fundamentals of management - management principles

8/3/2019 Fundamentals of Management - Management Principles

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Fundamentals of ManagementFundamentals of Management

Management Principles

Prof. Rushen Chahal

1Prof. Rushen Chahal


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What is Organizing?What is Organizing?

Can be defined as process of determiningCan be defined as process of determiningthe activities to be performed, arrangingthe activities to be performed, arranging

these activities to administrative units, asthese activities to administrative units, aswell as assigning managerial authority andwell as assigning managerial authority andresponsibilities to people employed in theresponsibilities to people employed in theorganizationorganization



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Importance of organizingImportance of organizing

Focus on and facilitate theFocus on and facilitate the attaining ofattaining ofobjectivesobjectives

Arrangement ofArrangement ofpositions and jobspositions and jobswithin thewithin the hierarchyhierarchy

DefineDefine responsibilities and line ofresponsibilities and line ofauthority ofauthority of all levelsall levels

CreatingCreating relationships that willrelationships that willminimizeminimize friction..friction..



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Basic Elements of OrganizationBasic Elements of Organization

Centralization and decentralizationCentralization and decentralization

Delegation of AuthorityDelegation of Authority

Span of ControlSpan of ControlDivision of ServiceDivision of Service

DepartmentalizationDepartmentalization



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Elements of Formal organizationElements of Formal organization

1.1. CentralizationCentralization: Concentration of decision: Concentration of decisionmaking and actions at high levelmaking and actions at high level

managementmanagement

2.2. DecentralizationDecentralization: Consistent delegation of: Consistent delegation ofauthority to the lower levels where theauthority to the lower levels where thework is performedwork is performed



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Advantages of CentralizationAdvantages of Centralization

Provide Power and prestige for managerProvide Power and prestige for manager

Promote uniformity of policies, practicesPromote uniformity of policies, practices

and decisionsand decisionsMinimal extensive controlling proceduresMinimal extensive controlling procedures

and practicesand practices

Minimize duplication of functionMinimize duplication of function



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Disadvantages of CentralizationDisadvantages of Centralization

Neglected functions for mid. Level, andNeglected functions for mid. Level, and

less motivated beside personnel.less motivated beside personnel.

Nursing supervisor functions as a linkNursing supervisor functions as a link

officer between nursing director and firstofficer between nursing director and first--line management.line management.



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Advantages ofDecentralizationAdvantages ofDecentralization

Raise morale and promote interpersonalRaise morale and promote interpersonalrelationshipsrelationships

Relieve from the daily administrationRelieve from the daily administrationBring decisionBring decision--making close to actionmaking close to action

Develop SecondDevelop Second--line managersline managers

Promote employees enthusiasm andPromote employees enthusiasm andcoordinationcoordination

Facilitate actions by lowerFacilitate actions by lower--level managerslevel managers



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Disadvantages ofDisadvantages of

DecentralizationDecentralization

TopTop--level administration may feel it wouldlevel administration may feel it woulddecrease their statusdecrease their status

Managers may not permit full andManagers may not permit full andmaximum utilization of highly qualifiedmaximum utilization of highly qualifiedpersonnelpersonnel

Increased costs. It requires moreIncreased costs. It requires moremanagers and large staffmanagers and large staff

It may lead to overlapping and duplicationIt may lead to overlapping and duplicationof effortof effort



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Delegation ofAuthorityDelegation ofAuthority

Process off assigning work from a topProcess off assigning work from a toporganizational level to a lower one or fromorganizational level to a lower one or from

superior to subordinate and giving thatsuperior to subordinate and giving thatperson the authority to accomplish themperson the authority to accomplish them

Adownward flow of authority fromAdownward flow of authority fromHIGHER level in the organization toHIGHER level in the organization toLOWER levelLOWER level



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The Delegation ProcessThe Delegation Process

1.1. Allocation of dutiesAllocation of duties

2.2. Delegation of authorityDelegation of authority

3.3. Assignment of responsibilityAssignment of responsibility4.4. Creation of accountabilityCreation of accountability



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The Delegation ProcessThe Delegation Process ContdContd::

AuthorityAuthority: It is a right to take a final: It is a right to take a finaldecision and command others. It moves indecision and command others. It moves ina downward directiona downward direction

ResponsibilityResponsibility: It is an obligation to: It is an obligation toperform a duty. It cannot be delegated.perform a duty. It cannot be delegated.

