflexibility
• External inflexibility means various external factors that cause limited flexibility in planning.
• These factors are beyond the control of the planners. The chief among them are: political climate, economic
changes, technical changes, natural calamities, policies of the competitors, etc.
• For example, in political context, as a result of change, a new government brings up a new trade policy,
policy of taxation, import policy, etc. All these changes make every sort of planning a meaningless waste.
Similarly, a change in the policies of the competitors suddenly makes all types of planning ineffective.

• (2) Planning Does Not Work in a Dynamic Environment
• Planning is based on the anticipation of future happenings. Since future is uncertain and dynamic, therefore,
the future anticipations are not always true. Therefore, to consider planning as the basis of success is like a
leap in the dark.
• Generally, a longer period of planning makes it less effective. Therefore, it can be said that planning does
not work in dynamic environment.
• For example, a company anticipated that the government was thinking about allowing the export of some
particular product. With this hope the same company started manufacturing that product. But the
government did not allow the export of this product. In this way, the wrong anticipation proved all planning
wrong or incorrect. It brought loss instead of profit.

• 3) Planning Reduces Creativity
• Under planning all the activities connected with the attainment of objectives of the organization are pre-
determined. Consequently, everybody works as they have been directed to do and as it has been made clear
in the plans.
• Therefore, it checks their incisiveness. It means that they do not think about appropriate ways of
discovering new alternatives. According to Terry, “Planning strangulates the initiative of the employees and
compels them to work in an inflexible manner.”
• (4) Planning Involves Huge Costs
• Planning is a small work but its process is really big. Planning becomes meaningful only after traversing a
long path. It takes a lot of time to cover this path.
• During this entire period the managers remain busy in collecting a lot of information and analysing it. In
this way, when so many people remain busy in the same activity, the organization is bound to face huge
costs.

• (5) Planning is a Time-consuming Process
• Planning is a blessing in facing a definite situation but because of its long process it cannot face sudden
emergencies. Sudden emergencies can be in the form of some unforeseen problem or some opportunity of
profits and there has been no planning for all these situations beforehand and which now requires immediate
decision.
• In such a situation, if the manager thinks of completing the planning process before taking some decision, it
may be possible that the situations may worsen or the chance of earning profit may slip away. Thus, planning
is time consuming and it delays action.
• (6) Planning Does Not Guarantee Success
• Sometimes the managers think that planning solves all their problems. Such thinking makes them neglect their
real work and the adverse effect of such an attitude has to be faced by the organization.
• In this way, planning offers the managers a false sense of security and makes them careless. Hence, we can say
that mere planning does not ensure success; rather efforts have to be made for it.

Process of Planning
Planning Process
• Recognizing Need for Action
• The first step in planning process is the awareness of business opportunity and the need for taking action. Present and future
opportunities must be found so that planning may be undertaken for them. The trend of economic situation should also be visualized.
For example, if thinking of the government is to develop rural areas as industrial centres, a farsighted businessman will think of
setting up units suitable to that environment and will avail the facilities offered for this purpose. Before venturing into new areas the
pros and cons of such projects should be evaluated. A beginning should be made only after going through a detailed analysis of the
new opportunity.
• Gathering Necessary Information
• Before actual planning is initiated relevant facts and figures are collected. All information relating to operations of the business should
be collected in detail. The type of customers to be dealt with, the circumstances under which goods are to be provided, value of
products to the customers, etc. should be studied in detail. The facts and figures collected will help in framing realistic plans.
• Laying Down Objectives
• Objectives are the goals which the management tries to achieve. The objectives are the end products and all energies are diverted to
achieve these goals. Goals are a thread which bind the whole company. Planning starts with the determination of objectives. The tie
between planning and objectives helps employees to understand their duties. Objectives are the guides of employees. It is essential
that objectives should be properly formulated and communicated to all members of the organization.

• Determining Planning Premises
• Planning is always for uncertain future. Though nothing may be certain in the coming period but still certain assumptions
will have to be made for formulating plans. Forecasts are essential for planning even if all may not prove correct. A forecast
means the assumption of future events. The behaviour of certain variables is forecasted for constituting planning premises.
• Forecasts will generally be made for the following:
• (a) The expectation of demand for the products.
• (b) The likely volume of production.
• (c) The anticipation of costs and the likely prices at which products will be marketed.
• (d) The supply of labour raw materials etc.
• (e) The economic policies of the government.
• (f) The changing pattern of consumer preferences.
• (g) The impact of technological changes on production processes.
• (h) The sources for supply of funds.
• It is on the basis of these forecasts that planning is undertaken. The success or failure of planning will depend upon the
forecasts for various factors mentioned above. If the forecasts are accurate then planning will also be reliable. The effect of
various factors should be carefully weighed.
• Examining Alternative Course of Action
• The next step in planning will be choosing the best course of action. There are a number of ways of doing a thing. The
planner should study all the alternatives and then a final selection should be made. Best results will be achieved only when
best way of doing a work is selected. According to Koontz and O’Donnell, “There is seldom a plan made for which
reasonable alternatives do not exist.” All the pros and cons of methods should be weighed before a final selection.

• Evaluation of Action Patterns
• After choosing a course of action, the next step will be to make an evaluation of those courses of actions.
Evaluation will involve the study of performance of various actions. Various factors will be weighed against
each other. A course of action may be suitable but it may involve huge investments and the other may
involve less amount but it may not be very profitable. The evaluation of various action patterns is essential
for proper planning.
• Determining Secondary Plans
• Once a main plan is formulated then a number of supportive plans are required. In fact secondary plans are
meant for the implementation of principal plan. For example, once production plan is decided then a
number of plans for procurement of raw materials, purchase of plant and equipment, recruitment of
personnel will be required. All secondary plans will be a part of the main plan.
• Implementation of Plans
• The last step in planning process is the implementation part. The planning should be put into action so that
business objectives may be achieved. The implementation will require establishment of policies,
procedures, standards and budgets. These tools will enable a better implementation of plans.

Importance of Planning
• Increases Efficiency
• Planning makes optimum utilization of all available resources. It helps to reduce the wastage of valuable resources and avoids their
duplication. It aims to give the highest returns at the lowest possible cost. It thus increases the overall efficiency.
• Reduces business-related risks
• There are many risks involved in any modern business. Planning helps to forecast these business-related risks. It also helps to take the
necessary precautions to avoid these risks and prepare for future uncertainties in advance. Thus, it reduces business risks.
• Facilitates proper coordination
• Often, the plans of all departments of an organization are well coordinated with each other. Similarly, the short-term, medium-term
and long-term plans of an organization are also coordinated with each other. Such proper coordination is possible only because of
efficient planning.
• Aids in Organizing
• Organizing means to bring together all available resources, i.e. 6 Ms. Organizing is not possible without planning. It is so, since,
planning tells us the number of resources required and when are they needed. It means that planning aids in organizing in an efficient
way.
• Gives right direction
• Direction means to give proper information, accurate instructions and useful guidance to the subordinates. It is impossible without
planning. It is because planning tells us what to do, how to do it and when to do it. Therefore, planning helps to give the right
direction.

• Keeps good control
• With control, the actual performance of an employee is compared with the plans, and deviations (if any) are found
out and corrected. It is impossible to achieve such control without the right planning. Therefore, planning becomes
necessary to keep good control.
• Helps to achieve objectives
• Every organization has certain objectives or targets. It keeps working hard to fulfill these goals. Planning helps an
organization to achieve these aims, but with some ease and promptness. Planning also helps an organization to avoid
doing some random (done by chance) activities.
• Motivates personnel
• A good plan provides various financial and non-financial incentives to both managers and employees. These
incentives motivate them to work hard and achieve the objectives of the organization. Thus, planning through
various incentives helps to motivate the personnel of an organization.
• Encourages creativity and innovation
• Planning helps managers to express their creativity and innovation. It brings satisfaction to the managers and
eventually a success to the organization.
• Helps in decision-making
• A manager makes many different plans. Then the manager selects or chooses the best of all available strategies.
Making a selection or choosing something means to take a decision. So, decision-making is facilitated by planning.
• Therefore, planning is necessary for effective and efficient functioning of every organization irrespective of its size,
type and objectives.

Forms of Planning
• Plans commit individuals, departments, organizations, and the resources of each to specific actions for the future.
Effectively designed organizational goals fit into a hierarchy so that the achievement of goals at low levels permits
the attainment of high‐level goals. This process is called a means‐ends chain because low‐level goals lead to
accomplishment of high‐level goals.
• Three major types of plans can help managers achieve their organization’s goals: strategic, tactical, and operational.
Operational plans lead to the achievement of tactical plans, which in turn lead to the attainment of strategic plans. In
addition to these three types of plans, managers should also develop a contingency plan in case their original plans
fail.
• Operational Plans
• The specific results expected from departments, work groups, and individuals are the operational goals. These goals
are precise and measurable. “Process 150 sales applications each week” or “Publish 20 books this quarter” are
examples of operational goals.
• An operational plan is one that a manager uses to accomplish his or her job responsibilities. Supervisors, team
leaders, and facilitators develop operational plans to support tactical plans (see the next section). Operational plans
can be a single‐use plan or an ongoing plan.

• Single‐use plans apply to activities that do not recur or repeat. A one‐time occurrence, such as a special
sales program, is a single‐use plan because it deals with the who, what, where, how, and how much of an
activity. A budget is also a single‐use plan because it predicts sources and amounts of income and how
much they are used for a specific project.
• Continuing or ongoing plans are usually made once and retain their value over a period of years while
undergoing periodic revisions and updates. The following are examples of ongoing plans:

• A policy provides a broad guideline for managers to follow when dealing with important areas of decision
making. Policies are general statements that explain how a manager should attempt to handle routine
management responsibilities. Typical human resources policies, for example, address such matters as employee
hiring, terminations, performance appraisals, pay increases, and discipline.
• A procedure is a set of step‐by‐step directions that explains how activities or tasks are to be carried out. Most
organizations have procedures for purchasing supplies and equipment, for example. This procedure usually
begins with a supervisor completing a purchasing requisition. The requisition is then sent to the next level of
management for approval. The approved requisition is forwarded to the purchasing department. Depending on
the amount of the request, the purchasing department may place an order, or they may need to secure
quotations and/or bids for several vendors before placing the order. By defining the steps to be taken and the
order in which they are to be done, procedures provide a standardized way of responding to a repetitive
problem.
• A rule is an explicit statement that tells an employee what he or she can and cannot do. Rules are “do” and
“don’t” statements put into place to promote the safety of employees and the uniform treatment and behavior
of employees. For example, rules about tardiness and absenteeism permit supervisors to make discipline
decisions rapidly and with a high degree of fairness.

