organisation management module 1

7/31/2019 Organisation Management Module 1

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Definition of Management Management :

On expanding : Manage men tactfullyManage Men technology

Manage men as team

Manage competencies

Manage objectives (MBO)

Manage men and things (resources physical,inanimate)

MANAGE f ( RISKS, REWARDS)

Competencies = f (SKATE)

(Men/Women- no discrimination)

Norway will have by 2007, 40% women in all fields, in govt orgs, in

corporates and also in NGOs. This is now made as a law.


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When it comes to manage people, it is said that

people are enigmatic.

Thus, Management is enigmatic.

Harold Koontz described the present state of

management theory as a jungle.

There can be lots of ambiguity and there will be

no recipe book


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MANAGEMENT IS A FUNCTION OF :

M = f(RESULTS, FEEDBACK,

RESULTS)

MANAGING THE INTERNAL AND EXTERNAL

ENVIRONS IN THE BIO-ECOSYSTEMS,THROUGH VARIOUS EFFECTIVE AND

EFFICIENT PROCESSES, WITH THE

OBJECTIVE OF ACHIEVING LAID DOWN

EXPECTED RESULTS.


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All is PEOPLE RESOURCE

MANAGEMENT Why?Get into discussion mode:

Who Created all that is around us:

Except the sun, the moon, air, ocean, sky, stars,and the first human being and the firstanimals/insects

Thereafter the development of clones, artificialinsemination, going on the moon, technologicaladvancements and moving towards civilization isall done my people.


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Definition of Management

By Griffin:

A set of management functions directed at the

efficient and effective utilization of resources in

the pursuit of organization goals.


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Definition.contd.

By Koontz and Weihrich:

Management is the process of designing and

maintaining an environment in which individuals

working together in groups, efficiently

accomplish selected aims.


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Peter F. Drucker-Father of

Modern Management Management is an organ, organs can be

described and defined only through their

functions


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The difference between Management Principles

and Management Functions: What should I do (principles) to ensure that I do

my job (functions) with effectiveness andefficiency.

Principles are strategies / processes whichenable the individual to do their functions betterto achieve laid down goals and objectives

GOALS qualitative achievements

Objectives could have a mix of quantitativeand qualitative


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Terry & Franklin

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.


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110

L E A R N I N G O U T L I N EFollow this Learning Outline as you read and study this chapter.

Who Are Managers?

Explain how managers differ from non-managerialemployees.

Describe how to classify managers in organizations.

What Is Management?

Define management.

Explain why efficiency and effectiveness are important to

management.


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111

L E A R N I N G O U T L I N E (contd)Follow this Learning Outline as you read and study this chapter.

What Do Managers Do?

Describe the four functions of management.

Explain Mintzbergs managerial roles.

Describe Katzs three essential managerial skills and howthe importance of these skills changes depending onmanagerial level.

Discuss the changes that are impacting managers jobs.

Explain why customer service and innovation areimportant to the managers job.


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112

L E A R N I N G O U T L I N E (contd)Follow this Learning Outline as you read and study this chapter.

What Is An Organization?

Describe the characteristics of an organization.

Explain how the concept of an organization is changing.

Why Study Management?

Explain the universality of management concept.

Discuss why an understanding of management isimportant.

Describe the rewards and challenges of being a manager.


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113

Who Are Managers?

Manager

Someone who coordinates and oversees the work of

other people so that organizational goals can be

accomplished.

someone who works with and through other people by

coordinating their work activities in order toaccomplish organizational goals

changing nature of organizations and work has

blurred the clear lines of distinction between

managers and non-managerial employees


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114

Classifying Managers

First-line Managers

Individuals who manage the work of non-managerial

employees.

Middle Managers

Individuals who manage the work of first-linemanagers.

Top Managers

Individuals who are responsible for making

organization-wide decisions and establishing plansand goals that affect the entire organization.


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115

Exhibit 11 Managerial Levels


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116

What Is Management?

Managerial Concerns

Efficiency

Doing things right

Getting the most output

for the least inputs

Effectiveness Doing the right things

Attaining organizational

goals


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117

Exhibit 12 Effectiveness and Efficiency in Management


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118

What Do Managers Do?

Functional Approach

Planning

Defining goals, establishing strategies to achieve goals,

developing plans to integrate and coordinate activities.

Organizing

Arranging and structuring work to accomplish organizationalgoals.

Leading

Working with and through people to accomplish goals.

Controlling Monitoring, comparing, and correcting work.


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119

Exhibit 13 Management Functions


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120

What Do Managers Do? (contd)

Management Roles

Approach (Mintzberg)

Interpersonal roles

Figurehead, leader, liaison

Informational roles

Monitor, disseminator,

spokesperson

Decisional roles

Disturbance handler, resource

allocator, negotiator


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Mintzberg's Management Roles21

Mintzberg's Ten Management Roles


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Figurehead: All social, inspiration, legal and ceremonial obligations. In this light, themanager is seen as a symbol of status and authority.

Leader: Duties are at the heart of the manager-subordinate relationship and includestructuring and motivating subordinates, overseeing their progress, promoting and

encouraging their development, and balancing effectiveness.

Liaison: Describes the information and communication obligations of a manager.One must network and engage in information exchange to gain access to knowledgebases.


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Monitor: Duties include assessing internal operations, a department's success andthe problems and opportunities which may arise. All the information gained in thiscapacity must be stored and maintained.

Disseminator: Highlights factual or value based external views into the organization

and to subordinates. This requires both filtering and delegation skills.

Spokesman: Serves in a PR capacity by informing and lobbying others to keep keystakeholders updated about the operations of the organization


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Entrepreneur: Roles encourage managers to create improvement projects and work to delegate,empower and supervise teams in the development process.

Disturbance handler: A generalist role that takes charge when an organisation is unexpectedlyupset or transformed and requires calming and support.

Resource Allocator: Describes the responsibility of allocating and overseeing financial, materialand personnel resources.

Negotiator: Is a specific task which is integral for the spokesman, figurehead and resourceallocator roles.