AccountabilityAccountability: subordinates must be held: subordinates must be heldanswerable to their carried out dutiesanswerable to their carried out duties



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Types ofAuthorityTypes ofAuthority

FormalFormal: Delegated within an organization: Delegated within an organizationfor e.g. superiorfor e.g. superior--subordinate authoritysubordinate authority

FunctionalFunctional: Authority based on specialized: Authority based on specializedknowledge like staff authority or theknowledge like staff authority or theauthority delegated to assist lineauthority delegated to assist linemanagersmanagers

PersonalPersonal: Authority based on seniority and: Authority based on seniority andrelationshirelationshi



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Factors determining degree ofFactors determining degree of

authority delegationauthority delegation

Organizations size...Organizations size...

Importance of duty or decision...Importance of duty or decision...

Task complexity...Task complexity...Organizational culture...Organizational culture...

Qualities of subordinatesQualities of subordinates



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Main principles ofDelegationMain principles ofDelegation

Responsibility cannot be delegatedResponsibility cannot be delegated

Authority and responsibility should beAuthority and responsibility should be

equal in proportionequal in proportion



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Barriers to successfulBarriers to successful

delegationdelegation

Lack of superiors ability to direct theLack of superiors ability to direct the

subordinatessubordinates

Lack of confidence in subordinateLack of confidence in subordinate

Absence of controlAbsence of control



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Major Causes of managersMajor Causes of managers

refusal to delegaterefusal to delegate

Tendency to do things personallyTendency to do things personally

Desire to dominate the knowledge,Desire to dominate the knowledge,information, and/or skillsinformation, and/or skills

Unwillingness to accept risks of wrongsUnwillingness to accept risks of wrongs



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Reasons for why subordinatesReasons for why subordinates

avoiding delegationavoiding delegation

DecisionDecision--making is a hard mental work,making is a hard mental work,and people seek ways of avoiding itand people seek ways of avoiding it

Fear of criticism for mistakesFear of criticism for mistakes

Lack off necessary information andLack off necessary information andresources to do a good jobresources to do a good job

Overload of workOverload of work

Positive incentives may be inadequatePositive incentives may be inadequate



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Types of organizationalTypes of organizational

relationshipsrelationships

The Line relationThe Line relation: presents levels of: presents levels ofhierarchy, Superiorhierarchy, Superior--subordinatesubordinaterelationships, and provides the frameworkrelationships, and provides the frameworkfor the organizationfor the organization

The Staff relationThe Staff relation: has no command,: has no command,personnel have only the right to advise,personnel have only the right to advise,assist, support those in the line authorityassist, support those in the line authorityin the performance of their dutiesin the performance of their duties



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Span of ControlSpan of Control

Number of subordinates that can beNumber of subordinates that can be

adequately supervised by one supervisoradequately supervised by one supervisor

Span of control consists of twoSpan of control consists of two

dimensionsdimensionsNarrow Span of controlNarrow Span of control

Wide span of controlWide span of control



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Narrow span of controlNarrow span of control

The Manager supervises a small numberThe Manager supervises a small numberof people or subordinatesof people or subordinates



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Advantages ofNarrow Span ofAdvantages ofNarrow Span of

controlcontrol

Close supervisionClose supervision

Close controlClose control

Fast communication betweenFast communication betweensubordinates and superiors.subordinates and superiors.



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Disadvantages ofNarrow spanDisadvantages ofNarrow span

of controlof control

Superiors tend to get too involved inSuperiors tend to get too involved in

subordinates worksubordinates work

Many levels of managementMany levels of management

High costs due to many levelsHigh costs due to many levels



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Wide span of controlWide span of control

The Manager supervises a large number ofThe Manager supervises a large number ofpeoplepeople



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Advantages ofWide span ofAdvantages ofWide span of

controlcontrol

Superiors are forced to delegateSuperiors are forced to delegate

Clear policies must be madeClear policies must be made

Subordinates must be carefully selectedSubordinates must be carefully selected



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Disadvantages of wide span ofDisadvantages of wide span of

controlcontrol

Tendency of overload superiors to takeTendency of overload superiors to take

most or all decisionsmost or all decisions

Danger of superiors loss of controlDanger of superiors loss of control

Requires exceptional quality of managersRequires exceptional quality of managers



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Factors determining span ofFactors determining span of

controlcontrol

The competence of both the supervisorThe competence of both the supervisorand the subordinateand the subordinate