• Tactical plans
• A tactical plan is concerned with what the lower level units within each division must do, how they must do it, and who
is in charge at each level. Tactics are the means needed to activate a strategy and make it work.
• Tactical plans are concerned with shorter time frames and narrower scopes than are strategic plans. These plans usually
span one year or less because they are considered short‐term goals. Long‐term goals, on the other hand, can take several
years or more to accomplish. Normally, it is the middle manager’s responsibility to take the broad strategic plan and
identify specific tactical actions.
• A strategic plan is an outline of steps designed with the goals of the entire organization as a whole in mind, rather than
with the goals of specific divisions or departments. Strategic planning begins with an organization’s mission.
• Strategic plans look ahead over the next two, three, five, or even more years to move the organization from where it
currently is to where it wants to be. Requiring multilevel involvement, these plans demand harmony among all levels of
management within the organization. Top‐level management develops the directional objectives for the entire
organization, while lower levels of management develop compatible objectives and plans to achieve them. Top
management’s strategic plan for the entire organization becomes the framework and sets dimensions for the lower level
planning.
• Contingency Plans
• Intelligent and successful management depends upon a constant pursuit of adaptation, flexibility, and mastery of
changing conditions. Strong management requires a “keeping all options open” approach at all times — that’s where
contingency planning comes in.
• Contingency planning involves identifying alternative courses of action that can be implemented if and when the original
plan proves inadequate because of changing circumstances.

Techniques of Decision Making
• Marginal Analysis
• This technique is used in decision-making to figure out how much extra output will result if one more variable (e.g. raw material, machine, and
worker) is added. In his book, ‘Economics’, Paul Samuelson defines marginal analysis as the extra output that will result by adding one extra
unit of any input variable, other factors being held constant.
• Marginal analysis is particularly useful for evaluating alternatives in the decision-making process.
• Financial Analysis
• This decision-making tool is used to estimate the profitability of an investment, to calculate the payback period (the period taken for the cash
benefits to account for the original cost of an investment), and to analyze cash inflows and cash outflows.
• Investment alternatives can be evaluated by discounting the cash inflows and cash outflows (discounting is the process of determining the
present value of a future amount, assuming that the decision-maker has an opportunity to earn a certain return on his money).
• Break-Even Analysis
• This tool enables a decision-maker to evaluate the available alternatives based on price, fixed cost and variable cost per unit. Break-even
analysis is a measure by which the level of sales necessary to cover all fixed costs can be determined.
• Using this technique, the decision-maker can determine the break-even point for the company as a whole, or for any of its products. At the
break-even point, total revenue equals total cost and the profit is nil.
• Ratio Analysis
• It is an accounting tool for interpreting accounting information. Ratios define the relationship between two variables. The basic financial ratios
compare costs and revenue for a particular period. The purpose of conducting a ratio analysis is to interpret financial statements to determine
the strengths and weaknesses of a firm, as well as its historical performance and current financial condition.
• Operations Research Techniques
• One of the most significant sets of tools available for decision-makers is operations research. An operation research (OR) involves the practical
application of quantitative methods in the process of decision-making. When using these techniques, the decision-maker makes use of
scientific, logical or mathematical means to achieve realistic solutions to problems. Several OR techniques have been developed over the years.

• Linear Programming
• Linear programming is a quantitative technique used in decision-making. It involves making an optimum allocation of scarce or limited
resources of an organization to achieve a particular objective. The word ‘linear’ implies that the relationship among different variables is
proportionate.
• The term ‘programming’ implies developing a specific mathematical model to optimize outputs when the resources are scarce. In order to
apply this technique, the situation must involve two or more activities competing for limited resources and all relationships in the situation
must be linear.
• Some of the areas of managerial decision-making where linear programming technique can be applied are:
• (i) Product mix decisions
• (ii) Determining the optimal scale of operations
• (iii) Inventory management problems
• (iv) Allocation of scarce resources under conditions of uncertain demand
• (v) Scheduling production facilities and maintenance.
• Waiting-line Method
• This is an operations research method that uses a mathematical technique for balancing services provided and waiting lines. Waiting lines (or
queuing) occur whenever the demand for the service exceeds the service facilities.
• Since a perfect balance between demand and supply cannot be achieved, either customers will have to wait for the service (excess demand) or
there may be no customers for the organization to serve (excess supply).
• When the queue is long and the customers have to wait for a long duration, they may get frustrated. This may cost the firm its customers. On
the other hand, it may not be feasible for the firm to maintain facilities to provide quick service all the time since the cost of idle service
facilities have to be borne by the company.
• The firm, therefore, has to strike a balance between the two. The queuing technique helps to optimize customer service on the basis of
quantitative criteria. However, it only provides vital information for decision-making and does not by itself solve the problem. Developing
queuing models often requires advanced mathematical and statistical knowledge

• Game Theory
• This is a systematic and sophisticated technique that enables competitors to select rational strategies for attainment of goals. Game
theory provides many useful insights into situations involving competition. This decision-making technique involves selecting the best
strategy, taking into consideration one’s own actions and those of one’s competitors.
• The primary aim of game theory is to develop rational criteria for selecting a strategy. It is based on the assumption that every player
(a competitor) in the game (decision situation) is perfectly rational and seeks to win the game.
• In other words, the theory assumes that the opponent will carefully consider what the decision-maker may do before he selects his
own strategy. Minimizing the maximum loss (minimax) and maximizing the minimum gain (maximin) are the two concepts used in
game theory.
• Simulation
• This technique involves building a model that represents a real or an existing system. Simulation is useful for solving complex
problems that cannot be readily solved by other techniques. In recent years, computers have been used extensively for simulation. The
different variables and their interrelationships are put into the model.
• When the model is programmed through the computer, a set of outputs is obtained. Simulation techniques are useful in evaluating
various alternatives and selecting the best one. Simulation can be used to develop price strategies, distribution strategies, determining
resource allocation, logistics, etc.
• Decision Tree
• This is an interesting technique used for analysis of a decision. A decision tree is a sophisticated mathematical tool that enables a
decision-maker to consider various alternative courses of action and select the best alternative. A decision tree is a graphical
representation of alternative courses of action and the possible outcomes and risks associated with each action.
• In this technique, the decision-maker traces the optimum path through the tree diagram. In the tree diagram the base, known as the
‘decision point,’ is represented by a square. Two or more chance events follow from the decision point. A chance event is represented
by a circle and constitutes a branch of the decision tree. Every chance event produces two or more possible outcomes leading to
subsequent decision points

Process of Decision Making
• Decision making is a daily activity for any human being. There is no exception about that. When it comes
to business organizations, decision making is a habit and a process as well.
• Effective and successful decisions make profit to the company and unsuccessful ones make losses.
Therefore, corporate decision making process is the most critical process in any organization.
• In the decision making process, we choose one course of action from a few possible alternatives. In the
process of decision making, we may use many tools, techniques and perceptions.
• In addition, we may make our own private decisions or may prefer a collective decision.
• Usually, decision making is hard. Majority of corporate decisions involve some level of dissatisfaction or
conflict with another party

Steps of Decision Making Process
• Following are the important steps of the decision making process. Each step may be supported by different tools and techniques.
• Step 1: Identification of the purpose of the decision
• In this step, the problem is thoroughly analysed. There are a couple of questions one should ask when it comes to identifying the
purpose of the decision.
• What exactly is the problem?
• Why the problem should be solved?
• Who are the affected parties of the problem?
• Does the problem have a deadline or a specific time-line?
• Step 2: Information gathering
• A problem of an organization will have many stakeholders. In addition, there can be dozens of factors involved and affected by the
problem.
• In the process of solving the problem, you will have to gather as much as information related to the factors and stakeholders
involved in the problem. For the process of information gathering, tools such as ‘Check Sheets’ can be effectively used.
• Step 3: Principles for judging the alternatives
• In this step, the baseline criteria for judging the alternatives should be set up. When it comes to defining the criteria, organizational
goals as well as the corporate culture should be taken into consideration.
• As an example, profit is one of the main concerns in every decision making process. Companies usually do not make decisions
that reduce profits, unless it is an exceptional case. Likewise, baseline principles should be identified related to the problem in
hand.

• Step 4: Brainstorm and analyse the different choices
• For this step, brainstorming to list down all the ideas is the best option. Before the idea generation step, it is vital to understand the
causes of the problem and prioritization of causes.
• For this, you can make use of Cause-and-Effect diagrams and Pareto Chart tool. Cause-and-Effect diagram helps you to identify
all possible causes of the problem and Pareto chart helps you to prioritize and identify the causes with highest effect.
• Then, you can move on generating all possible solutions (alternatives) for the problem in hand.
• Step 5: Evaluation of alternatives
• Use your judgment principles and decision-making criteria to evaluate each alternative. In this step, experience and effectiveness
of the judgment principles come into play. You need to compare each alternative for their positives and negatives.
• Step 6: Select the best alternative
• Once you go through from Step 1 to Step 5, this step is easy. In addition, the selection of the best alternative is an informed
decision since you have already followed a methodology to derive and select the best alternative.
• Step 7: Execute the decision
• Convert your decision into a plan or a sequence of activities. Execute your plan by yourself or with the help of subordinates.
• Step 8: Evaluate the results
• Evaluate the outcome of your decision. See whether there is anything you should learn and then correct in future decision making.
This is one of the best practices that will improve your decision-making skills.
• When it comes to making decisions, one should always weigh the positive and negative business consequences and should favour
the positive outcomes.
• This avoids the possible losses to the organization and keeps the company running with a sustained growth. Sometimes, avoiding
decision making seems easier; especially, when you get into a lot of confrontation after making the tough decision.
• But, making the decisions and accepting its consequences is the only way to stay in control of your corporate life and time.