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125

What Managers Actually Do (Mintzberg)

Interaction

with others

with the organization

with the external context

of the organization

Reflection

thoughtful thinking

Action

practical doing


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126

What Do Managers Do? (contd)

Skills Approach

Technical skills

Knowledge and proficiency in a specific field

Human skills

The ability to work well with other people

Conceptual skills

The ability to think and conceptualize about abstract and

complex situations concerning the organization


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127

Exhibit 15 Skills Needed at Different Management Levels


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128

Exhibit 16 Conceptual Skills

Using information to solve business problems

Identifying of opportunities for innovation

Recognizing problem areas and implementing

solutions

Selecting critical information from masses of

data

Understanding of business uses of technology

Understanding of organizations business model

Source:Based on American Management Association Survey of Managerial Skills and

Competencies, March/April 2000, found on AMA Web site (www.ama.org), October 30, 2002.


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129

Exhibit 16 Communication Skills

Ability to transform ideas into words and actions

Credibility among colleagues, peers, and

subordinates

Listening and asking questions

Presentation skills; spoken format

Presentation skills; written and/or graphic

formats




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130

Exhibit 16 Effectiveness Skills

Contributing to corporate mission/departmental

objectives

Customer focus

Multitasking: working at multiple tasks in parallel

Negotiating skills

Project management

Reviewing operations and implementing

improvements




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131

Exhibit 16 Effectiveness Skills (contd)



Setting and maintaining performance standards

internally and externally

Setting priorities for attention and activity

Time management


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132

Exhibit 16 Interpersonal Skills (contd)



Coaching and mentoring skills

Diversity skills: working with diverse people and

cultures

Networking within the organization

Networking outside the organization

Working in teams; cooperation and commitment


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133

Exhibit 17 Management Skills and Management Function Matrix


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134

How The Managers Job Is Changing

The Increasing Importance of Customers

Customers: the reason that organizations exist

Managing customer relationships is the responsibility of all

managers and employees.

Consistent high quality customer service is essential for

survival. Innovation

Doing things differently, exploring new territory, and

taking risks

Managers should encourage employees to be aware of andact on opportunities for innovation.


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135

Exhibit 18Changes Impactingthe Managers Job


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136

What Is An Organization?

An Organization Defined

A deliberate arrangement of people to accomplish

some specific purpose (that individuals independently

could not accomplish alone).

Common Characteristics of Organizations

Have a distinct purpose (goal)

Composed of people

Have a deliberate structure


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137

Exhibit 19 Characteristics of Organizations


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138

Exhibit 110 The Changing Organization


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139

Why Study Management?

The Value of Studying Management

The universality of management

Good management is needed in all organizations.

The reality of work

Employees either manage or are managed.

Rewards and challenges of being a manager

Management offers challenging, exciting and creative

opportunities for meaningful and fulfilling work.

Successful managers receive significant monetary rewardsfor their efforts.


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140

Exhibit 111 Universal Need for Management


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141

Exhibit 112 Rewards and Challenges of Being A Manager


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142

Terms to Know

manager

first-line managers

middle managers

top managers

management

efficiency

effectiveness

planning

organizing leading

controlling

management roles

interpersonal roles

informational roles

decisional roles

technical skills

human skills

conceptual skills

organization

universality ofmanagement


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PRINCIPLESAND

PRACTICES OF MANAGEMENT


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WHY MANAGEMENT

- Effective utilisation of resources

- Development of resources

- Incorporate innovations

-Integrating varied interest groups

- Stability in the society


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HISTORY OF MANAGEMENTTHOUGHT

No attention paid before 20th century

Lowly profession compared to bankers and lawyers

Treatment of management as an art or scienceconfused people

Belief that managers are born and not made


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EVOLUTION OF

MANAGEMENT THOUGHTS

Growing competition and complexity of

managing large business organisations gave

a push to the development of management

concepts and principles.


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EVOLUTION OFMANAGEMENT THOUGHTS

Competion gave rise to factors like

Technology innovations

Obsolescence

Increase in capital investment

Freedom at national and international markets


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EVOLUTION OF MANAGEMENTTHOUGHTS - contd..

Complexity came because of

Increase in the size of business organisations

High degree of division of labour and specialisation

Pressure of various conflicting groups

Socially oriented business controls by government

EVOLUTION OF MANAGEMENT THOUGHTS


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EVOLUTION OF MANAGEMENT THOUGHTS -

contd..

All these have demanded the efficiency inmanagement process which cannot come by trialand error methods but by developing andapplying sound management concepts and

principles

Economists, sociologist, psychologists,anthropologists, mathematicians andmanagement practitionersstudiedorganisations and its processes


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EMERGENCE OF MANAGEMENTTHOUGHTS

This all led to the emergence of a variety of

orientations or approaches in management.

One approach or thought was an extention

/improvement over the previous one.


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DEFINITIONS PRODUCTION ORIENTED

DECISION ORIENTED

PEOPLE ORIENTED

FUNCTION ORIENTED


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PRODUCTION ORIENTEDDEFINITION

TAYLOR: Management is the

art of knowing what you want todo and then seeing that it is done

in the best and cheapest way


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PRODUCTION ORIENTEDDEFINITION

Features

Aim/Goal

Results

Efficiency

Shortcomings: It does not specify how theseobjectives can be achieved.


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DECISION ORIENTEDDEFINITION

Stanley Vance: Management is simply the

process of decision-making and control over theaction of human-beings for the expressed

purpose of attaining pre-determined goals.


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DECISION ORIENTEDDEFINITION

It implies:

Main activity of a manager is decision making

Control

Goals

Shortcoming: The process or activities where decision-

making is involved is not provided


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PEOPLE ORIENTED DEFINITION L.Apply:Management is accomplishment of

results through the efforts of other people

Koontz: It is the art of getting things donethrough and with people in formally organised

groups


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PEOPLE ORIENTED DEFINITION Features

Existence of objectives

Working with and through people

Shortcomings: It does not specify the functions oractivities involved in the process of getting things

done by or with the cooperation of other people


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FUNCTION ORIENTEDDEFINITION

Mac Farland:Management is a process by

which managers create, direct, maintain andoperate purposive organisations through

systematic, coordinated, cooperative human

efforts


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FUNCTION ORIENTEDDEFINITION

Features

Existence of objectives

Organised activities

Relation among resources

Working with and through people

Decision making


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Management is the process ofdesigning and maintaining anenvironment in which individuals,working together in groups,accomplish their aims effectively andefficiently.


