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This ppt file includes the Concept of Management, its importance, its evolution and the function of organizing in a very systematic and easy to understand manner with relevant examples specifically for B.COM, BBA students.

This ppt file includes the Concept of Management, its importance, its evolution and the function of organizing in a very systematic and easy to understand manner with relevant examples specifically for B.COM, BBA students.


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  1. 1. INTRODUCTION  Concept and Characteristics of Management  Managerial Functions (Functions of Management)  Evolution of Management Thought: Classical Theory, Neo Classical Theory and Modern Management Theory SAYANTAN GM
  2. 2. CONCEPT OF MANAGEMENT Mr. A is a student Mr. A regularly attends his classes Mr. A teaches in his tuition classes Mr. A is also learning guitar Mr. A loves photography (hobby) Mr. A is also taking care of his family Mr. A is very busy But, he handles everything pretty well He fulfills all the responsibilities taken by him MANAGEMENT SAYANTAN GM
  3. 3.  Process of managing or controlling  Art of getting things done through and with other people with the aim of achieving goals effectively and efficiently  Process of planning, organizing, staffing, directing, coordinating and controlling  Main aim is to achieve the set goals  “Management is the art of getting things done through and with people in formally organized groups.” -- Harold Koontz SAYANTAN GM
  4. 4. NATURE/CHARACTERISTICS OF MANAGEMENT 1. Goal Oriented Process 2. Group Activity 3. Universal/Pervasive 4. Dynamic function 5. Art as well as Science 6. Profession 7. Social Process 8. Factor of Production SAYANTAN GM
  5. 5. MANAGERIAL FUNCTIONS 1. PLANNING:  Deciding in advance what to do, when to do, how to do and by whom a particular task will be done  ‘Thinking before doing’ 2. ORGANIZING:  Process of identifying and grouping of activities, assigning duties, delegating authority, establishing relationship among the members etc. 3. STAFFING:  Selecting the right man for the right job  Recruitment and selection of human resources SAYANTAN GM
  6. 6. 4. DIRECTING:  The actual work begins in this step  It sets in motion the action of the people  ‘Doing function’  deals directly with influencing, guiding, supervising, and motivating staff for the achievement of organizational goals. 5. CONTROLLING:  Process of ensuring that the actual activities conform to planned activities  In case of any deviations, corrective measures shall be taken SAYANTAN GM
  8. 8. CLASSICAL THEORY  Focuses on management of organization  Oldest school of thought  represents traditionally accepted views about organization  Classical theorists concentrated on organization structure for the achievement of organizational goals. SAYANTAN GM
  9. 9. ADMINISTRATIVE MANAGEMENT  Father of Modern Management Theory  HENRY FAYOL  He wrote a book on General and Industrial Management in 1916. This book is considered as one of the best foundational work in classical management theory. SAYANTAN GM
  10. 10. CATEGORIES OF CONTRIBUTION BY HENRY FAYOL: A. Classification of Business Activities: a. Technical Activities  Production b. Commercial Activities  Buying, Selling & Exchange c. Financial Activities  Search for and optimum use of capital d. Security Activities  Protection of property and persons e. Accounting Activities  including statistics f. Managerial  most important according to Fayol SAYANTAN GM
  11. 11. B. FUNCTIONS OF MANAGEMENT : a. Planning  deciding in advance and prepare for the future b. Organizing  useful for functioning, raw materials, tools, capital, personnel etc. c. Coordinating  binding together; unifying all activities d. Commanding  directing, leading the personnel in better ways e. Controlling  ensures everything goes as per plans SAYANTAN GM
  12. 12. C. PRINCIPLES OF MANAGEMENT:  Management Principle is a fundamental truth which establishes cause-effect relationship.  Fayol suggested 14 principles of management: 1. DIVISION OF WORK:  leads to Specialization  dividing the total task in order to lighten the total burden  avoids waste of time and efforts EXAMPLE: Manufacturing a Shirt  One group will be responsible for making the collars  Other is engaged in stitching buttons  Another is engaged in dyeing  Yet another will be engaged in packing SAYANTAN GM
  13. 13. 2. AUTHORITY AND RESPONSIBILITY:  Authority is the right to give orders ; power to take decisions.  Responsibility means obligation to carry out an assigned job.  According to Fayol, there should be a balance between authority and responsibility. EXAMPLE: A person is given the responsibility to produce 100 units in one week but he is not given the authority to buy raw materials. Thus, he is not able to fulfill his responsibility. SAYANTAN GM