Organization: Concept, Objectives
• A social unit of people that is structured and managed to meet a need or to pursue collective goals. All organizations
have a management structure that determines relationships between the different activities and the members, and
subdivides and assigns roles, responsibilities, and authority to carry out different tasks. Organizations are open
systems–they affect and are affected by their environment.
• The term ‘Organizing’ and ‘Organization’ are given a variety of interpretations.
• In the first sense, ‘organizing’ refers to a dynamic process and a managerial activity by which different elements or
parts of an enterprise are brought together to obtain a desired result.
• This process places the enterprise into working order by defining and allocating the duties and responsibilities of
different employees and provides it with everything useful to its functioning—raw material, tools, capital and
personnel.
• It thus combines and co-ordinates their activities for commonness of purpose. So the term ‘organizing’ implies co-
ordination and arrangement of men and materials of an undertaking in order to achieve a certain purpose.
• When used in the other sense, the term ‘Organizing’ is understood as the creation of a structure of relationships
among various positions and jobs for the realisation of the objectives and goals of the enterprise. In this sense,
‘Organization’ is the vehicle through which goals are sought to be attained.

Objectives of an Organization
• Facilitates Administration
• An efficient and sound organization make easy for the management to relate the flow of resource continually to the
overall objectives. A sound organization helps in providing appropriate platform where management can performs
the functions of planning, direction, coordination, motivation and control.
• Facilitates Growth and Diversification
• A sound organization helps in the growth and diversification of activities. The growth is facilitated by clear division
of work, proper delegation of authority etc. In short, it helps in the organizational elaboration. In case of reasonable
expansion of organization, the functional types get replaced by a more flexible decentralized organization.
• Permits optimum use of Resources
• The optimum use of technical and human resources gets facilitated in sound and efficient organization. The
organization can have the facilities of latest technological developments and improvements. It also facilitates
optimum use of human resources through specialization. The people in the organization get appropriately trained
and get promotion opportunities. A sound organization provides all the desired potential and strength to the company
to meet the future challenges.

• Stimulate Creativity
• The specialization in the organization helps individuals in getting well defined duties, clear lines of
authority and responsibility. It encourages the creativity of the people. The sound organizational structure
enables mangers to concentrate on important issues where their talent can be exploited to the maximum.
• Encourages Humanistic Approach
• A sound organization helps in adopting efficient methods of selection, training, remuneration and
promotion for employees. It makes people work in a team and not like machines or robots. Organization
helps in providing factors like job rotation, job enlargement and enrichment to its employees. A sound
organization provides higher job satisfaction to its employees through proper delegation and
decentralization, favorable working environment and democratic and participative leadership. It enhances
the mode of communication and interaction among different levels of the management.

Nature of an Organization
• There are some common features of organization through which a clear idea about its nature can be obtained.
These are indicated below:
• Process
• Organization is a process of defining, arranging and grouping the activities of an enterprise and establishing the
authority relationships among the persons performing these activities. It is the framework within which people
associate for the attainment of an objective.
• The framework provides the means for assigning activities to various parts and identifying the relative authorities
and responsibilities of those parts. In simple term, organization is the process by which the chief executive, as a
leader, groups his men in order to get the work done.
• Structure
• The function of organizing is the creation of a structural framework of duties and responsibilities to be performed
by a group of people for the attainment of the objectives of the concern. The organization structure consists of a
series of relationships at all levels of authority.
• An organization as a structure contains an “identifiable group of people contributing their efforts towards the
attainment of goals.” It is an important function of management to organize the enterprise by grouping the activities
necessary to carry out the plans into administrative units, and defining the relationships among the executives and
workers in such units.

• Dividing and Grouping the Activities
• Organizing means the way in which the parts of an enterprise are put into working order. In doing such, it
calls for the determination of parts and integration of one complete whole on the other. In fact, organization
is a process of dividing and combining the activities of an enterprise.
• Activities of an enterprise are required to be distributed between the departments, units or sections as well
as between the persons for securing the benefits of division of labour and specialisation, and are to be inte-
grated or combined for giving them a commonness of purpose.
• L. Urwick defines organization as: ‘determining what activities are necessary to any purpose and arranging
them as groups which may be assigned to individual.
• 4. Accomplishment of Goals or Objectives
• An organization structure has no meaning or purpose unless it is built around certain clear-cut goals or
objectives. In fact, an organization structure is built-up precisely because it is the ideal way of making a
rational pursuit of objectives. Haney defines organization as: “a harmonious adjustment of specialised parts
for the accomplishment of some common purpose or purposes”.

• Authority-Responsibility Relationship
• An organization structure consists of various positions arranged in a hierarchy with a clear definition of the
authority and responsibility associated with each of these. An enterprise cannot serve the specific purposes or
goals unless some positions are placed above others and given authority to bind them by their decisions.
• In fact, organization is quite often defined as a structure of authority-responsibility relationships.
• Human and Material Aspects
• Organization deals with the human and material factors in business. Human element is the most important
element in an organization. To accomplish the task of building up a sound organization, it is essential to
prepare an outline of the organization which is logical and simple. The manager should then try to fit in
suitable men. Henry Fayol says in this connection: “see that human and material organizations are suitable”
and “ensure material and human order”.

Types of Organization
• As you might have guessed by now, there exist two types of organization:
• Formal Organization
• Informal Organization
• Formal Organization
• In every enterprise, there are certain rules and Organization procedures that establish work relationships among
the employees. These facilitate the smooth functioning of the enterprise. Further, they introduce a systematic flow
of interactions among the employees. Effectively, all of this is done through a formal organization.
• Notably, the management is responsible for designing the formal organization in such a way that it specifies a clear
boundary of authority and responsibility. Coupled with systematic coordination among various activities, it ensures
achievement of organizational goals.
• Again, the management builds the formal organization. It ensures smooth functioning of the enterprise as it defines
the nature of interrelationships among the diverse job positions. Additionally, these ensure that the organizational
goals are collectively achieved. Also, formal organization facilitates coordination, interlinking and integration of
the diverse departments within an enterprise. Lastly, it lays more emphasis on the work to be done without
stressing much on interpersonal relationships.

• Advantages
• The formal organization clearly outlines the relationships among employees. Hence, it becomes easier to rack
responsibilities.
• An established chain of commands maintains the unity of command.
• As the duties of each member is clearly defined, there is no ambiguity or confusion in individual roles
whatsoever. Further, there is no duplication of efforts which eliminates any wastage.
• In a formal organization, there is a clear definition of rules and procedures. This means that behaviours and
relationships among the members are predictable. Consequently, there is stability and no chaos existing in the
enterprise.
• Finally, it leads to the achievement of organizational goals and objectives. This is because there exist
systematic and well thought out work cultures and relationships.
• Disadvantages
• Decision making is slow in a formal organization. It is important to realise that any organizational need has to
flow through the respective chain of commands before being addressed.
• Formal organization is very rigid in nature. This means that there prevails perfect discipline coupled with no
deviations from the procedures. Hence, this can lead to low recognition of talent.
• Lastly, the formal organization does not take into account the social nature of humans as it talks about only
structure and work. Interestingly, we cannot eliminate this integral part of our nature. Hence, it does not
entirely display the functioning of the organization.

• Informal Organization
• It’s easy to understand that if we interact with certain people regularly we tend to get more informal with
them. This is because we develop interpersonal relationships with them which are not based solely on work
purposes. Rather, these relationships might arise because of shared interests, like if you get to know that
your colleague likes the same football club of which you’re a fan of.
• As a matter of fact, informal organization arises out of the formal organization. This is because when people
frequently contact each other we cannot force them into a rigid and completely formal structure. Instead,
they bond over common interests and form groups, based upon friendship and social interactions.
• Unlike formal organization, informal organization is fluid and there are no written or predefined rules for it.
Essentially, it is a complex web of social relationships among members which are born spontaneously.
Further, unlike the formal organization, it cannot be forced or controlled by the management.
• Also, the standards of behaviour evolve from group norms and not predefined rules and norms. Lastly, as
there are no defined structures or lines of communication, the interactions can be completely random and
independent lines of communication tend to emerge in informal organization.

• Advantages
• In this type of organization, communication does not need to follow the defined chain. Instead, it can flow through
various routes. This implies that communication in an informal organization is much faster relative to formal
organization.
• Again, humans are social animals. The needs to socialize exists deep within our existence. The informal
organization ensures that there is socialization within the enterprise. Consequently, members experience the sense
of belongingness and job satisfaction.
• Informal organization, getting true feedbacks and reactions is not easy. Hence, in informal organization, various
limitations of formal organization is covered up.
• Disadvantages
• The informal organization is random and can result in the spread of rumours. Again, we cannot manage and
control informal organization. Consequently, this may result in chaos within the enterprise.
• It is important to realise that it is not possible to effect changes and grow without the support of the informal
organization. This can work in both ways, for growth or decline of the enterprise.
• To point out again, informal organization conforms to group standards and behaviors. If such behaviors are
against the organizational interests, they can eventually lead to disruption of the organization.

Delegation of Authority
• Authority
• In context of a business organization, authority can be defined as the power and right of a person to use and allocate the
resources efficiently, to take decisions and to give orders so as to achieve the organizational objectives. Authority must
be well- defined. All people who have the authority should know what is the scope of their authority is and they
shouldn’t misutilize it. Authority is the right to give commands, orders and get the things done. The top level
management has greatest authority.
• Authority always flows from top to bottom. It explains how a superior gets work done from his subordinate by clearly
explaining what is expected of him and how he should go about it. Authority should be accompanied with an equal
amount of responsibility. Delegating the authority to someone else doesn’t imply escaping from accountability.
Accountability still rest with the person having the utmost authority.
• Responsibility
• It is the duty of the person to complete the task assigned to him. A person who is given the responsibility should ensure
that he accomplishes the tasks assigned to him. If the tasks for which he was held responsible are not completed, then he
should not give explanations or excuses. Responsibility without adequate authority leads to discontent and dissatisfaction
among the person. Responsibility flows from bottom to top. The middle level and lower level management holds more
responsibility. The person held responsible for a job is answerable for it. If he performs the tasks assigned as expected,
he is bound for praises. While if he doesn’t accomplish tasks assigned as expected, then also he is answerable for that.