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This definition implies thefollowing:

A process

Universal application

Applicable to all managerial levels

Common aim- creating profits

Effectiveness and efficiency


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ninth edition

STEPHEN P. ROBBINS

PowerPoint Presentation by Charlie Cook

The University of West Alabama

MARY COULTER

The Evolution of Management Theory


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Scientific Management Theory

Evolution of Modern Management

Began in the industrial revolution in the late 19thcentury as:

Managers of organizations began seeking ways

to better satisfy customer needs.Large-scale mechanized manufacturing began to

supplanting small-scale craft production in theways in which goods were produced.

Social problems developed in the large groupsof workers employed under the factory system.

Managers began to focus on increasing theefficiency of the worker-task mix.


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Evolution of Management Theory


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Job Specialization and the Division of

Labor Adam Smith (18th century economist)

Observed that firms manufactured pins in one oftwo different ways:

Craft-styleeach worker did all steps.Productioneach worker specialized in one

step.

Realized that job specialization resulted in much

higher efficiency and productivity

Breaking down the total job allowed for thedivision of labor in which workers becamevery skilled at their specific tasks.

F W T l d S i ifi M


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F.W. Taylor and Scientific Management

Scientific Management

The systematic study of the relationships between

people and tasks for the purpose of redesigning the

work process for higher efficiency.

Defined by Frederick Taylor in the late 1800sto replace informal rule of thumb knowledge.

Taylor sought to reduce the time a worker spent

on each task by optimizing the way the task was

done.

F d i k T l


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Fredrick Taylor

The credit of systematic study and practice of

management goes to FWT, very well known asFATHER OF SCIENTIFIC MANAGEMENT

Experiments of Taylor

Mid l i


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Midvale experience

At Midvale Steel Company, he found that

individual workers had their own notions aboutwork and different workers performed the sametask in different ways

He realized that greater output was possible onthe part of the workers but most of them were

engaged in what he called systematicsoldiering.

The solution: the first task of management wasto know what constituted a proper days work

He conducted time studies at Midvale SteelCompany which proved of immense use to him

B hl h E i Pi


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Bethlehem Experiments Pig-Iron Handling

Taylor was hired by the Bethlehem Steel Company toincrease the output of one of the larger machine shopswhich had been a serious production bottleneck

Conclusion: Periodic rests enabled a worker to producemore than continuous work. By a systematic resting timeand improved methods average productivity was raisedfrom 12.5 tons to 47.5 tons per day.

Taylor began selecting workers and training them in

handling pig-iron The original crew was 75, this reduced dramatically

The earnings of the crew increased from USD1.15 toUSD 1.85 per man per day.

T l i ti f


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Taylors prescription for

Managers responsibilities Under four heads :

a. They should develop a science for each element of mans workwhich replaces the old rule of thumb method

b. They should scientifically select and then train, teach anddevelop the workmen

c. They should heartily cooperate with the men so as to ensureperformance of work in accordance with the principles of thescience which have been developed

d. There should be almost equal division of work and responsibilitybetween management and workmen

Taylor, wanted that management should take the responsibility of

planning, directing and organizing work.HE DEEMED IT ESSENTIAL TO SEPARATE THE PLANNING OF

WORK FROM ITS EXECUTION, SO THAT EACH INDIVIDUALCOULD WORK AT HIS BEST EFFICIENCY AND COULD BECOMPENSATED ACCORDINGLY.

T l M t P i i l


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Taylors Management Principles

Large, daily, defined task

Standard conditionsskill sets and tool setsto be made available with authority alongwith clear cut objectives and expectations;this is called as ACCOUNTABILITY

High Pay for success Loss in case of failure

Separation of planning from doing the mostvaluable insights of TAYLOR

Functional foremanship

P bl ith S i tifi M t


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Problems with Scientific Management

Managers frequently implemented only the increased

output side of Taylors plan.

Workers did not share in the increased output.

Specialized jobs became very boring, dull.

Workers ended up distrusting the ScientificManagement method.

Workers could purposely under-perform.

Management responded with increased use of

machines and conveyors belts.

F k d Lilli Gilb th


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Frank and Lillian Gilbreth Refined Taylors work and made many improvements

to the methodologies of time and motion studies.Time and motion studies

Breaking up each job action into itscomponents.

Finding better ways to perform the action.

Reorganizing each job action to be moreefficient.

Also studied worker-related fatigue problems causedby lighting, heating, and the design of tools andmachines.


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Frank and Lillian Gilbreth

Frank Gilbreth engineer; pioneered Scientific Methods inbricklaying.

Member of Taylor Society (SAM)

Lillian Gilbreth engineer/industrial psychologist (PhD);

stress and fatigue

Together 12 Children Cheaper by the Dozen

Time and motion studies

Breaking up each job action into its components

(Therblig).

Finding better ways to perform the action. Reorganizing each job action to be more efficient.

Administrative Management Theory


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Administrative Management Theory

Administrative Management

The study of how to create an organizationalstructure that leads to high efficiency and

effectiveness.

Max WeberDeveloped the concept of bureaucracy as a formal

system of organization and administration

designed to ensure efficiency and effectiveness.


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Webers

Principles of

Bureaucracy

Webers Five Principles of Bureaucracy


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Weber s Five Principles of Bureaucracy

Authority is the power to hold people accountablefor their actions.

Positions in the firm should be held based on

performance, not social contacts.

Position duties are clearly identified so that people

know what is expected of them.

Lines of authority should be clearly identified such

that workers know who reports to who. Rules, standard operating procedures (SOPs), and

norms guide the firms operations.

Fayols Principles of Management


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Fayol s Principles of Management

Division of Labor: allows for job specialization.