  14. 14. 3. DISCIPLINE:  Obedience, respect of authority and observance of the established rules.  following rules and regulations, developing commitment in the employees towards organization as well as each other. EXAMPLE: Workers have agreed to work an hour extra without additional wages to take out the company from losses and the management has promised to increase their wages as and when the goal is accomplished. Both the parties need to fulfill their commitments. SAYANTAN GM
  15. 15. 4. UNITY OF COMMAND:  One person should receive orders from only one superior  Receiving orders from more than one superior will confuse the person and he will not be able as to whose orders need to be executed.  Avoids confusion and reduces conflicts. EXAMPLE: An employee receiving order from production department to go slow in production to maintain quality standards and the same employee receives order from sales department to fasten the production to meet the pending orders. He will get damn confused. SAYANTAN GM
  16. 16. 5. UNITY OF DIRECTION:  One Unit/Head and One Plan  Efforts of all the members and employees of organization must be directed towards one direction  achievement of common goal.  leads to coordination EXAMPLE: An organization is producing different lines of product viz. cosmetics, medicines etc. Each division must plan its target and every employee of that division must put his efforts towards the achievement of plan of their division under the direction of one head only. SAYANTAN GM
  17. 17. 6. SUBORDINATION OF INDIVIDUAL INTEREST TO GENERAL INTEREST:  Objective of Organization > Objective of the individuals  The objectives of individuals and the objectives of the organization must be in the same direction.  The goal of the organization must not be sacrificed because individuals will be able to achieve their objectives only when the organization prospers. EXAMPLE: If objective of individual is to earn more remuneration and objective of the organization is to cut down the expenses due to financial crisis, the objective of the individual must be sacrificed. SAYANTAN GM
  18. 18. 7. FAIR REMUNERATION TO WORKERS:  Employees must be paid fairly or adequately according to the services rendered.  Employees must be satisfied with the remuneration that he is paid. EXAMPLE: If an organization has earned more profit in a particular year, employees should also be given a part of the increased profits as bonus. Thus, this will encourage and motivate the workers. SAYANTAN GM
  19. 19. 8. CENTRALISATION & DECENTRALISATION:  Centralization refers to the concentration of authority or power in the hands of few at the top level.  Decentralization means evenly distribution of power at every level of management.  Fayol states that an organization must not be completely centralized or completely decentralized.  There must be a balance between the two. EXAMPLE: The major decisions and activities of setting up organizational goals can be centralized but the activities of routine work can be decentralized. SAYANTAN GM
  20. 20. 9. SCALAR CHAIN:  It refers to the chain of superiors ranging from the ultimate authority (highest rank) to the lowest ranks.  According to Fayol, “Organizations should have a chain of authority and communication that runs from top to bottom and should be followed by managers and the subordinates.”  Every information must pass through every key of this chain, no skipping of any one key should be allowed. SAYANTAN GM
  21. 21. SAYANTAN GM
  22. 22.  EXAMPLE: If D wants to contact G, he has to move through C  B  A  E  F  G.  Fayol permits a short cut in the chain which is called Gang Plank.  Gang Plank permits direct communication between the employees working at the same level of authority without following the scalar chain. SAYANTAN GM
  23. 23. 10. ORDER:  Right man at the right job and right material in the right place.  Fayol insists that there must be a fixed place to every material and thing used in the organization. EXAMPLE: If a worker is in need of a tool, he must know in which box or which place it will be found. If no fixed place is given, then worker will waste his time and energy in search of tools or supervisor. SAYANTAN GM
  24. 24. 11. EQUITY:  kind, fair and just treatment to employees  kindliness and justice in the behaviour of managers towards workers.  Employees will put their maximum efforts only when they are treated with kindness and justice. EXAMPLE: The roles for granting medical leave to an employee should be same irrespective of their position, grade or gender. SAYANTAN GM
  25. 25. 12. STABILITY IN TENURE OF PERSONNEL:  According to Fayol, “Employee Turnover should be minimized to maintain organizational efficiency.”  Frequent turnover of employees is bad for organization .  Employees should have stability of tenure and should be given sufficient time to show their performance. EXAMPLE: An employee was appointed and while performing his duty, he committed a mistake. He was fired from his job due to the small mistake done by him. He should have been given another chance to showcase his performance. SAYANTAN GM