• Accountability
• It means giving explanations for any variance in the actual performance from the expectations set.
Accountability can not be delegated. For example, if ’A’ is given a task with sufficient authority, and ’A’
delegates this task to B and asks him to ensure that task is done well, responsibility rest with ’B’, but
accountability still rest with ’A’. The top level management is most accountable. Being accountable means
being innovative as the person will think beyond his scope of job. Accountability, in short, means being
answerable for the end result. Accountability can’t be escaped. It arises from responsibility.
• For achieving delegation, a manager has to work in a system and has to perform following steps : –
• Assignment of tasks and duties
• Granting of authority
• Creating responsibility and accountability

Delegation of authority is the base of superior-subordinate relationship, it involves
following steps:-
• (i) Assignment of Duties:
• The delegator first tries to define the task and duties to the subordinate. He also has to define the result expected from the
subordinates. Clarity of duty as well as result expected has to be the first step in delegation.
• (ii) Granting of authority:
• Subdivision of authority takes place when a superior divides and shares his authority with the subordinate. It is for this
reason, every subordinate should be given enough independence to carry the task given to him by his superiors. The
managers at all levels delegate authority and power which is attached to their job positions. The subdivision of powers is
very important to get effective results.
• (iii) Creating Responsibility and Accountability:
• The delegation process does not end once powers are granted to the subordinates. They at the same time have to be
obligatory towards the duties assigned to them. Responsibility is said to be the factor or obligation of an individual to carry
out his duties in best of his ability as per the directions of superior. Responsibility is very important. Therefore, it is that
which gives effectiveness to authority. At the same time, responsibility is absolute and cannot be shifted. Accountability, on
the others hand, is the obligation of the individual to carry out his duties as per the standards of performance. Therefore, it is
said that authority is delegated, responsibility is created and accountability is imposed. Accountability arises out of
responsibility and responsibility arises out of authority. Therefore, it becomes important that with every authority position
an equal and opposite responsibility should be attached.
• Therefore every manager,i.e.,the delegator has to follow a system to finish up the delegation process. Equally important is
the delegatee’s role which means his responsibility and accountability is attached with the authority over to here.

Authority and Responsibility
• Authority
• We define ‘authority’ as the legal and formal right of the manager or supervisor or any of the top level
executives, of the organization to command subordinates, gives them orders, instructions and directions,
and access obedience. The manager is entitled to make decisions, concerning performance or non-
performance of a task in a particular manner, so as to accomplish organizational objectives. It comprises of
some permissions and the right to act for the organization in a particular area.
• Authority is derived by virtue of the position of an individual in the organization, and the degree of
authority is maximum at the top level and decreases consequently as we go down the corporate hierarchy.
Therefore, it flows from top to bottom, giving authority to superior over the subordinate.
• One cannot occupy a superior position in an organization if he does not have any authority. It is the
authority; that distinguishes one position from that of another and vests the power to the concerned
individual, to order his subordinates and obtain necessary compliance.

• Types of Authority
• Official Authority: The authority which gives the manager, power to command his subordinates, by virtue of
his designation in the organization.
• Personal Authority: It indicates the ability by which a person influences the behaviour of other persons in an
organization.
• Responsibility
• Responsibility is the obligation of an individual, whether a manager or any other employee of the organization
to carry out the task or duty assigned to him by the senior. The one who accepts the task are held responsible
for their performance, i.e. when an employee takes the responsibility of an action, at the same time, he
becomes responsible for its consequences too.
• The obligation is the kernel of responsibility. It is originated from the superior-subordinate relationship, formed
in an organization. Hence, the manager can get the tasks done from his subordinates, by virtue of their
relationship, as the subordinate is bound to perform the tasks assigned.
• Comparison

Differences between Authority and Responsibility
• The following points are noteworthy so far as the difference between authority and responsibility is concerned:
• The power or right, inherent to a particular job or position, to give orders, enforce rules, make decisions and obtain
conformity, is called authority. Duty or obligation to undertake and complete a task satisfactorily, assigned by the senior or
established by one’s own commitment or circumstances is called responsibility.
• Authority refers to the legal right of the manager to give orders and expect obedience from subordinates. On the other hand,
responsibility is the corollary, i.e. result of the authority.
• The position of an individual in an organization determines his/her authority, i.e. the higher the position of a person in the
corporate ladder, the more is the authority and vice versa. As against this, the superior-subordinate relationship forms the
basis for responsibility.
• While authority is delegated, by the superior to subordinates, responsibility is assumed, i.e. it is inherent in the task assigned.
• Authority needs the ability to give orders and instructions, whereas responsibility demands the ability of compliance or
obedience, to follow orders.
• Authority flows downward, i.e. the extent of authority is greatest at the top level and lowest at the low level. On the contrary,
the responsibility exacts upward, i.e. from bottom to top, the subordinate will be responsible to superior.
• The purpose of the authority is to take decisions and execute them. Conversely, responsibility aims at executing duties
assigned by the superior.
• Authority is inherent with the position, and so it continues for a long period. Unlike responsibility, which is attached to the
task assigned and hence it is short-lived, it ends as soon as the task accomplishes successfully.

Centralization and Decentralization
• Centralization
• A pivot location or group of managerial personnel for the planning and decision-making or taking activities of the
organization is known as Centralization. In this type of organization, all the important rights and powers are in the
hands of the top level management.
• In earlier times, centralization policy was the most commonly practiced in every organization to retain all the
powers in the central location. They have full control over the activities of the middle or low-level management.
Apart from that personal leadership and coordination can also be seen as well as work can also be distributed easily
among workers.
• However, due to the concentration of authority and responsibility, the subordinate employee’s role in the
organization is diminished because of all the right vests with the head office. Therefore, the junior staff is only to
follow the commands of the top managers and function accordingly; they are not allowed to take an active part in
the decision-making purposes. Sometimes hotchpotch is created due to excess workload, which results in hasty
decisions. Bureaucracy and Red-tapism are also one of the disadvantages of centralization.

• Decentralization
• The assignment of authorities and responsibilities by the top level management to the middle or low-level
management is known as Decentralization. It is the perfect opposite of centralization, in which the decision-
making powers are delegated to the departmental, divisional, unit or center level managers, organization-
wide. Decentralization can also be said as an addition to Delegation of authority.
• At present, due to the increase in competition, managers take the decision regarding for the delegation of
authority to the subordinates. Due to which the functional level managers get a chance to perform better, as
well as freedom of work, is also there. Moreover, they share the responsibility of the high-level managers
which results in quick decision making and saving of time. It is a very effective process for the expansion
of the business organization, like for mergers and acquisitions.
• Although, decentralization lacks leadership and coordination, which leads to inefficient control over the
organization. For an effective decentralization process, open and free communication in the organization
must be there.

Differences between Centralization and Decentralization
• The points given below are noteworthy, so far as the difference between centralization and decentralization is concerned:
• The unification of powers and authorities, in the hands of high-level management, is known as Centralization. Decentralization means
dispersal of powers and authorities by the top level to the functional level management.
• Centralization is the systematic and consistent concentration of authority at central points. Unlike, decentralization is the systematic
delegation of authority in an organization.
• Centralization is best for a small sized organization, but the large sized organization should practice decentralization.
• Formal communication exists in the centralized organization. Conversely, in decentralization, communication stretches in all
directions.
• In centralization due to the concentration of powers in the hands of a single person, the decision takes time. On the contrary,
decentralization proves better regarding decision making as the decisions are taken much closer to the actions.
• There are full leadership and coordination in Centralization. Decentralization shares the burden of the top level managers.
• When the organization has inadequate control over the management, then centralization is implemented, whereas when the
organization has full control over its management, decentralization is implemented.
• The difference between centralization and decentralization is one of the hot topics these days. Some people think that centralization is
better while others are in favor of decentralization. In ancient times, people used to run their organization in a centralized manner, but
now the scenario has been changed completely due to rise in the competition where quick decision making is required and therefore
many organizations opted for decentralization.
• At present, most of the organization is equipped with both the features, as absolute centralization or decentralization is not possible.
Complete centralization in an organization not practicable because it represents that each and every single decision of the organization
is taken by the top echelon. On the other hand, full fledge decentralization is an indicator of no control over the activities of
subordinates. So, a balance between these two should be maintained.

Span of Control
• The larger an organization, the more management layers it has. As a result, a hierarchy is born. Multiple people in a department deal
with a single superior. Some departments might only have ten people, while others consist of over a hundred employees. In both cases,
span of control is present to properly manage all layers of the organization.
• The Span of Control is the number of employees a manager can supervise as effectively as possible. The addition of new hierarchical
layers makes the organizational structure steeper.
• A large Span of Control leads to a flatter organizational structure, which results in lower costs. A small span of control creates a
steeper organizational structure, which requires more managers and which will consequently be more expensive for the organization.
It is therefore useful for an organization if its managers have a large span of control.
• Increasing Span of Control
• When a manager supervises a large number of employees, he often has little time to align activities and monitor the quality of how
activities are executed.
• Every situation needs to be assessed individually based on factors that determine the span of control. If a situation arises in which a
supervisor manages too many employees, there are several ways for finding a solution to increase the Span of Control:
• Training the manager, teaching him management skills such as delegating and clear communication.
• Training employees, teaching them to work independently and make better use of their time.
• Delegation by the manager, decreasing his workload and improving the division of labour.
• Improving procedures and systems; when procedures take up a lot of time, it is a good idea to find efficient solutions with the help of
the management team.
• Involving HR, who will unburden the manager by taking over certain specialist tasks such as the department’s HR policy.
• Assigning a personal assistant, who can take over routine activities, reducing the manager’s workload.
• Appointing an assistant-manager who reports to the manager, but in the perception of the subordinates is fully qualified in terms of
executive and policy tasks and can act as manager when needed.