Fayol noted jobs can have too much specializationleading to poor quality and worker dissatisfaction.

Authority and Responsibility

Fayol included both formal and informal authorityresulting from special expertise.

Unity of Command

Employees should have only one boss.

F l P i i l f M t ( td)


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FayolsPrinciples of Management (contd)

Line of Authority

A clear chain of command from top to bottom ofthe firm.

Centralization

The degree to which authority rests at the top ofthe organization.

Unity of Direction

A single plan of action to guide the organization.

Fayols Principles of Management (contd)


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Fayol sPrinciples of Management (cont d)

Equity

The provision of justice and the fair and impartial treatmentof all employees.

Order

The arrangement of employees where they will be of themost value to the organization and to provide careeropportunities.

Right man in the right place; competency specific;man should fit the job and not the other way round; orelse this will be like A SQUARE PEG IN A ROUND

HOLE. Initiative

The fostering of creativity and innovation by encouragingemployees to act on their own.



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Discipline

Obedient, applied, respectful employees arenecessary for the organization to function.

Remuneration of Personnel

An equitable uniform payment system that

motivates contributes to organizational success.

Stability of Tenure of Personnel

Long-term employment is important for the

development of skills that improve theorganizations performance.



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Subordination of Individual Interest to the Common

InterestThe interest of the organization takes precedence

over that of the individual employee.

Esprit de corpsComradeship, shared enthusiasm foster devotion to

the common cause (organization).

UNION IS STRENGTH; team work;

cohesiveness among the members

Fayols Elements of


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Fayols Elements of

Management Fayol made a distinction between General

Principles of Management and elements of

Management.

The latter was regarded as functions ofmanagement. Dividing them into:

PLANNING, ORGANIZATION, COMMAND,

COORDINATION AND CONTROL

Planning


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Planning

Planning : most important and difficult managerialfunction.

Planning meant looking ahead and to foresee both toassess the future and make provision for it

He considered unity, continuity, flexibility and provisionas the broad features of a good plan of action

A GOOD PLAN IS A PRECIOUS MANAGERIALINSTRUMENT

A GOOL PLAN ALSO HAS TO BE IMPLEMENTABLE

ORGANIZING


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ORGANIZING

Means : to organize a business is to provide it

with everything useful to its functioning, rawmaterials, tools, capital, personnel.

Fayol concerned himself both with structure andprocess, listing 16 managerial duties and

emphasizing the necessity for clear objectives,authority, decisions and task

COMMAND/DIRECTION


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COMMAND/DIRECTION

After the organization is formed, it is the mission

of command to set it going. For every manager, the object of command is to

get the optimum return from all employees of his

unit in the interest of the whole concern

The art of command, according to Fayol, rests

on certain personal qualities and knowledge of

general principles of management

COORDINATION


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COORDINATION

To coordinate is to harmonize all the activities of aconcern so as to facilitate its working and its success

According to him, in a well coordinated enterprise thefollowing facts are to be observed;

1. Every dept works in harmony with the rest

2. Divisions or sub-divisions in each dept are precisely

informed as to the share they must take in thecommercial task and the reciprocal aid they are toafford one another

3. The working schedule of the various departments and

sub-divisions thereof is constantly attuned tocircumstances

CONTROL/MEASUREMENT AND


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CONTROL/MEASUREMENT ANDFEEDBACK

According to Fayol, control consists in verifying

whether everything occurs in conformity with the

plan adopted, the instruction issued and the

principles established Its object is to point out weaknesses and errors

in order to rectify them and prevent recurrence.

It operates on everything resources (things),people and actions

Key principles of Mgmt of


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Key principles of Mgmt ofFAYOL

Unity of command

Unity of direction

Responsibility equal to authority and Scalar Chain

Behavioral Management Theory


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Behavioral Management Theory

Behavioral Management

The study of how managers should behave tomotivate employees and encourage them to

perform at high levels and be committed to the

achievement of organizational goals.

Focuses on the way a manager should personally

manage to motivate employees.

Behavioral Management


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Behavioral Management Mary Parker Follett

An influential leader in early managerial theory

Held a horizontal view of power and authority in

organizations

Suggested workers help in analyzing their jobsfor improvementsthe worker knows the best

way to improve the job.

If workers have relevant knowledge of the task,

then they should control the task.

Mary Parker Follett


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Mary Parker Follett

Mary Parker Follett: The Humanizing of

Management and focus on collaboration. Taylor ignored the human side of the work,

Follett argued:

Organizations are an interdependence of people.

People have own interests but also share common

goals which should be the basis of conflict resolution.

Use of power/coercion creates conflict. People

will defer to the facts of a situation for authority.


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The Hawthorne Studies: New Direction

The Hawthorne Experiments were a series ofstudies into worker productivity performed at theCicero plant beginning in 1924 and ceasing in1932, initially conducted by the National ResearchCouncil and later by Western Electric and HarvardUniversity

Illumination Studies, 1924 -1927: Does Use ofElectric Lights Increase Productivity?

Hypothesis: Increased illumination is correlated withhigher productivity.

Finding: No relationshipHawthorne effect or "halo effect Researcher

affects outcome (bias)

2nd Hawthorne Experiment


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2 Hawthorne Experiment

Relay Assembly Test Room Experiments, 1927-1929Harvard research team set up experiment with 5females from Relay Assembly area to test impact ofincentives and work conditions on worker fatigue

There is no conclusive evidence

that these affected fatigue orproductivity.

Productivity and worker

satisfaction increase whenconditions are improvedand made worse.

3rd Hawthorne Experiment


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3 Hawthorne Experiment

Mica-Splitting Test group, 1928 1930

Relationship between work conditions andproductivity, by maintaining a piece-rate

incentive system and varying work conditions

Productivity increased by about 15% and

researchers concluded that productivity was

affected by non-pay considerations

Conclusion: social dynamics were the basis

of worker performance.