  26. 26. 13. INITIATIVE:  taking the first step with self motivation.  According to Fayol, “Workers should be encouraged to develop and carry out their plans for improvement.”  It implies the power of thinking out a plan and ensuring its successful implementation. EXAMPLE: A group of subordinates were given freedom to take an important decision regarding planning for increasing production. One subordinate took the initiative to plan regarding installation of more machineries so that more workers can use the machineries and produce more. SAYANTAN GM
  27. 27. 14. ESPIRIT DE CORPS:  Espirit De Corps mean union in strength.  According to Fayol, “ Management should promote a team spirit of unity and harmony among employees.”  The feeling of “I” should be replaced with “WE”. EXAMPLE: If the production manager assigned a target of manufacturing 100 units to a group of 10 members each getting a share of 10 units, principle of espirit de corps says that each member should not concentrate only on producing the 10 units of their share. If any two employees fall sick, the other 8 members must also produce the share of the 2 employees. SAYANTAN GM
  28. 28. SCIENTIFIC MANAGEMENT:  Father of Scientific Management  FREDERICK WINSLOW TAYLOR  He investigated the effective use of human resources in the industrial organization.  He tried to find out the reasons for slow pace of work and suggested methods for improving it.  He believed that management is a science based on well defined principles.  According to F.W. Taylor, “Scientific Management means knowing exactly what you want men to do and seeing that they do it in the best and cheapest way.” SAYANTAN GM
  29. 29. A. PRINCIPLES OF SCIENTIFIC MANAGEMENT: 1. SCIENCE, NOT RULE OF THUMB:  Replacement of rule of thumb with scientific methods  Taylor insists that each job should be performed based on scientific enquiry and not on estimation, intuition, experience etc.  He focused on thinking before doing. EXAMPLE: The standard time required to perform a particular job, in case of rule of thumb, is determined on the basis of past experience. But, according to Taylor, time study should be used and then the target should be fixed. SAYANTAN GM
  30. 30. 2. COOPERATION, NOT INDIVIDUALISM: Every employee should work in harmony i.e. with mutual understanding.  There should be complete cooperation between the employees and management and also among the employees.  Competition should be replaced by Cooperation.  Both management and employees should realize that they both need each other. EXAMPLE: While assigning job to workers, if management asks them about their interest and then work is assigned accordingly, then they will try their best to achieve it. SAYANTAN GM
  31. 31. 3. DEVELOPMENT OF WORKERS:  Organizational efficiency depends upon the efficiency of workers.  All the goals of the organization can be achieved only with the efforts of its employees.  Taylor insisted due care should be taken while selecting the employees and after selecting, they must be given job according to their qualification.  He suggested on the job training for workers. SAYANTAN GM
  32. 32. 4. MAXIMUM OUTPUT:  Scientific Management focuses on increase in production and productivity.  Taylor suggested to change the old methods so that rate of production can be increased.  Maximum output will bring higher profits.  Result of the earlier three principles. SAYANTAN GM
  33. 33. B. ELEMENTS OF SCIENTIFIC MANAGEMENT: 1. FUNCTIONAL FOREMANSHIP:  Taylor suggested the concept of functional foremanship to ensure specialization.  Functional Foremanship is the extension of the principle of division of work.  He suggested separation of planning aspect from actual doing of work  He suggested that there should be 8 functional experts. SAYANTAN GM
  34. 34. SAYANTAN GM
  35. 35. A. PLANNING DEPARTMENT: a. Route Clerk  lays down the sequence of operations b. Instruction Card Clerk:  gives general instructions and lays down the exact method of doing the work. c. Time and Cost Clerk:  fixes the time for starting and completing the job and records the time taken by the workers. d. Disciplinarian:  ensures that job is done in an orderly and systematic way. SAYANTAN GM
  36. 36. B. OPERATIONAL DEPARTMENT: a. Gang Boss  arranges and assembles all the machines, tools, equipments etc. b. Speed Boss  assures timely completion of job c. Repairs Boss  ensures regular cleaning, servicing and repairing of machines. d. Inspector  keeps a check on the quality control of the output Worker’s efficiency improves when divided into departments. SAYANTAN GM
  37. 37. 2. STANDARDISATION AND SIMPLIFICATION OF WORK:  Standardization means setting standards for every business activity.  maximum output should be produced keeping in mind the quality of the products.  It also includes the size, type, weights, measures and quality of product.  Simplification emphasizes on elimination of unnecessary diversity of products, size and types. 3. SCIENTIFIC SELECTION, PLACEMENT & TRAINING:  Workers should be selected by considering their education, experience and attitude towards work.  Placement should be such that only right man is selected for the right job. SAYANTAN GM