STAFFING
• Staffing involves filling the positions needed in the organization structure by appointing competent and
qualified persons for the job.
• The staffing process encompasses man power planning, recruitment, selection, and training.
• a) Manpower requirements:
• Manpower Planning which is also called as Human Resource Planning consists of putting right number of
people, right kind of people at the right place, right time, doing the right things for which they are suited for
the achievement of goals of the organization. The primary function of man power planning is to analyze and
evaluate the human resources available in the organization, and to determine how to obtain the kinds of
personnel needed to staff positions ranging from assembly line workers to chief executives.
• b) Recruitment:
• Recruitment is the process of finding and attempting to attract job candidates who are capable of
effectively filling job vacancies.
• Job descriptions and job specifications are important in the recruiting process because they specify the
nature of the job and the qualifications required of job candidates.

• c) Selection:
• Selecting a suitable candidate can be the biggest challenge for any organization. The success of an organization
largely depends on its staff. Selection of the right candidate builds the foundation of any organization's success and
helps in reducing turnovers.
• d) Training and Development:
• Training and Development is a planned effort to facilitate employee learning of job-related behaviors in order to
improve employee performance. Experts sometimes distinguish between the terms “training” and “development”;
“training” denotes efforts to increase employee skills on present jobs, while “development” refers to efforts
oriented toward improvements relevant to future jobs. In practice, though, the distinction is often blurred (mainly
because upgrading skills in present jobs usually improves performance in future jobs).
• RECRUITMENT PROCESS
• Recruitment is the process of finding and attempting to attract job candidates who are capable of effectively filling
job vacancies. The recruitment process consists of the following steps
• Identification of vacancy
• Preparation of job description and job specification
• Selection of sources
• Advertising the vacancy
• Managing the response
•

a) Identification of vacancy:
• The recruitment process begins with the human resource department receiving requisitions for recruitment from any department of the company.
These contain:
• Posts to be filled
• Number of persons
• Duties to be performed
• Qualifications required
b) Preparation of job description and job specification:
• A job description is a list of the general tasks, or functions, and responsibilities of a position. It may often include to whom the position reports,
specifications such as the qualifications or skills needed by the person in the job, or a salary range. A job specification describes the knowledge,
skills, education, experience, and abilities you believe are essential to performing a particular job.
c) Selection of sources:
• Every organization has the option of choosing the candidates for its recruitment processes from two kinds of sources: internal and external sources.
The sources within the organization itself (like transfer of employees from one department to other, promotions) to fill a position are known as the
internal sources of recruitment. Recruitment candidates from all the other sources (like outsourcing agencies etc.) are known as the external sources
of the recruitment.
d) Advertising the vacancy:
• After choosing the appropriate sources, the vacancy is communicated to the candidates by means of a suitable media such as television, radio,
newspaper, internet, direct mail etc.
e) Managing the response:
• After receiving an adequate number of responses from job seekers, the sieving process of the resumes begins. This is a very essential step of the
recruitment selection process, because selecting the correct resumes that match the job profile, is very important. Naturally, it has to be done rather
competently by a person who understands all the responsibilities associated with the designation in its entirety. Candidates with the given skill set
are then chosen and further called for interview. Also, the applications of candidates that do not match the present nature of the position but may be
considered for future requirements are filed separately and preserved.

CAREER DEVELOPMENT
• Career development refers to those personal improvements which one undertakes to achieve a personal career plan. Before we discuss
about career development, it will be quite in the fitness of things to first understand about the following terms which will be used while
discussing about career development
• Stages of career development
• “career development is an on-going process that occurs over the life span and includes home, school and community
experience”. – pietrofesa and splete.
• Career development can be analysed based on the career stages. There are five career development stages through which most of us
have gone through or will go through. These stages include- exploration, establishment, and mid-career, late career and decline.
• Stages of career development in HRM: 6 stages
• Stages in career development – 5 main stages: exploration, establishment, mid-career, late career and decline
• Career development refers to those personal improvements which one undertakes to achieve a personal career plan. Before we discuss
about career development, it will be quite in the fitness of things to first understand about the following terms which will be used while
discussing about career development.
• According to keith davis, a career is all the jobs that are held during ones working life.
• Career path – a career path is the sequential pattern of jobs that form a career.
• Career planning – career planning is the process by which one selects career goals and the path to these goals.
• Career goals – career goals are the future positions one strives as a part of career.
• Career management – According to French and bell, career management is the process of designing and implementing goals, plans and
strategies to enable the organisation to satisfy employee needs while allowing individuals to achieve their career goals.

• Super and hall have pointed out the following five stages in career development:
• Stage # 1. Exploration:
• The exploratory stage is the period of transition from college to work, that is, the period immediately prior to employment. It is
usually the period of one’s early 20 s and ends by mid-20 s. It is a stage of self-exploration and making preliminary choices.
• Stage # 2. Establishment:
• This career stage begins when one starts seeking for work. It includes getting one’s first job. Hence, during this stage, one is likely to
commit mistakes; one has also the opportunities to learn from such mistakes and may also assume greater responsibilities. He/ she
accepts job challenges and develops competence in a speculating area. He/she develops creativity and rotates into a new area after
three-five years.
• Stage # 3. Mid-career:
• During this stage, the performance may increase or decrease or may remain constant. While some employees may reach their goals at
the early stage and may achieve greater heights, some may be able just to maintain their performance. While the former may be called
‘climbers’, the later ones are not very ambitious though competent otherwise. During this stage, an employee tries to update
himself/herself technically and develops skills in coaching others. He/she may rotate into a new job requiring new skills.
• Stage # 4. Late career:
• This stage is usually a pleasant one because during this stage, the employee neither tries to learn new things nor tries to improve
his/her performance over that of previous years. He/she takes advantage of and depends on his/her reputation and enjoys playing the
role of an elderly statesperson. He/she may shift from a power role to one of consultation. He/she starts identifying and developing
successors and may also start activities outside the organisation.
• Stage # 5. Decline:
• Since it is the final stage of one’s career, it ends in the retirement of the employee after putting up decades of service full of
continuous achievements and success stories. As such, it is viewed as a hard stage

Performance Appraisal
• Performance Appraisal is the systematic evaluation of the performance of employees and to understand the
abilities of a person for further growth and development. Performance appraisal is generally done in systematic
ways which are as follows:
• The supervisors measure the pay of employees and compare it with targets and plans.
• The supervisor analyses the factors behind work performances of employees.
• The employers are in position to guide the employees for a better performance.
• Objectives of Performance Appraisal
• Performance Appraisal can be done with following objectives in mind:
• To maintain records in order to determine compensation packages, wage structure, salaries raises, etc.
• To identify the strengths and weaknesses of employees to place right men on right job.
• To maintain and assess the potential present in a person for further growth and development.
• To provide a feedback to employees regarding their performance and related status.
• To provide a feedback to employees regarding their performance and related status.
• It serves as a basis for influencing working habits of the employees.
• To review and retain the promotional and other training programmes

• Advantages of Performance Appraisal
It is said that performance appraisal is an investment for the company which can be justified by following advantages:
• Promotion: Performance Appraisal helps the supervisors to chalk out the promotion programmes for efficient
employees. In this regards, inefficient workers can be dismissed or demoted in case.
• Compensation: Performance Appraisal helps in chalking out compensation packages for employees. Merit rating
is possible through performance appraisal. Performance Appraisal tries to give worth to a performance.
Compensation packages which includes bonus, high salary rates, extra benefits, allowances and pre-requisites are
dependent on performance appraisal. The criteria should be merit rather than seniority.
• Employees Development: The systematic procedure of performance appraisal helps the supervisors to frame
training policies and programmes. It helps to analyse strengths and weaknesses of employees so that new jobs can
be designed for efficient employees. It also helps in framing future development programmes.
• Selection Validation: Performance Appraisal helps the supervisors to understand the validity and importance of the
selection procedure. The supervisors come to know the validity and thereby the strengths and weaknesses of
selection procedure. Future changes in selection methods can be made in this regard.
• Communication: For an organization, effective communication between employees and employers is very
important. Through performance appraisal, communication can be sought for in the following ways:

• Directing can be defined as that function of management, which helps in guiding and leading people to
work in such a manner so as to perform efficiently and effectively for the attainment of organizational
objectives. Directing is the managerial function, which initiates organized action.
• It is one of the most important fundamental functions of management and is a part of every managerial
action taken because the direction is primarily concerned towards various other function of management
like leadership, motivation, and communication.
• According to Koontz and O ‘Donnel; “directing is a complex function that includes all those activities
which are designed to encourage subordinate to work effectively and efficiently in both the short and long-
run.”
• Directing is the heart of management function. All other functions of management such as planning,
organizing, and staffing have no importance without directing. Leadership, motivation, supervision,
communication are various aspects of directing. Let us study the importance and principles of directing.
• Directing refers to a process or technique of instructing, guiding, inspiring, counselling, overseeing and
leading people towards the accomplishment of organizational goals. It is a continuous managerial process
that goes on throughout the life of the organization.

Main characteristics of Directing
• Initiates Action
• A directing function is performed by the managers along with planning, staffing, organizing and controlling in
order to discharge their duties in the organization. While other functions prepare a platform for action, directing
initiates action.
• Pervasive Function
• Directing takes place at every level of the organization. Wherever there is a superior-subordinate relationship,
directing exists as every manager provides guidance and inspiration to his subordinates.
• Continuous Activity
• It is a continuous function as it continues throughout the life of organization irrespective of the changes in the
managers or employees.
• Descending Order of Hierarchy
• Directing flows from a top level of management to the bottom level. Every manager exercises this function on his
immediate subordinate.
• Human Factor
• Since all employees are different and behave differently in different situations, it becomes important for the
managers to tackle the situations appropriately. Thus, directing is a significant function that gets the work done by
the employees and increases the growth of the organization.