Hawthorne Interviews


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Hawthorne Interviews

Plant-wide Interview program, 1928-1931

1. Western Electric implemented a plant-wide

survey of employees to record their concerns

and grievances. From 1928 to 1930, 21,000

employees were interviewed. 2. Data supported the research conclusion that

work improved when supervisors began to pay

attention to employees, that work takes place in

a social context in which work and non-workconsiderations are important, norms and groups

matter to workers.

Hawthorne : Final Experiment


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Hawthorne : Final Experiment

Bank Wiring Observation group, 1931-1932

The final test studying 14 male workers in the BankWiring factory to study the dynamics of the group

when incentive pay was introduced.

There was no effect. Why?

Work group established a work norm a shared

expectation about how much work should be

performed in a day and stuck to it, regardless of

pay.

The conclusion: informal groups operate inthe work environment to manage behavior.

Hawthorne Experiments - Importance


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a t o e pe e ts po ta ce

Changed perspective in management from Taylorsengineering approach to a social sciencesapproach, leading to "Human Relations" approachand, later, "Organization Behavior" approach:

Engineering approach subordinated to socialsciences

Managers = leaders, motivators, communicatorsAt one time major contributors to Management

theory worked on Hawthorne experiments.

Elton Mayo - Human Relationsapproach (to 1950s). Mayos views

lead to the construction of manager

as a leader.

George Elton Mayo (1880-1949)


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g y ( )

He has been called the founder of the human

relations school. He became famous on account of the

Hawthorne experiments

These experiments had a significant impact on

management thought, and considerablyinfluenced the human relations movement.

Experiments conducted in the Hawthorne Plantof the Western Electric Company in Chicago

from 1927 to 1932.

Hawthorne studies three


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Hawthorne studies threegeneral phases Test Room Studies : the object being to assess

the effect of single variables upon employeeperformance. They were experimental in nature

Interviewing Studies: these were largelyconcerned with improving employee attitudesand were psychological in nature

Observations Studies: these were undertaken to

understand and describe the factors influencingthe informal organization of work groups andwere sociological in nature

TEST ROOM STUDIES


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Illumination Experiments: Two test groups variedeffects of lighting on output vs. no change situation; theresults were that in both the groups the output increased.Conclusion that environmental factors like lighting maynot be the only factor, there could be other variables

Relay Assembly Test Room Experiments: This study

was made to discover the anomalies of the previousexperiments. Numerous variables were put into actionroom conditions, pauses during work, piece-work, workwithout pauses and shorter working hours. After 12week study, the output went up to a record level

Interviewing studies: An interview program of


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Interviewing studies: An interview program ofthousands of workers was conducted with the object offinding out the attitude of the employees towards their

job, working conditions and supervisionThe interviewing program revealed the following points:

a. Merely giving a person an opportunity to talk and airhis grievance has a beneficial effect on his morale

b. Complaints are not necessarily objective statements of

facts. They are often symptoms of more deep-seateddisturbances

c. Workers are influenced in their demands byexperience both inside and outside the factory

d. Worker is satisfied or dissatisfied not in terms of any

objective frame of reference but rather in terms of howhe regards his social status in the firm and what hefeels he is entitled to in the way of rewards

Observational studies


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The Bank Wiring Observation Group Study constitutedthe last phase of Hawthorne studies

It was conducted to investigate the social pattern of agroup of fourteen workers and their associatedsupervisors

The main point of difference between this study and the

earlier test room studies was that no experimentalchanges were planned but efforts were directed to studythe group in its customary functioning

This study revealed that there existed a GROUP NORMin terms of which the behavior of different individualswas in some sense being regulated

This group was restricting the output on account of various forms ofsocial pressures


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social pressures

The group had for itself a standard of a days work which was notimposed upon them, but had apparently been evolved by workmenthemselves

The group had various social pressures to see that the workers didnot exceed the group output norm, and nobody attempted to attainofficial production targets

Those who attempted to exceed became targets of socialdisapproval, verbally or physically

This study showed the importance of informal, social group inbusiness organization

A member of such a group cared more for the opinion of the grouprather than for financial incentives of the management

IT WAS THE GROUP THAT DECIDED HIS ATTITUDE TO WORK,MANAGEMENT AND LEVEL OF PRODUCTION

THESE STUDIES FURTHER REAFFIRMED THE IMPORTANCE OFINFORMAL GROUP IN THE MOTIVATION OF WORKERS.

CONCLUSIONS OF


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CONCLUSIONS OFHAWTHORNE STUDIES1. Environmental factors not the sole factors

affecting productivity

2. Worker is not an economic man (not purelymotivated by money alone)

3. Importance of recognition, Security andMorale

4. Importance of Informal group

5. Importance of total work situation6. Complaints as symptoms

Mary Parker Follett-famed


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Mary Parker Follett famedpolitical and social philosopher Her main contributions:

Was formulation of principles of human association and organization,

especially in terms of industry

The basis of her philosophy was that one cannot separate work from

human beingsBusiness is a series of interrelationships between people

Follett pleaded that there is a great need to recognize the motivating

desires of the individual and the group

She said that the basic problem of any organization was that of

harmonizing and coordinating the group efforts to achieve the mostefficient effort towards completing a task

She talked about power, leadership and authority.

Her ideas are as under:

Conflicts


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Follett said that conflicts have a constructive role

to play in an organization. Conflicts are not warfares but the appearance

of difference, difference of opinion, of interests.