  38. 38. 4. WORK STUDY:  Related to analyzing the work to be performed by eliminating unnecessary operations and finding out the quicker way of doing it. a. Method Study  find out one best way of doing the job. Main aim  minimize the cost, maximize the quality and satisfaction of the customers. b. Motion Study  find out the total movements of workers while performing a task. Main aim  minimize the unproductive movements and increase the productive movements. c. Time Study  find out the standard time taken for performing a task. d. Fatigue Study  find out how many intervals are required for rest within the working hours of the workers. SAYANTAN GM
  39. 39. 5. INTRODUCING COSTING SYSTEM:  To present costs for cost reduction and cost control. 6. DIFFERENTIAL PIECE WAGE SYSTEM:  Paying different rate of wages to different workers according to their efficiency and inefficiency.  Extra wages paid to efficient employees will motivate the efficient employees to remain efficient and the inefficient employees to work more efficiently  Payment according to the number of units produced will maximize the production. SAYANTAN GM
  40. 40. 7. MENTAL REVOLUTION:  Involves a change in the attitude of workers and management towards each other from competition to cooperation.  Mutual understanding and cooperation is an essential aspect as advocated by Taylor. FAYOL  focused on human aspect TAYLOR  cause effect relationship SAYANTAN GM
  41. 41.  BUREAUCRATIC MODEL:  Developed by Max Webber, a German Sociologist  Chief exponent of this model  Max Webber  In Webber’s views, bureaucratic organization is the most efficient form of organization.  He names it as rational-legal.  It is rational because specific objectives of the organization are laid down and organization is designed to achieve them.  It is legal because authority stems from a clearly defined set of rules, procedures and roles. SAYANTAN GM
  42. 42.  Webber’s bureaucratic model included the following: a. Clear separation between superior and subordinate. b. Division of labour based upon specialization. c. Divorce between personal and official matters. d. System of rules, regulations and procedures. e. Hierarchy in positions based on legal authority and power. SAYANTAN GM
  43. 43. NEO CLASSICAL THEORY:  Focuses on human factor.  The neo classical writers tried to remove the deficiencies of the classical school and suggested recognition of the need of good human relations in the organization.  Organization is a social system and human factor is the most important element within it. SAYANTAN GM
  44. 44. HUMAN RELATIONS MOVEMENT:  Father of Human Relations Movement  Elton Mayo  Human Relations Management deals with factors which encourage higher performance on the part of workers.  Improvement of working conditions, improvement of social relations of workers also help in increasing productivity.  Human Relations Movement was started by Elton Mayo with a set of experiments known as the Hawthorne experiments. SAYANTAN GM
  45. 45. HAWTHORNE EXPERIMENTS  The Hawthorne plant of Western Electric Company , manufacturing telephone system bell.  It employed about 30,000 employees at the time of experiments.  Although company provided benefits like pension, sickness benefits etc., there was a great deal of dissatisfaction among the workers and productivity was not up to the mark.  A team led by Elton Mayo investigated the real causes behind this phenomenon.  The various experiments were carried out in 4 phases from 1924-32. SAYANTAN GM
  46. 46.  PART 1: Illumination Experiments:  conducted to find out how varying levels of amount of light at the workplace affected productivity.  Low Light or High light  same productivity.  Finding: Physical environment at the work place do not have any impact in influencing workers productivity.  PART 2: Relay Assembly Test Room Experiments:  designed to determine the effect of changes in various job conditions on group productivity.  Changes : Incentive system, increase in rest period, providing refreshments during breaks, reduced working hours  productivity increased  All the above changes were eliminated but it was observed that the productivity didn’t decrease.  Finding: Workers’ positive attitudes and sense of work team influence workers efficiency and productivity. SAYANTAN GM
  47. 47.  PART 3: MASS INTERVIEWING PROGRAMME:  Conducted to study the human behaviour in the company towards the company, supervision, insurance plans, promotion and wages.  Finding: Workers’ satisfaction derived from the fulfillment of their social, economic and psychological needs contributes to their morale and efficiency.  PART 4: BANK WIRING OBSERVATION ROOM EXPERIMENTS:  Conducted to analyze the functioning of small group and its impact on individual behaviour.  The workers gave restricted output because of fear of unemployment (producing more will lead to firing of the inefficient employees), fear of raising standards (producing more will lead the management to give higher targets)  Finding: Attachment to informal organization is stronger SAYANTAN GM