• Importance of Directing
• Initiates Action
• Each and every action in an organization is initiated only through directing. The managers direct the subordinates about what to
do, how to do when to do and also see to it that their instructions are properly followed.
• Ingrates Efforts
• Directing integrates the efforts of all the employees and departments through persuasive leadership and effective communication
towards the accomplishment of organizational goals.
• Motivates Employees
• A manager identifies the potential and abilities of its subordinates and helps them to give their best. He also motivates them by
offering them financial and non-financial incentives to improve their performance.
• Provides Stability
• Stability is significant in the growth of any organization. Effective directing develops co-operation and commitment among the
employees and creates a balance among various departments and groups.
• Coping up with the Changes
• Employees have a tendency to resist any kind of change in the organization. But, adapting the environmental changes is necessary
for the growth of the organization. A manager through motivation, proper communication and leadership can make the employees
understand the nature and contents of change and also the positive aftermaths of the change. This will help in a smooth adaptation
of the changes without any friction between the management and employees.
• Effective Utilization of Resources
• It involves defining the duties and responsibilities of every subordinate clearly thereby avoiding wastages, duplication of efforts,
etc. and utilizing the resources of men, machine, materials, and money in the maximum possible way. It helps in reducing costs
and increasing profits.

Principles of Directing
• Maximum Individual Contribution
• One of the main principles of directing is the contribution of individuals. Management should adopt such directing
policies that motivate the employees to contribute their maximum potential for the attainment of organizational goals.
• Harmony of Objectives
• Sometimes there is a conflict between the organizational objectives and individual objectives. For example, the
organization wants profits to increase and to retain its major share, whereas, the employees may perceive that they
should get a major share as a bonus as they have worked really hard for it.
• Here, directing has an important role to play in establishing harmony and coordination between the objectives of both
the parties.
• Unity of Command
• This principle states that a subordinate should receive instructions from only one superior at a time. If he receives
instructions from more than one superiors at the same time, it will create confusion, conflict, and disorder in the
organization and also he will not be able to prioritize his work.
• Appropriate Direction Technique
• Among the principles of directing, this one states that appropriate direction techniques should be used to supervise,
lead, communicate and motivate the employees based on their needs, capabilities, attitudes and other situational
variables.

• Managerial Communication
• According to this principle, it should be seen that the instructions are clearly conveyed to the employees and it
should be ensured that they have understood the same meaning as was intended to be communicated.
• Use of Informal Organization
• Within every formal organization, there exists an informal group or organization. The manager should identify
those groups and use them to communicate information. There should be a free flow of information among the
seniors and the subordinates as an effective exchange of information are really important for the growth of an
organization.
• Leadership
• Managers should possess a good leadership quality to influence the subordinates and make them work according
to their wish. It is one of the important principles of directing.
• Follow Through
• As per this principle, managers are required to monitor the extent to which the policies, procedures, and
instructions are followed by the subordinates. If there is any problem in implementation, then the suitable
modifications can be made.

Techniques of Directing
• There are various elements involved in direction are as follows-
• Issuing Orders and Instructions to Subordinates
• The first and foremost element of direction is to issue orders and instructions which are considered an essential step in the process of directing
subordinates. An order is a fundamental tool for getting things done. Therefore, the orders and instructions reflect managerial decisions and initiate
action on the part of subordinates. Orders may be general or specific, formal or informal, written or oral.
• Thus an order should serve the following characteristics:
• The order should be clear and complete.
• It should be reasonable and attainable.
• The order must be in tune with the various other objectives of the organization and also for the interests of the subordinates.
• All order should follow the chain of command.
• Face-to-face suggestions are preferable to long distance orders.
• Supervision in an overall manner
• It refers to monitor the progress of routine work of one’s subordinates and guiding them properly. Supervision is an important element of the
directing function of management. Supervision has an important feature which includes face-to-face interaction between the supervisor and his
subordinates.
• It involves direct personal contact with subordinates. Supervision converts plans into action. Thus supervision is considered as an essential step in
the process of directing.
• Motivating Subordinates
• The term motivation can be referred to as that process which excites people to work for the attainment of the desired objective. Among the various
factors of production, it is only the human factor which is dynamic and provides mobility to other physical resources.
• Thus, in an overall sense, it becomes essential so as to motivate the human resources so as to keep the employees dynamic, aware and eager to
perform their duty. Both the monetary and non-monetary incentives are given to the employees for motivation. Thus through motivation, the
employees will perform better. Hence, it will help to achieve the organizational goals and objectives.

• Providing Leadership
• The term Leadership defines as to influence others in such a manner as to guide them to do what the leader wants
them to do. Leadership plays an important role in directing. Only through this leadership skill, a manager can
develop trust and zeal among his subordinates. Therefore it leads to guide and provide overall counselling to
subordinates in the best way for achieving their objectives and also for the organization.
• Communicating with Subordinates
• It refers to an act of transferring facts, ideas, feeling, etc. from one person to another and making him understand
them. A manager has to continuously t guides and also at the same time, monitors his subordinates about what to do,
how to do, and when to do various things.
• Also, it is very essential to know their reactions. To do all this it becomes essential to develop effective
telecommunication facilities. Therefore, the essential feature is to communicate with itself can be called by
developing mutual understanding inculcates a sense of cooperation which builds an environment of coordination in
the organization.
• Maintaining discipline and Rewarding Effective People
• By maintaining an atmosphere of discipline and trust in the organization, the manager can easily give directions. So
that the work done by his employees is in most efficient and effective manner.
• In return, the employees will get a reward in the form of bonus, incentives and other perks so as to get themselves
associated with the organization on a long-term basis. Therefore, this element of direction also plays a very
important role in achieving overall objectives of an organization.

Coordination Concept of Leadership
• Co-ordination is the unification, integration, synchronization of the efforts of group members so as to provide unity of action in the
pursuit of common goals. It is a hidden force which binds all the other functions of management. According to Mooney and Reelay,
“Co-ordination is orderly arrangement of group efforts to provide unity of action in the pursuit of common goals”. According to
Charles Worth, “Co-ordination is the integration of several parts into an orderly hole to achieve the purpose of understanding”.
• Management seeks to achieve co-ordination through its basic functions of planning, organizing, staffing, directing and controlling.
That is why, co-ordination is not a separate function of management because achieving of harmony between individuals efforts
towards achievement of group goals is a key to success of management. Co-ordination is the essence of management and is implicit
and inherent in all functions of management.
• A manager can be compared to an orchestra conductor since both of them have to create rhythm and unity in the activities of group
members. Co-ordination is an integral element or ingredient of all the managerial functions as discussed below:
• Co-ordination through Planning: Planning facilitates co-ordination by integrating the various plans through mutual discussion,
exchange of ideas. e.g. – co-ordination between finance budget and purchases budget.
• Co-ordination through Organizing: Mooney considers co-ordination as the very essence of organizing. In fact when a manager
groups and assigns various activities to subordinates, and when he creates department’s co-ordination uppermost in his mind.
• Co-ordination through Staffing: A manager should bear in mind that the right no. of personnel in various positions with right type
of education and skills are taken which will ensure right men on the right job.
• Co-ordination through Directing: The purpose of giving orders, instructions & guidance to the subordinates is served only when
there is a harmony between superiors & subordinates.
• Co-ordination through Controlling: Manager ensures that there should be co-ordination between actual performance & standard
performance to achieve organizational goals.

Motivation is a huge field of study. There are many theories of motivation. Some of the famous
motivation theories include the following:
• 1. Maslow’s hierarchy of needs
• Abraham Maslow postulated that a person will be motivated when his needs are fulfilled. The need starts
from the lowest level basic needs and keeps moving up as a lower level need is fulfilled. Below is the
hierarchy of needs:
• Physiological: Physical survival necessities such as food, water, and shelter.
• Safety: Protection from threats, deprivation, and other dangers.
• Social (belongingness and love): The need for association, affiliation, friendship, and so on.
• Self-esteem: The need for respect and recognition.
• Self-actualization: The opportunity for personal development, learning, and fun/creative/challenging
work. Self-actualization is the highest level need to which a human being can aspire.

• Mc Gregor Theory X and Theory Y
• In 1960, Douglas McGregor formulated Theory X and Theory Y suggesting two aspects of human
behaviour at work, or in other words, two different views of individuals (employees): one of which is
negative, called as Theory X and the other is positive, so called as Theory Y. According to McGregor, the
perception of managers on the nature of individuals is based on various assumptions.
• Assumptions of Theory X
• An average employee intrinsically does not like work and tries to escape it whenever possible.
• Since the employee does not want to work, he must be persuaded, compelled, or warned with punishment
so as to achieve organizational goals. A close supervision is required on part of managers. The managers
adopt a more dictatorial style.
• Many employees rank job security on top, and they have little or no aspiration/ ambition.
• Employees generally dislike responsibilities.
• Employees resist change.
• An average employee needs formal direction.

• Assumptions of Theory Y
• Employees can perceive their job as relaxing and normal. They exercise their physical and mental efforts in an
inherent manner in their jobs.
• Employees may not require only threat, external control and coercion to work, but they can use self-direction
and self-control if they are dedicated and sincere to achieve the organizational objectives.
• If the job is rewarding and satisfying, then it will result in employees’ loyalty and commitment to organization.
• An average employee can learn to admit and recognize the responsibility. In fact, he can even learn to obtain
responsibility.
• The employees have skills and capabilities. Their logical capabilities should be fully utilized. In other words,
the creativity, resourcefulness and innovative potentiality of the employees can be utilized to solve
organizational problems.
• Thus, we can say that Theory X presents a pessimistic view of employees’ nature and behaviour at work, while
Theory Y presents an optimistic view of the employees’ nature and behaviour at work. If correlate it with
Maslow’s theory, we can say that Theory X is based on the assumption that the employees emphasize on the
physiological needs and the safety needs; while Theory X is based on the assumption that the social needs,
esteem needs and the self-actualization needs dominate the employees.
• McGregor views Theory Y to be more valid and reasonable than Theory X. Thus, he encouraged cordial team
relations, responsible and stimulating jobs, and participation of all in decision-making process.