Conflicts are neither good or bad; if used

constructively their results are god and if useddestructively their results are bad

She suggested that conflicts can be harnessedto the service of the group much as an engineer

uses friction

Three ways to resolve conflicts


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Domination (victory of one side over the other. Follett did notadvance this method, because of use of force beyond a certain point

lessens energies and self-respect) Compromise (This is better than Domination; both sides surrendersome part of what they are demanding, i.e., for a compromise theremust be a mid-point between the needs and desires of both partieson which they agree, willingly or unwillingly. This method is stillcommonly unsatisfactory)

Integration (best way to resolve conflicts; it means combination ofwhat is best in all view points, i.e, bringing about unity of conflict inwhich both sides se a way out which will satisfy their real needs. Itresolves conflicts for good

FOR DETAILS ATTEND A CONFLICT MANAGEMENT CLASS

Folletts views on Leadership


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It is the role of the leader to educate and train

The leader is responsible for integrative unity The great leader is one who is able to integrate

the experience of all and use it for a commonpurpose

Leadership is not the product of position but ofknowledge

Folletts views on Authority and


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y

Responsibility

Authority belongs to the job and stays with the

job

An executive decision is an movement in a

processAuthority and responsibility go with function

Folletts views on Co-ordination


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CONTROL , Follett, meant fact control rather

than human control, and central control meantsynthesis rather than domination from the center

The four principles of organization at which she

finally arrived at provided for the need of four

kinds of coordination as the basis of goodmanagement:

4 principles of coordination


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Coordination by direct contact of the responsible peopleconcerned. Ideas, ideals, goals and purposes can beeasily stated and understood through direct personalcontact and communication

Coordination should be achieved in early stages ofplanning and policy-making. It would be easier to secure

the willing enthusiastic adherence of all concerned toany new principles and policy if they have participatedfrom the beginning. For this principle Follett hadsuggested cross relations between heads ofdepartments instead of up and down the line through the

chief executive


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In coordination all factors in a situation are

reciprocally related Coordination is a continuous process. It means

that coordination should be left to chance and it

is the duty of the coordinator to strive for it

constantly so that the efforts of the group aredirected towards achieving the common goals

Follett on PROFESSIONAL


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MANAGEMENT Management can develop as a profession on two bases:

a. Its recognition as a function of or service to the community

b. Application of an accepted and proven body of knowledge andprinciples

Managers can become professional by working for long hours and thus

getting satisfaction from work.According to her, a professional manager has three main jobs:

1. S/he must be loyal to company

2. S/he must inform the public what are good practices and

standards (today it is called Corporate Governance) and3. S/he must try to extend the boundaries of knowledge in his/herprofession and then pass on his/her extra knowledge for thebenefit of all.

Douglas M. McGregor-(1906-


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115

1964; a social psychologist)THEORY X THEORY Y

Work is inherently distasteful to most people Work is as natural as play, if the conditions are

favorable

Most people are not ambitious, have little desire

for responsibility, and prefer to be directed

Self-control is often indispensable in achieving

organizational goals

Most people have little capacity for creativity in

solving organizational problems

The capacity for creativity in solving

organizational problems is widely distributed inthe population

Motivation occurs only at the psychological and

safety levels

Motivation occurs at the social, esteem, and self-

actualization levels, as well as physiological and

security levels

Most people must be closely controlled and often

coerced to achieve organizational objectives

People can be self-directed and creative at work if

properly motivated

Chris Argyris Immaturity-


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116

Maturity model

Immaturity MaturityPassive Active

Dependence Independence

Behave in a few ways Capable of behaving in many ways

Erratic shallow interests Deeper and stronger interests

Short-time perspective Long-time perspective (past andfuture)

Subordinates position Equal or superordinate position

Lack of awareness of

self

Awareness and control over self

Argyris 4 principles of


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gy p porganization

Task specialization Individuals should

concentrate on a narrow range of task. It

increases human skills and output too

Chain of command (Hierarchy of authority) Unity of direction Leaders must define and

direct the work of those under them

Span of control administrative efficiency is

increased if there is a limit to the number of

people a leader or supervisor can control

Definition T-Group


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T-Group is .a group experience designed to

provide maximum possible opportunity to theindividuals to expose their behavior, give and

receive feedback, experiment with new behavior

and develop an everlasting awareness and

acceptance of self and others.

Rensis Likert


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New pattern of Management

Comparison among high performance managerwith Low performance managers

High producing managers are employee

centered. Their main attention was on building

effective work group with high performance

goals

They found that better result can be achieved

through different motivational techniques. He focused on different styles of leadership

1119

Contd.


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System 1 Exploitative autocrat no

confidence on subordinates System 2 Benevolent autocrat Some

confidence on subordinates

System 3 Participative substantial

confidence

System 4 Full confidence

1120

Quantitative management approach


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This theory is more applied in decision making

and for economic effectiveness. It was developed during world war II by P. M. S.

Blackett and his group to logically solve war

problems

This theory has two sides : Management

Science and operations management

1121

Management Science Theory


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An approach to management that uses rigorous

quantitative techniques to maximize the use oforganizational resources.

Quantitative managementutilizes linearprogramming, modeling, simulation systems.

Operations managementtechniques to analyzeall aspects of the production system.

Total Quality Management (TQM)focuses onimproving quality throughout an organization.

Management Information Systems (MIS)provides information about the organization.

Operational management


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Less mathematical and more of the nature of

applied management science Many firms use this technique to manage their

inventories like : calculating EOQ, determining

the minimum and maximum re-order level of

inventory etc.

1123

Social systems approach


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Chester I. Bernard developed anew approach to management and

categorized all organizations as a cooperative system

According to Bernard, a formal organization comprised people

willing to work for a common goal and they were able to

communicate with each other.

He divided organization into formal and informal type.

Bernard suggested that executives should encourage informal

organizations within the formal organizations with a view to

encourage good communication.

Limitation of this approach is that it overlooks many managerial

concepts, principles and techniques.

1124

Systems Approach Ludwig VonB t l ff


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Bertalanffy

Organizational Environment


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Theory

Organizational Environment

The set of forces and conditions that operate

beyond an organizations boundaries but affect amanagers ability to acquire and utilizeresources.

The Open-Systems View


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Open System

A system that takes resources for its externalenvironment and converts them into goods and

services that are then sent back to that environment

for purchase by customers.

Inputs: the acquisition of external resources.

Conversion: the processing of inputs into goods

and services.

Output: the release of finished goods into theenvironment.

The Organization as an Open System


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Other System Considerations


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Closed system

A system that is self-contained and thus notaffected by changes occurring in its externalenvironment.

Often undergoes entropy and loses its ability to

control itself, and fails. Synergy

Performance that results when individuals anddepartments coordinate their actions

Performance gains of the whole surpass the sumof the performance of the individualcomponents.