  48. 48.  CHARACTERISTICS OF HUMAN RELATIONS MOVEMENT: 1. Organization is a social system. 2. System is composed of many interacting groups. 3. Many informal groups emerge at workplace. 4. They have great impact on the behaviour of the members. 5. Monetary gains alone cannot motivate workers. 6. Workers’ participation in decision making boosts morale and productivity. SAYANTAN GM
  49. 49. BEHAVIOURAL SCIENCES MOVEMENT:  Further refinement of Human Relations Movement.  The important aspects of behavioral approach: a. Motivation of employees for improving productivity b. Organization as a social system. c. Leadership, study of managerial behaviour. d. Communication for better understanding in the organization. e. Employee development, upgrading of employees and managerial skills. SAYANTAN GM
  50. 50. MODERN MANAGEMENT THEORY 1. SYSTEMS APPROACH:  Chester Bernard was the first to see management in the context of a system.  System: A system is a set of interdependent parts forming an organized unit or entity.  It is a set of interrelated and independent parts arranged in a manner that produces a unified whole.  Organization is made up of interdependent factors including individuals, groups, attitudes, motives, formal structure, interactions, goals, status and authority.  Managers coordinate activities in all the parts of the organization and they ensure that all the departments work together and achieve their goal. SAYANTAN GM
  51. 51.  Types of Systems: a. Closed System:  independent organization, do not depend on environment  isolated from the environment, does not have any connection with outsiders. But, self independent system is not possible in today’s world. b. Open System:  influenced and influences the environment, close connection with the environment. Generally, organization is an open system. FOR EXAMPLE: The system approach recognizes that, no matter how efficient the production department might be, the marketing department better anticipate changes in customer tastes and work with the product development department in creating products customers wants, or the organization’s performance will suffer. SAYANTAN GM
  52. 52.  In addition, the systems approach implies that decisions and actions in one organizational area will affect other areas. For Example: If the purchasing department doesn’t acquire the right quantity and quality of inputs, the production department won’t be able to do his job. SAYANTAN GM
  53. 53. SAYANTAN GM
  54. 54. CONTRIBUTIONS OF SYSTEMS APPROACH: 1. This approach examines interrelationships and interdependency among various parts of the organization. 2. It acknowledges the environmental influences on the organization. 3. It focused on the dynamic and adaptive nature of the organization. SAYANTAN GM
  55. 55. 2. CONTINGENCY APPROACH:  Developed by J.W. Lorsch and P.R. Lawrence in 1970.  Also called the Situational Approach/ Multi Variate Approach Theory which says that organizations require different ways of managing.  Management is not based on simplistic principles to be applied in all situations.  Different and changing situations require managers to use different approaches and techniques. SAYANTAN GM
  56. 56. ELEMENTS/ FEATURES OF CONTINGENCY APPROACH: 1. Management is entirely situational. 2. There is no one best type of organization which suits to all situations. 3. Various techniques and control systems should be designed to fit a particular situation. 4. Adaptability of change constitutes one of the biggest challenge facing the modern management. SAYANTAN GM
  57. 57. MANAGEMENT BY OBJECTIVES:  Also known as Performance Result and Individual Development Evolution (PRIDE)  Setting goals for all managerial activities  goals set for every manager at every level of management  The idea of MBO was contributed by Donaldson Brown and Alfred Sloan in 1920s and Edward Hagenin in 1930s. SAYANTAN GM
  58. 58.  Peter Drucker, father of MBO technique, coined this term in 1954.  According to Peter Drucker, “MBO is regarded as a system for improving performance of both the managers and enterprise as a whole by setting objectives at the corporate, departmental and individual managers level.”  MBO is a technique by which executives can improve organizational performance and effectiveness. SAYANTAN GM
  59. 59.  ASSUMPTIONS OF MBO:  Existence of mutual understanding between superior and subordinates.  Employees can perform better when they clearly know what is expected of them.  It assumes that employees are interested in formulation of plans, want to know the results of their performance & want to be fairly rewarded for their performance. SAYANTAN GM
  60. 60. PROCESS OF MBO: 1. Setting Objectives at the top  analyze the purpose or mission of the organization.  long term goals are undertaken by the top level & short term goals are mainly undertaken by the lower level. 2. Clarifying Organizational Roles  clear cut assignment of tasks and fixation of responsibilities. 3. Setting Subordinates Objectives explain the objectives of the company to the subordinates and set their objectives accordingly 4. Recycling Objectives  objectives of every department should be reconciled with every other department SAYANTAN GM