• Implications of Theory X and Theory Y
• Quite a few organizations use Theory X today. Theory X encourages use of tight control and supervision. It
implies that employees are reluctant to organizational changes. Thus, it does not encourage innovation.
• Many organizations are using Theory Y techniques. Theory Y implies that the managers should create and
encourage a work environment which provides opportunities to employees to take initiative and self-
direction. Employees should be given opportunities to contribute to organizational well-being. Theory Y
encourages decentralization of authority, teamwork and participative decision making in an organization.
Theory Y searches and discovers the ways in which an employee can make significant contributions in an
organization. It harmonizes and matches employees’ needs and aspirations with organizational needs and
aspirations

Importance of Leadership
• Leadership is an important function of management which helps to maximize efficiency and to achieve organizational goals. The following points
justify the importance of leadership in a concern.
• 1. Initiates action
• Leader is a person who starts the work by communicating the policies and plans to the subordinates from where the work actually starts.
• 2. Motivation
• A leader proves to be playing an incentive role in the concern’s working. He motivates the employees with economic and non-economic rewards and
thereby gets the work from the subordinates.
• 3. Providing guidance
• A leader has to not only supervise but also play a guiding role for the subordinates. Guidance here means instructing the subordinates the way they
have to perform their work effectively and efficiently.
• 4. Creating confidence
• Confidence is an important factor which can be achieved through expressing the work efforts to the subordinates, explaining them clearly their role and
giving them guidelines to achieve the goals effectively. It is also important to hear the employees with regards to their complaints and problems.
• 5. Building morale
• Morale denotes willing co-operation of the employees towards their work and getting them into confidence and winning their trust. A leader can be a
morale booster by achieving full co-operation so that they perform with best of their abilities as they work to achieve goals.
• 6. Builds work environment
• Management is getting things done from people. An efficient work environment helps in sound and stable growth. Therefore, human relations should
be kept into mind by a leader. He should have personal contacts with employees and should listen to their problems and solve them. He should treat
employees on humanitarian terms.
• 7. Co-ordination
• Co-ordination can be achieved through reconciling personal interests with organizational goals. This synchronization can be achieved through proper
and effective co-ordination which should be primary motive of a leader.

• 8 Most Common Leadership Styles
• 1. Democratic Leadership
• Democratic leadership is exactly what it sounds like — the leader makes decisions based on the input of each team member. Although he or she
makes the final call, each employee has an equal say on a project’s direction.
• Democratic leadership is one of the most effective leadership styles because it allows lower-level employees to exercise authority they’ll need to
use wisely in future positions they might hold. It also resembles how decisions can be made in company board meetings.
• For example, in a company board meeting, a democratic leader might give the team a few decision-related options. They could then open a
discussion about each option. After a discussion, this leader might take the board’s thoughts and feedback into consideration, or they might open
this decision up to a vote.
• 2. Autocratic Leadership
• Autocratic leadership is the inverse of democratic leadership. In this leadership style, the leader makes decisions without taking input from anyone
who reports to them. Employees are neither considered nor consulted prior to a direction, and are expected to adhere to the decision at a time and
pace stipulated by the leader.
• An example of this could be when a manager changes the hours of work shifts for multiple employees without consulting anyone — especially the
effected employees.
• Frankly, this leadership style stinks. Most organizations today can’t sustain such a hegemonic culture without losing employees. It’s best to keep
leadership more open to the intellect and perspective of the rest of the team.
• 3. Laissez-Faire Leadership
• If you remember your high-school French, you’ll accurately assume that laissez-faire leadership is the least intrusive form of leadership. The
French term “laissez faire” literally translates to “let them do,” and leaders who embrace it afford nearly all authority to their employees.
• In a young startup, for example, you might see a laissez-faire company founder who makes no major office policies around work hours or
deadlines. They might put full trust into their employees while they focus on the overall workings of running the company.
• Although laissez-faire leadership can empower employees by trusting them to work however they’d like, it can limit their development and
overlook critical company growth opportunities. Therefore, it’s important that this leadership style is kept in check.

• 4. Strategic Leadership
• Strategic leaders sit at the intersection between a company’s main operations and its growth opportunities. He or she accepts the burden of
executive interests while ensuring that current working conditions remain stable for everyone else.
• This is a desirable leadership style in many companies because strategic thinking supports multiple types of employees at once. However, leaders
who operate this way can set a dangerous precedent with respect to how many people they can support at once, and what the best direction for the
company really is if everyone is getting their way at all times.
• 5. Transformational Leadership
• Transformational leadership is always “transforming” and improving upon the company’s conventions. Employees might have a basic set of tasks
and goals that they complete every week or month, but the leader is constantly pushing them outside of their comfort zone.
• When starting a job with this type of leader, all employees might get a list of goals to reach, as well as deadlines for reaching them. While the
goals might seem simple at first, this manager might pick up the pace of deadlines or give you more and more challenging goals as you grow with
the company.
• This is a highly encouraged form of leadership among growth-minded companies because it motivates employees to see what they’re capable of.
But transformational leaders can risk losing sight of everyone’s individual learning curves if direct reports don’t receive the right coaching to
guide them through new responsibilities.
• 6. Transactional Leadership
• Transactional leaders are fairly common today. These managers reward their employees for precisely the work they do. A marketing team that
receives a scheduled bonus for helping generate a certain number of leads by the end of the quarter is a common example of transactional
leadership.
• When starting a job with a transactional boss, you might receive an incentive plan that motivates you to quickly master your regular job duties.
For example, if you work in marketing, you might receive a bonus for sending 10 marketing emails. On the other hand, a transformational leader
might only offer you a bonus if your work results in a large amount of newsletter subscriptions.
• Transactional leadership helps establish roles and responsibilities for each employee, but it can also encourage bare-minimum work if employees
know how much their effort is worth all the time. This leadership style can use incentive programs to motivate employees, but they should be
consistent with the company’s goals and used in addition to unscheduled gestures of appreciation.

• 7. Coach-Style Leadership
• Similarly to a sports team’s coach, this leader focuses on identifying and nurturing the individual strengths of each member on his or
her team. They also focus on strategies that will enable their team work better together. This style offers strong similarities to
strategic and democratic leadership, but puts more emphasis on the growth and success of individual employees.
• Rather than forcing all employees to focus on similar skills and goals, this leader might build a team where each employee has an
expertise or skill set in something different. In the long run, this leader focuses on creating strong teams that can communicate well
and embrace each other’s unique skill sets in order to get work done.
• A manager with this leadership style might help employees improve on their strengths by giving them new tasks to try, offering them
guidance, or meeting to discuss constructive feedback. They might also encourage one or more team members to expand on their
strengths by learning new skills from other teammates.
• 8. Bureaucratic Leadership
• Bureaucratic leaders go by the books. This style of leadership might listen and consider the input of employees — unlike autocratic
leadership — but the leader tends to reject an employee’s input if it conflicts with company policy or past practices.
• You may run into a bureaucratic leader at a larger, older, or traditional company. At these companies, when a colleague or employee
proposes a strong strategy that seems new or non-traditional, bureaucratic leaders may reject it. Their resistance might be because the
company has already been successful with current processes and trying something new could waste time or resources if it doesn’t
work.
• Employees under this leadership style might not feel as controlled as they would under autocratic leadership, but there is still a lack
of freedom in how much people are able to do in their roles. This can quickly shut down innovation, and is definitely not encouraged
for companies who are chasing ambitious goals and quick growth

Controlling: Concept
• Controlling is one of the important functions of a manager. In order to seek planned results from the subordinates, a manager
needs to exercise effective control over the activities of the subordinates. In other words, the meaning of controlling function
can be defined as ensuring that activities in an organization are performed as per the plans. Controlling also ensures that an
organization’s resources are being used effectively & efficiently for the achievement of predetermined goals.
• Controlling is a goal-oriented function.
• It is a primary function of every manager.
• Controlling the function of a manager is a pervasive function.
• How Controlling Function Helps Managers?
• Managers at all levels of management Top, Middle & Lower – need to perform controlling function to keep control over
activities in their areas. Therefore, controlling is very much important in an educational institution, military, hospital, & a
club as in any business organization.
• Therefore, controlling function should not be misunderstood as the last function of management. It is a function that brings
back the management cycle back to the planning function. Thus, the controlling function act as a tool that helps in finding out
that how actual performance deviates from standards and also finds the cause of deviations & attempts which are necessary to
take corrective actions based upon the same.
• This process helps in the formulation of future plans in light of the problems that were identified &, thus, helps in better
planning in the future periods. So from the meaning of controlling we understand it not only completes the management
process but also improves planning in the next cycle.

• Importance of Controlling
• After the meaning of control, let us see its importance. Control is an indispensable function of management without which the controlling function in an
organization cannot be accomplished and the best of plans which can be executed can go away. A good control system helps an organization in the following
ways:
• Accomplishing Organizational Goals
• The controlling function is an accomplishment of measures that further makes progress towards the organizational goals & brings to light the deviations, &
indicates corrective action. Therefore it helps in guiding the organizational goals which can be achieved by performing a controlling function.
• Judging Accuracy of Standards
• A good control system enables management to verify whether the standards set are accurate & objective. The efficient control system also helps in keeping
careful and progress check on the changes which help in taking the major place in the organization & in the environment and also helps to review & revise the
standards in light of such changes.
• Making Efficient use of Resources
• Another important function of controlling is that in this, each activity is performed in such manner so an in accordance with predetermined standards & norms so
as to ensure that the resources are used in the most effective & efficient manner for the further availability of resources.
• Improving Employee Motivation
• Another important function is that controlling help in accommodating a good control system which ensures that each employee knows well in advance what they
expect & what are the standards of performance on the basis of which they will be appraised. Therefore it helps in motivating and increasing their potential so to
make them & helps them to give better performance.
• Ensuring Order & Discipline
• Controlling creates an atmosphere of order & discipline in the organization which helps to minimize dishonest behavior on the part of the employees. It keeps a
close check on the activities of employees and the company can be able to track and find out the dishonest employees by using computer monitoring as a part of
their control system.
• Facilitating Coordination in Action
• The last important function of controlling is that each department & employee is governed by such pre-determined standards and goals which are well versed and
coordinated with one another. This ensures that overall organizational objectives are accomplished in an overall manner.