Contingency Approach


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There is no one best way.

Organizing (and other) decisions that match the demands of the

environment provide adaptation.

Contingency Theory


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Contingency Theory

The idea that the organizational structures andcontrol systems manager choose depend onarecontingent oncharacteristics of the externalenvironment in which the organization operates.

Assumes there is no one best way to manage.

The environment impacts the firm andmanagers must be flexible to react toenvironmental changes.

In rapidly changing organizational environments,managers must find ways to coordinate differentdepartments to respond quickly and effectively.

Contingency Theory of Organizational Design


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Mechanistic and Organic Structures


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Mechanistic Structure

Authority is centralized at the top. (Theory X)Employees are closely monitored and managed.

Can be very efficient in a stable environment.

Organic structure

Authority is decentralized throughout theorganization. (Theory Y)

Tasks and roles are left ambiguous to encourageemployees to react quickly to changingenvironment.


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134

Essential features of a good form of

business organization


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business organization

Easy formation Extent of liability

Ease in raising capital

Stability

Efficient and effective management

Business secrecy

Freedom from state regulations

Tax liability

Relationship between employer and employee

Transferability of shares

Business organizations are broadly classified as follows :


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Sloe proprietorship

Partnership Joint Hindu Family Business

Joint stock company (Public and Private)

Cooperative Undertaking

PrivateOwnership

Joint stock company or company ownership

Cooperative society or cooperative ownershipJoint

Ownership

Departmental Enterprises

Public corporations

Government Companies

PublicOwnership

Sole Proprietorship


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p p

James Stephenson says A sole trader is a person who

carries on business exclusively by and for himself. He is not

only the owner of the capital of the undertaking, but is usually

to organize and manage and takes all the profits or

responsibility forlosses.

Therefore a sole trader is a person who sets up the business

with his own resources, manages the business himself by

employing persons for his help and alone bears all the gain

and risks of the business

Characteristics of SoleProprietorship


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No registration required

Individual initiative

Unlimited liability

Used for small business or by Professionals

No Separate Legal Entity

Management and control

Secrecy

Owners and business exist together

Limited area of operation

138

Advantages of Sole Proprietorship


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Easy formation

Flexibility

Quick decisions

Secrecy

Personal Touch

Direct relationship between effort and reward

Independent way of life

Minimum Govt regulations

139

Disadvantages of SoleProprietorship


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Limited funds

Limited managerial talent

Lack of continuity

Unlimited liability

Limited Opportunities

Uncertainty

140

Characteristics of Partnership


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Section 11 of Companies Act, 1956

No partnership consisting of more than 20 persons shall be formed

141

Indian Partnership Act, 1932

Section 4 Partnership is the relation between persons who have agreed to share profits of business carried on

by all or any of them acting for all

Unlimited Liability

Registration not Compulsory


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Existence of business Plurality of persons

Contract

Sharing of profitsAgency

Advantages of Partnership


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Easy formation Greater financial resources

Better managerial talent

Personal touch Relationship between ownership, control

and management

Maintenance of secrecy Protection of minority right

Adaptability and flexibility

Disadvantages of

Partnership


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Partnership

Limited finances Dishonesty of partners

Unstable life (death, insolvency, insanity,

retirement etc.) Lack of prompt and united management

Unlimited liability

Lesser public confidence Restriction on transfer of interest

Liability after retirement continues

Contents of a partnership

deed


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deed Name of the partnership firm Name of the partners, extent of the contribution of

each partner and proportion in which profits and

losses are to be divided among the partners.

Permanent address of the partnership Duration of the partnership

Nature of business

Rights, power and duties of different partner

Name of authorized signatory

Arbitration clause in case of any dispute

Distinction between Partnership and

sole proprietorship


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so e p op eto s p

Method of formation

No of owners

Financial resources

Spread of risk and liability

Management and control

Decision making

Secrecy

Joint Hindu Family


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Joint Hindu family is a unique feature of indian businessscene. Like partnership it is owned by a group of person who

are the members of joint Hindu family. But two are different

from each other when we consider the legal aspects.

Legal aspect : Partnership firm is the result of an agreement

where as JHF results from the operation laws of successionetc. Thus even a minor become partner in the business

Position of females : Females are restricted in JHF while in

partnership both the gender enjoy same level

HUF and Karta

Joint stock Company


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The company act 1956 define Companyas an artificial person registered under

law, with a distinctive name and a

common seal, having capital divided into

shares of small fixed denominations

which are transferable, carrying limited

liability and having a perpetual

succession.

Characteristics of Joint stock

Company


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Company

Legal formation -A joint stock company comesinto existence only when it has been registered

after completion of all formalities required by the

Indian Companies Act, 1956.

Artificial person - Just like an individual, whotakes birth, grows, enters into relationships anddies, a joint stock company takes birth, grows,

enters into relationships and dies.

Separate legal entity - Being an artificial person,a joint stock company has its own separate

existence independent of its members.

Characteristics of Joint stock

Company


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Company

Common seal -Any document, on which thecompany's seal is put and is duly signed by any

official of the company, become binding on the

company.

Perpetual existence - It is not affected by thedeath, lunacy, insolvency or retirement of any of itsmembers.

Limited liability - In a joint stock company, theliability of a member is limited to the extent of the

value of shares held by him.

Democratic management

Advantages of Joint Stock Company


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Large financial resources Limited Liability

Professional management

Large-scale production Contribution to society

Research and Development

Ready transferability of shares Taxation relief

Company


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Governing Act Companies Act, 1956

152

Special Features of Company

a) Company is a Separate Legal Entity

b) It can sue and be sued in its own name

c) The liability of the shareholders are limited to the extent oftheir shareholdings

d) Company is distinct from its shareholders

e) It can hold property in its own name

Limitations of Joint Stock Company


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Limitations of Joint Stock Company-

Difficult to form Excessive government control

Delay in policy decisions

Concentration of economic power andwealth in few hands

Conflicting interest

Neglect of minority Lack of personal touch

Types of Companies


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Private Ltd

Public Ltd

Government

On thebasis of

ownership

Indian

Foreign

On the

basis ofNationality

Types of Companies in India


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155

DESCRIPTIONS PRIVATE COMPANY PUBLIC COMPANY

Definition Which by its article restricts:1 .Numbers of members to 502. Transfer of shares

Invitation of public tosubscribe its debenture,shares etc.