  61. 61. MICHAEL PORTER’S FIVE FORCE ANALYSIS:  Understanding the competitiveness of the business environment  forces which affect the profitability of a business.  Porter recognized that organizations keep a watch on their rivals but he encouraged them to look beyond the actions of their competitors and examine what other factors could impact the business environment. SAYANTAN GM
  62. 62. FIVE FORCES THAT MAKE UP THE COMPETITIVE ENVIRONMENT: 1. Competitive Rivalry  number and strength of competitors. If rivalry is intense, companies can attract customers with aggressive price cuts, marketing campaigns etc.  If competition is minimal, companies will be having tremendous strengths. 2. Supplier Power  determined by how easy it is for the suppliers to increase their prices.  the more the number of suppliers, the easier it will be for the companies to switch to cheaper alternatives.  the fewer the suppliers, the stronger their position to charge more. SAYANTAN GM
  63. 63. 3. Buyer Power  how many buyers are there and how big are their orders  the lesser the customers, the more their power  the more the customers, the more the power of the company 4. Threat of Substitution  likelihood of customers finding a different way of doing what the companies do ; substitution will weaken the company’s position. 5. Threat of New Entry  well developed strategies to protect the key technologies of the company from rivals or new entrants SAYANTAN GM
  64. 64. SAYANTAN GM
  65. 65. ORGANIZING  Concept of Organization and Organizing: process, principles and nature  Organization Structure and its Elements  Span of Management and its Factors  Departmentation and its Methods  Delegation and Decentralization of Authority: its elements and importance  Types of Authority
  66. 66. CONCEPT OF ORGANIZATION & ORGANIZING: Organization:  An organization exists where two or more people agree to get together and coordinate their activities so as to achieve a common goal.  Structural framework of duties and responsibilities required of personnel in performing various functions with a view to achieve business goals through organization. Organizing:  Process of identifying and grouping of activities, assigning duties, delegating authority, establishing relationship among the members and allocating resources for the purpose of accomplishing objectives. SAYANTAN GM
  67. 67. PROCESS OF ORGANIZING: 1. Identification and Division of Work:  The activities which are to be performed in achieving organizational objectives should be identified.  The total work so identified should be divided into smaller units.  leads to specialization. 2. Grouping of Activities and Departmentalization:  The closely related and similar activities are grouped together for departments, division or sections.  The coordination among activities can only be achieved through proper grouping. SAYANTAN GM
  68. 68. 3. Assignment of Duties:  Each individual working in different departments is assigned a duty matching to his skill and qualifications.  Employees are assigned duties by giving them a document called job description. 4. Establishing Reporting Relationship:  To perform the job, every individual needs some authority.  The authority is delegated to different individuals in accordance with the assignment of responsibilities. SAYANTAN GM
  69. 69. PRINCIPLES OF ORGANIZING: 1. Principle of Specialization 2. Principle of Functional Definition 3. Principle of Span of Control 4. Principle of Scalar Chain 5. Principle of Unity of Command SAYANTAN GM
  70. 70. NATURE OF ORGANIZATION: 1. Organization connotes a group of persons. 2. Organizing is a basic function of management. 3. Organizing is a continuous process. 4. Organizing is related to certain objectives. 5. Organization involves a network of authority and responsibility relationships 6. Organization connotes a structure of relationships. SAYANTAN GM
  71. 71. ORGANIZATION STRUCTURE:  Established pattern of relationships among components or parts of the organization.  It prescribes the relationships among various positions and activities in business.  It shows the authority and responsibility relationships between the various positions in the organization by showing who reports to whom. SAYANTAN GM
  72. 72. ELEMENTS OF ORGANIZATION STRUCTURE: 1. Division of Labour 2. Departmentalization 3. Span of Control/management 4. Delegation of Authority 5. Centralization & Decentralization SAYANTAN GM
  73. 73. SPAN OF MANAGEMENT  Span means the space between two supports of a structure.  It should neither be too large nor too small.  If it is too large, the structure may collapse and if it is too small, it will enhance its cost.  In management, span refers to the number of subordinates a manager or supervisor can supervise, manage or control effectively and efficiently.  Span of management is also known as Span of Control, Span of Supervision & Span of Authority. SAYANTAN GM