The degree of interaction between the

The degree of interaction between theunits or personnel being supervisedunits or personnel being supervised

Other duties of the top managerOther duties of the top manager

LowerLower--level managers have a wider rangelevel managers have a wider rangeof span than topof span than top--level managerlevel manager

The similarity or dissimilarity of activitiesThe similarity or dissimilarity of activitiesbeing supervisedbeing supervised



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Factors determining span ofFactors determining span of

controlcontrol contdcontd::

The similarity or dissimilarity of activitiesThe similarity or dissimilarity of activitiesbeing supervisedbeing supervised

The incidence of new problems in the Unit

The incidence of new problems in the Unit

Availability of plans of work, policies andAvailability of plans of work, policies andstandardized proceduresstandardized procedures

The degree of physical distribution

The degree of physical distribution

The nature of work (stability, complexity,The nature of work (stability, complexity,etc)etc)



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Division ofServiceDivision ofService

Dividing large activities to be distributedDividing large activities to be distributedamong several people.among several people.



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Advantages ofDivision ofAdvantages ofDivision of

serviceservice

Allow an employee to master a task with aAllow an employee to master a task with amaximum skillmaximum skill

Dividing work among individuals accordingDividing work among individuals accordingto their specialization leads to accuracyto their specialization leads to accuracy

Accomplishment of tasks within assignedAccomplishment of tasks within assignedperiod or deadlineperiod or deadline



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Disadvantages ofDivision ofDisadvantages ofDivision of

serviceservice

Creates many different, narrow jobs,Creates many different, narrow jobs,which need effective managerialwhich need effective managerialcoordinationcoordination

Human problems have been created fromHuman problems have been created fromdivision of service, fatigue and stress, anddivision of service, fatigue and stress, andwhich lead to less quantity and quality ofwhich lead to less quantity and quality ofwork, increased absenteeism and higherwork, increased absenteeism and higherturnoverturnover



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DepartmentationDepartmentation

Departmentation can be described asDepartmentation can be described asgrouping of functions and tasksgrouping of functions and tasks

Consisted of main methods such as:Consisted of main methods such as:

FunctionalFunctional

GeographicalGeographical

Product or ServiceProduct or Service

CustomerCustomer



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Functional DepartmentationFunctional Departmentation

Based on the functions or the operationsBased on the functions or the operationscarried within the organizationcarried within the organization

For e.g. production, selling, marketing,For e.g. production, selling, marketing,distributing and financingdistributing and financing

Type of organization or an enterpriseType of organization or an enterpriseaffects the formation of differentaffects the formation of differentdepartmentsdepartments



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Geographical DepartmentationGeographical Departmentation

Division of activities among branches orDivision of activities among branches orsubsidiaries that are away from the mainsubsidiaries that are away from the mainoffice or the headquartersoffice or the headquarters

Amanager is put inAmanager is put in--charge of the areacharge of the areaand made responsible for all the divisionsand made responsible for all the divisions

Results in lower cost of operating, butResults in lower cost of operating, butharder to control by the parent companyharder to control by the parent companyor the head officeor the head office 34Prof. Rushen Chahal


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Product or service departmentationProduct or service departmentation

Departmentation by product or serviceDepartmentation by product or servicee.g. Production unite.g. Production unit

Awide delegation of authority takes placeAwide delegation of authority takes placefrom top management to a division or afrom top management to a division or aplantplant

May have coMay have co--ordination problem andordination problem andduplication of serviceduplication of service



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CustomerDepartmentationCustomerDepartmentation

Usually found in sales or marketingUsually found in sales or marketingdepartmentsdepartments

Involves division of customer base inInvolves division of customer base interms of types of customers like individualterms of types of customers like individualbuyers, industrial buyers or wholesalersbuyers, industrial buyers or wholesalers

For e.g. banking services, credit cardFor e.g. banking services, credit cardservices, auto companiesservices, auto companies



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Process or equipmentProcess or equipment

departmentationdepartmentation

Aims at achieving economies or effectiveAims at achieving economies or effectiveutilization of the companys resources byutilization of the companys resources bygrouping activities around a processgrouping activities around a process

Similar types of labor and equipments areSimilar types of labor and equipments arebrought togetherbrought together

For e.g. Jewellery makers, shoe makersFor e.g. Jewellery makers, shoe makersand oil companiesand oil companies


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