3. Acceptance of depositsfrom person other than itsshareholders and directors

Which is not * private

Governing Laws Companies Act, 1956 Companies Act, 1956SEBI Act, 1992 and allied laws.

Types of Companies in IndiaDESCRIPTIONS PRIVATE COMPANY PUBLIC COMPANY


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156

IncorporationTime

2 to 3 weeks 2 to 3 weeks

Minimum Paid upCapital

INR 1,00,000/-INR 5,00,000/-

Maximum No. of

shareholders

50 (Fifty) No limit

Minimum No. ofShareholders

2 (Two)7 (Seven)

Transferability ofShares

Restricted Freely. If company is listed then through

stock exchange(s)

Minimum No. ofDirectors

23



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157

Whether aForeigner canbe Director

Yes

Yes

Whole TimeDirector (WTD) /ManagingDirector (WTMD):Appointment

Appointment not compulsory andNo restriction on appointment

Appointment :Not compulsory, Ifpaid up capital < Rs. 5 Cr.Compulsory. Ifpaid up capital => Rs.5 Crs

WTD / WTMD:Remuneration

No restriction As per schedule XIII, otherwise

permission of Central Government.

Foreigner asWTM D / WTD

No restriction With the approval of Central

Government



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158

Loan toDirector etc.

Yes With the previous approval of Central

Government

Contracts withDirector etc.

Yes With the consent of Board, If paid upcapital of the company is (One) 1 Cr. ormore, approval of Central Govt. isnecessary

Loan, Investment& Guarantee by

the company

No restrictionSome restrictions

Government Company


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In these companies the Government (either stateor central government or both) holds a majority

share capital i.e., not less than 51%. However,

companies having less than 51% share holding by

the government can also be called Government

companies provided control and management lies

with the government. Examples of government

companies are: Mahanagar Telephone Nigam

Limited, Bharat Heavy Electricals Limited.

Multinational Companies


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a multi-national company is one which isregistered as a company in one country but carries

on business in a number of other countries by

setting up factories, branches or subsidiary units.

Such a company may produce goods or arrange

services in one or more countries and sell these in

the same or other countries. You might have heard

about many Multinational Companies (MNCs)

running business in India, like Philips, Siemens,

Hyundai,Coca Cola, Nestle, Sony, McDonalds,Citi Bank, Good Year, etc.

Features of MNCs


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(i) International Operations: Multinational Companiesgenerally have production, marketing and other

facilities in several countries.

(ii) Large size: The volume of sales, the profits

earned, and also the value of assets held by amultinational companies are generally very large.

(iii) Centralized Control: The branches and subsidiary

units of an MNC operating in different countries

are controlled from the headquarters of the

company in the home country, which lay down

broad policies to be pursued.

Advantages of MultinationalCompanies


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Investment of Foreign capita Generation of employment

Use of advanced technology

Growth of ancillary units Increase in exports and inflow of foreign

exchange

Healthy competition

Holding Company


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Type of business organization that allows a firm(called parent) and its directors to control or

influence other firms (called subsidiaries). This

arrangement makes venturing outside one's core

industry possible and, under certain conditions, to

benefit from tax consolidation, sharing of operating

losses, and ease of divestiture. The legal definition

of a holding company varies with the legal system.

Some require holding of a majority (80 percent) or

the entire (100 percent) voting shares of thesubsidiary whereas other require as little as five

percent.

Holding Company


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Holding companies and the companies they control have aparent-subsidiary relationship. When a holding company owns

a controlling interest in another company, the holding

company is called the parent company and the controlled

company is called the subsidiary. If the parent owns all of the

voting stock of another company, that company is said to be a

wholly-owned subsidiary of the parent company.

A holding company is said to be a "pure" holding company if it

exists solely for the purpose of owning stock in other

companies and does not engage in business operations

separate from its subsidiaries. If the parent company also

engages in its own business operations, then it is said to be a"mixed" holding company or a holding-operating company.

Holding companies whose subsidiaries engage in unrelated

lines of business are called conglomerates.

Advantages of Holding Company


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From a financial point of view, it is usually possible to obtaincontrol of another company with less investment than would

be required in a merger or consolidation.

shares of stock in the subsidiary company are held as assets

on the books of the parent company and can be used as

collateral for additional debt financing.

For tax purposes, the parent company must own at least 80

percent of the voting stock in another company in order to be

able to file a consolidated tax return.

From a management point of view, the parent-subsidiary

relationship of holding companies and their subsidiariesallows for decentralized management.

Co-operative Organisation


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The word cooperative means living together andworking together.

A cooperative organization means voluntary

association of persons joining together on equal

basis for the fulfillment of their economic and otherinterests.

A cooperative society is a society which has its

objects the promotion of the economic interests of

its members in accordance with cooperative

principles as per Indian Cooperative Societies act

1912

Characteristics of cooperative

organization


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g

Voluntary association Open membership Open for all and the minimum

no is 10 and maximum no limit

Equal Voting rights

Democratic control and management Service motto

Disposal of surplus

Finance

Cash trading

State control

Types of cooperatives


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Consumer cooperatives Producers or industrial cooperative

Cooperative marketing societies

Cooperative housing societies Cooperative credit societies

Cooperative milk society

Multi purpose Co-operative society

Charitable Organization


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169

- Trust

- Society (seven or more)

- Section 25 Company

It can do business and earn any amount of profits, but the

distribution of profits cannot be made to Shareholders /

trustee

Regulatory Bodies in India


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Foreign Investment Promotion Board (FIPB)

Reserve Bank of India (RBI)

Security Exchange Board of India (SEBI)

Registrar of Companies (RoC)

Trade Mark Registry (TMR)

Director General of Foreign Trade (DGFT)

organisation management module 1

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