  74. 74.  Span of Management is an important element of a sound organization structure.  If the no. of subordinates placed under one manager is too large, it will be difficult to collectively control them and the desired results cannot be achieved.  If the no. of subordinates is too small, the time, energy and abilities of the supervisor are not utilized fully.  Span of management refers to the optimum number of subordinates that a manager or supervisor can manage or control effectively. SAYANTAN GM
  75. 75.  The principle of span of management is based on the theory of relationships propounded by V.A. Graicunos, a French Management Consultant.  Graicunos identified three types of subordinate superior relationship: 1. Direct Single Relationship 2. Direct Group Relationship 3. Cross Relationship  He has given the following formula to ascertain the no. of subordinate superior relationships: No. of Relationships = n [2n-1 + n-1] SAYANTAN GM
  76. 76. FACTORS THAT DETERMINE OPTIMUM SPAN OF MANAGEMENT: 1. Capacity and ability of the executive. 2. Competence and training of subordinates. 3. Nature of Work. 4. Time available for supervision. 5. Degree of Decentralization and Extent of Delegation. 6. Effectiveness of Communication System. 7. Quality of Planning. 8. Control Mechanism. 9. Degree of Physical Dispersion. 10. Assistance of Experts. SAYANTAN GM
  77. 77. DEPARTMENTATION:  Organization involves dividing and grouping of activities to be done in an enterprise.  Division of Work implies identification of activities which are to be done for the achievement of organizational goals.  Grouping of activities into departments is necessary part of the process of setting up organization.  departmentation  A department is a work group combined together for performing certain functions of similar nature.  The process of division of the enterprise into different parts is broadly called departmentalization. SAYANTAN GM
  78. 78. METHODS OF DEPARTMENTATION 1. Functional Departmentation:  Grouping of activities of an enterprise on the basis of functions viz. production, sale, purchase, finance etc. ORGANIZATION PRODUCTION DEPARTMENT PURCHASE DEPARTMENT FINANCE DEPARTMENT MARKETING DEPARTMENT SAYANTAN GM
  79. 79. 2. Productwise Departmentation:  grouping of activities on the basis of products or product lines. 3. Territorial or Geographical Departmentation:  Activities relating to a particular area or zone may be grouped together under one zonal manager. ORGANIZATION PRODUCT DIVISION A PRODUCT DIVISION B PRODUCT DIVISION C ORGANIZATION MANAGER NORTH ZONE MANAGER SOUTH ZONE MANAGER EAST ZONE MANAGER WEST ZONE SAYANTAN GM
  80. 80. 4. Customerwise Departmentation:  Based on the customers it serve viz. large and small customers, industrial and ultimate buyers etc.  Done in enterprises engaged in providing specialized services to different classes of customers. 5. Process or Equipmentwise Departmentation:  Adopted where production is carried through different processes.  Also adopted where work is carried on machines which are common. 6. Combined or Composite Method of Departmentation:  Combining two or more methods of departmentation to make best use of all of them. SAYANTAN GM
  81. 81. DELEGATION OF AUTHORITY  Managers are assigned a lot of work in every organization.  He divides the work among different individuals working under him  shares his responsibilities.  Along with sharing responsibility, authority is also required to be shared to fulfill the responsibility.  That’s delegation of authority  passing responsibility and authority to subordinates and creating accountability.  Delegation can be defined as: “A process of entrusting responsibility and authority to the subordinates and creating accountability on those employees who are entrusted responsibility and authority.” SAYANTAN GM
  82. 82. ELEMENTS / PROCESS OF DELEGATION: 1. RESPONSIBILITY:  The process of delegation begins when manager passes on some of his responsibilities to his subordinates.  It means the work assigned to an individual.  Includes all the physical and mental activities to be performed by the employees at a particular job position. SHARING OF RESPONSIBILITY SHARING OF AUTHORITY CREATION OF ACCOUNTABILITY SAYANTAN GM
  83. 83.  Features of Responsibility: 1. It is the obligation of a subordinate to properly perform the assigned duty. 2. It arises from superior subordinate relationship because subordinate is bound to perform the duty assigned by his superior. 3. It flows upward because subordinate will always be responsible to his superior. SAYANTAN GM
  84. 84. 2. AUTHORITY:  It means power to take decisions.  Employees need to have some authority to carry on the responsibilities.  Managers should pass some authority when they are passing responsibility.  Managers shall pass the authority keeping in mind the responsibility passed.  Features of Authority: 1. Refers to the right to take decisions. 2. Determines superior subordinate relationship. 3. Arises from scalar chain which links various job positions. 4. Flows downward. 5. Authority=Responsibility SAYANTAN GM