• Principles of Controlling
• The followings are the principles of controlling:
• 1.Objectives
• Controls must positively contribute to the achievement of group goals by promptly and accurately detecting
deviations from plans with a view to making corrective action possible.
• 2.Interdependence of Plans and Controls
• The principles of interdependence states that more the plans are clear, complete and integrated, and the more that
controls are designed to reflect such plans, the more effectively controls will serve the need of managers.
• Control Responsibility
• According to this principle, the primary responsibility for the exercise of controls rests in the manager charged with
the performance of the particular plans involved.
• Principal of Controls being in Conformity to Organization Pattern
• Controls must be designed so as to reflect the character and structure of plans. If the organization is clear and
responsibility for work done is well defined, control becomes more effective and it is simple to isolated persons
responsible for deviations.
• Efficiency of Controls
• Control techniques and approaches are effectively detect deviations from plans and make possible corrective actions
with the minimum of unsought consequences.

• Future-oriented Controls
• It stresses that controls should be forward looking. Effective controls should be aimed at preventing present
and future deviations from plans.
• Individuality of Controls
• Control should be designed to meet the individual requirements of managers in the organization. Although
some control techniques and information can be utilized in the same form by various types of enterprises and
managers as a general rule controls should be tailored to meet the specific requirements.
• Strategic Point Control
• Effective and efficient control requires that attention to be given to those factors which are strategic to the
appraisal of performance.
• The Exception Principle
• The exception principles whereby exceptions to the standards are notified, should be adopted. Note must be
taken of the varying nature of exceptions, as “small” exceptions in certain areas may be of greater significance
than ‘larger’ exceptions elsewhere.
• Principal of Review
• The control system should be reviewed periodically. The review exercise may take some or all the points
emphasised in the above stated principles. Besides, flexibility and economical nature or controls, should not be
lost sight of while reviewing controls.

• Process of Controlling
• Control process involves the following steps as shown in the figure:
• Establishing standards
• Standards are the plans or the targets which have to be achieved in the course of business function. They can also be called as the
criterions for judging the performance. Standards generally are classified into two-
• Measurable or tangible: Those standards which can be measured and expressed are called as measurable standards. They can be
in form of cost, output, expenditure, time, profit, etc.
• Non-measurable or intangible: There are standards which cannot be measured monetarily. For example- performance of a
manager, deviation of workers, their attitudes towards a concern. These are called as intangible standards.
• Controlling becomes easy through establishment of these standards because controlling is exercised on the basis of these
standards.
• Measurement of actual performance
• The second major step in controlling is to measure the performance. Finding out deviations becomes easy through measuring the
actual performance. Performance levels are sometimes easy to measure and sometimes difficult. Measurement of tangible
standards is easy as it can be expressed in units, cost, money terms, etc. Quantitative measurement becomes difficult when
performance of manager has to be measured. Performance of a manager cannot be measured in quantities. It can be measured only
by-
• Attitude of the workers,
• Their morale to work,
• The development in the attitudes regarding the physical environment, and
• Their communication with the superiors.
• It is also sometimes done through various reports like weekly, monthly, quarterly, yearly reports.

• Comparison of actual performance with the standard
• Comparison of actual performance with the planned targets is very important. Deviation can be defined as the gap between actual
performance and the planned targets. The manager has to find out two things here- extent of deviation and cause of deviation.
Extent of deviation means that the manager has to find out whether the deviation is positive or negative or whether the actual
performance is in conformity with the planned performance. The managers have to exercise control by exception. He has to find
out those deviations which are critical and important for business. Minor deviations have to be ignored. Major deviations like
replacement of machinery, appointment of workers, quality of raw material, rate of profits, etc. should be looked upon
consciously. Therefore it is said, “ If a manager controls everything, he ends up controlling nothing.” For example, if stationery
charges increase by a minor 5 to 10%, it can be called as a minor deviation. On the other hand, if monthly production decreases
continuously, it is called as major deviation.
• Once the deviation is identified, a manager has to think about various cause which has led to deviation. The causes can be-
• Erroneous planning,
• Co-ordination loosens,
• Implementation of plans is defective, and
• Supervision and communication is ineffective, etc.
• Taking corrective actions
• Once the causes and extent of deviations are known, the manager has to detect those errors and take remedial measures for it.
There are two alternatives here:
• Taking corrective measures for deviations which have occurred; and
• After taking the corrective measures, if the actual performance is not in conformity with plans, the manager can revise the
targets. It is here the controlling process comes to an end. Follow up is an important step because it is only through taking
corrective measures, a manager can exercise controlling

• Techniques of Controlling
• 10 Types of Control Techniques
• The ten types of traditional techniques of controlling are discussed below:-
• Direct Supervision and Observation
• ‘Direct Supervision and Observation’ is the oldest technique of controlling. The supervisor himself observes the employees and their work. This brings him
in direct contact with the workers. So, many problems are solved during supervision. The supervisor gets first-hand information, and he has better
understanding with the workers. This technique is most suitable for a small-sized business.
• Financial Statements
• All business organizations prepare Profit and Loss Account. It gives a summary of the income and expenses for a specified period. They also prepare
Balance Sheet, which shows the financial position of the organization at the end of the specified period. Financial statements are used to control the
organization. The figures of the current year can be compared with the previous year’s figures. Ratio analysis can be used to find out and analyses the
financial statements. Ratio analysis helps to understand the profitability, liquidity and solvency position of the business.
• Budgetary Control
• A budget is a planning and controlling device. Budgetary control is a technique of managerial control through budgets. It is the essence of financial control.
Budgetary control is done for all aspects of a business such as income, expenditure, production, capital and revenue. Budgetary control is done by the
budget committee.
• Break Even Analysis
• Break Even Analysis or Break Even Point is the point of no profit, no loss. For e.g. When an organization sells 50K cars it will break even. It means that,
any sale below this point will cause losses and any sale above this point will earn profits. The Break-even analysis acts as a control device. It helps to find
out the company’s performance. So the company can take collective action to improve its performance in the future. Break-even analysis is a simple
control tool.
• Return on Investment (ROI)
• Investment consists of fixed assets and working capital used in business. Profit on the investment is a reward for risk taking. If the ROI is high then the
financial performance of a business is good and vice-versa.
• ROI is a tool to improve financial performance. It helps the business to compare its present performance with that of previous years’ performance. It helps
to conduct inter-firm comparisons. It also shows the areas where corrective actions are needed.

• Management by Objectives (MBO)
• MBO facilitates planning and control. It must fulfill following requirements :-
• Objectives for individuals are jointly fixed by the superior and the subordinate.
• Periodic evaluation and regular feedback to evaluate individual performance.
• Achievement of objectives brings rewards to individuals.
• Management Audit
• Management Audit is an evaluation of the management as a whole. It critically examines the full management process, i.e. planning,
organizing, directing, and controlling. It finds out the efficiency of the management. To check the efficiency of the management, the
company’s plans, objectives, policies, procedures, personnel relations and systems of control are examined very carefully. Management
auditing is conducted by a team of experts. They collect data from past records, members of management, clients and employees. The data is
analyzed and conclusions are drawn about managerial performance and efficiency.
• Management Information System (MIS)
• In order to control the organization properly the management needs accurate information. They need information about the internal working of
the organization and also about the external environment. Information is collected continuously to identify problems and find out solutions.
MIS collects data, processes it and provides it to the managers. MIS may be manual or computerized. With MIS, managers can delegate
authority to subordinates without losing control.
• PERT and CPM Techniques
• Programme Evaluation and Review Technique (PERT) and Critical Path Method (CPM) techniques were developed in USA in the late 50’s.
Any programme consists of various activities and sub-activities. Successful completion of any activity depends upon doing the work in a given
sequence and in a given time.
• Self-Control
• Self-Control means self-directed control. A person is given freedom to set his own targets, evaluate his own performance and take corrective
measures as and when required. Self-control is especially required for top level managers because they do not like external control.
• The subordinates must be encouraged to use self-control because it is not good for the superior to control each and everything. However, self-
control does not mean no control by the superiors. The superiors must control the important activities of the subordinates

• Relation between Planning and Controlling
• Planning and controlling are inter-related to each other. Planning sets the goals for the organization and controlling ensures their
accomplishment. Planning decides the control process and controlling provides sound basis for planning. In reality planning and
controlling are both dependent on each other. In the words of M.C. Niles, “Control is an aspect and projection of planning, where as
planning sets the course, control observes deviations from the course, and initiates action to return to the chosen course or to an
appropriately changed one.”
• The relationship between planning and control can be explained as follows:
• Planning Originates Controlling
• In planning the objectives or targets are set in order to achieve these targets control process is needed. So planning precedes control.
• Controlling Sustains Planning
• Controlling directs the course of planning. Controlling spots the areas where planning is required.
• Controlling Provides Information for Planning
• In controlling the actual performance is compared to the standards set and records the deviations, if any. The information collected for
exercising control is used for planning also.
• Planning and Controlling are Interrelated
• Planning is the first function of management. The other functions like organizing, staffing, directing etc. are organized for
implementing plans. Control records the actual performance and compares it with standards set. In case the performance is less than
that of standards set then deviations are ascertained. Proper corrective measures are taken to improve the performance in future.
Planning is the first function and control is the last one. Both are dependent upon each other.
• Planning and Control are Forward Looking
• Planning and control are concerned with the future activities of the business. Planning is always for future and control is also forward
looking. No one can control the past, it is the future which can be controlled. Planning and controlling are concerned with the
achievement of business goals. Their combined efforts are to reach maximum output with minimum of cost. Both systematic planning
and organized controls are essential to achieve the organizational goals.

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