  85. 85. 3. ACCOUNTABILITY:  Accountability is created to make sure that the employees or subordinates perform their responsibilities.  It means sub ordinates will be answerable for the non-completion of the task.  Even after delegating responsibility and authority, managers will be accountable for non-completion of task.  Features of Accountability: 1. It cannot be delegated or passed. 2. It flows upward  subordinate will be accountable to his superior. SAYANTAN GM
  86. 86.  Relationship between Authority, Responsibility & Accountability:  Authority is delegated, Responsibility is assumed and Accountability is imposed.  Responsibility is derived from authority and accountability is derived from responsibility. SAYANTAN GM
  87. 87. IMPORTANCE OF DELEGATION 1. Effective Management 2. Employees’ Development 3. Motivation of Employees 4. Facilitates Organizational Growth 5. Basis of Management Hierarchy 6. Better Coordination 7. Reduces the workload of managers 8. Basis of superior subordinate relationship SAYANTAN GM
  88. 88. DECENTRALISATION:  Decentralization means evenly distribution of power at every level of management  Every employee working at different levels gets some share in the authority.  Decentralization is a policy matter and managers plan in advance whether to go for centralized or decentralized policy.  “Everything that goes to increase the importance of the subordinates’ role is decentralization; everything which goes to reduce it is centralization.” -Henry Fayol SAYANTAN GM
  89. 89. IMPORTANCE OF DECENTRALIZATION: 1. Develop initiative among subordinates 2. Develop managerial talent for future 3. Quick decision making 4. Relief to top level management 5. Facilitates growth 6. Better control 7. Promotes initiative and creativity 8. Improved team work SAYANTAN GM
  90. 90.  Relation between Delegation & Decentralization:  Decentralization is the extension of delegation.  In delegation, authority is multiplied by two (shared by manager and subordinate only), while in decentralization, authority is multiplied by many (shared by many people at all levels).  Systematic delegation at every level will result in evenly distribution of authority and responsibility at every level and result in decentralization.  Delegation is necessary in every organization but decentralization is optional. SAYANTAN GM
  91. 91. BASIS DELEGATION DECENTRALIZATION Scope Limited as it is shared by only two parties Wide as different levels are involved Frequency Routine Function One time decision Nature Compulsory Optional Responsibility Every manager Top level manager only Purpose Reduce the burden of managers Increase the role of subordinates Grant of authority Immediate superior Top level Freedom of action Less More SAYANTAN GM
  92. 92. TYPES OF AUTHORITY: 1. LINE AUTHORITY:  It represents a direct vertical relationship through which authority flows from top to lower levels.  Line authority refers to those positions and elements of the organization which have responsibility, authority and accountability for accomplishment of primary objectives.  It implies a vertical structure where one person delegates authority to his subordinate and who in turn delegates to his subordinates and so on.  It is thus the authority to direct the work of others and to require them to confirm to decisions, plans, policies, systems and goals. SAYANTAN GM
  93. 93.  Three features of Line Authority given by Louis A. Allen: 1. Acts as a Chain of Command  highest to lowest positions  scalar chain 2. Carrier of Accountability  answerable and responsible for the non completion of tasks 3. As a Channel of Communication  every subordinate reports to his superior SAYANTAN GM
  94. 94. SAYANTAN GM
  95. 95. 2. STAFF AUTHORITY:  Staff officers are functional experts.  They provide advice to the line authorities in the performance of duties  render advisory services to the departmental heads.  Staff authority refers to those elements which have responsibility and authority for providing advice and services to line in the attainment of objectives.  They cannot issue orders to line authority. They can provide only solutions to organizational problems in their areas. SAYANTAN GM
  96. 96. Features of Staff Authority: 1. Its nature is advisory. 2. They are appointed to provide special counsel and assistance to the line manager who is unable to carry out the demands of his position. 3. There is an indirect relationship between the staff authority and primary objectives of the organization. 4. They do not have any authority to command the line authority. SAYANTAN GM
  97. 97. 3. FUNCTIONAL AUTHORITY:  It occupies a midway position between line and staff authority.  It refers to the authority of staff department members to control the activities of other departments that are related to specific staff responsibilities.  This remains confined to functional guidance of different departments. SAYANTAN GM
  98. 98. SAYANTAN GM