Principles of Management

Management

Management is the art of getting things done through people

Management as a process consists of planning, organizing, actuating and controlling, performed to determine and accomplish the objectives by the use of people and resources.

Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims.

Importance of Management

1)   Management is a critical element in the economic growth of a country

2)   Management is essential in all organized efforts, be it a business activity or any other activity

3)   Management is the dynamic, life-giving element in every organization

Management Functions

1)   Planning

2)   Organizing

3)   Directing

4)   Controlling

5)   Innovating

6)   Representation

Planning

Determination of what is to be done, how and where it is to be done, who is to do it and how results are to be evaluated

Function which is performed by managers at all levels – top, middle and bottom

Organizing

To provide a business with everything useful: majorly human organization and material organization

According to Allen, Organization refers to the structure which results from identifying and grouping work, defining and delegating responsibility and authority, and establishing relationships’.

Directing

Function can also be called leading, directing, motivating, actuating, etc.

Directing involves 3 sub-functions:

1)   Communication

2)   leadership

3)   motivation

Two broad categories of motivation

1)   Financial

2)   non-financial

Controlling

Function of controlling involves

1)   Establishing standards of performance

2)   Measuring current performance and comparing it against the established standards

3) Taking action to correct any performance that does not meet those standards

Innovation

   Creating new ideas which may improve a product, process or practice

1)   Innovation in packaging: HUL’s shampoo sachets

2)   Innovation in distribution: Eureka forbes’ DTH salesforce

3)   Innovation in business model: ITC’s e-choupal

Representing

A manager is required to spend a part of his time in representing his organization before various outside groups which have some stake in the organization

Selection - A Part of Recruitment Process

Selection has been regarded as the most important function of HRD. It ensure the organization that means .It has right number, right kind of people at the right place and at the right time

Selection is the process of picking up more competent and suitable employees

Process of Selection

The Main process of selecting employees are as following

Application Blank

1)   Application black is filled by candidates

2) Applicants gives relevant personal data such as his Qualifications, specialization, experience, firms in which he has worked etc.

3)   These are checked by company with reference to specifications prescribed for the jobs to decide applicants who are to be called for interview.

Initial Interview

1)   Applicants selected in application blank are called for interview.

2) It provides rough ideas concerning the person’s fit with the job & organization or not

Employment Tests

Tests that are used in this are

1)   Aptitude test

2)   Interest test

3)   Intelligence test

4)   Performance test

5)   Personality test

Checking References

If the candidate is found satisfactory at interview & if performance is good at tests than employer will get the important personal details about candidate such as character, past history, background etc.

Physical & Medical Examination

Objectives of this examination are

1)   To check physical fitness of applicant for the job applied for

2)   To protect company against the unwarranted claims for compensation under certain legislative enactments, such as workmen’s compensation act,

3)   To prevent communicable diseases entering the business concern

Final Interview

This interview is conducted for those who are ultimately selected for employment. In this interview candidates are given an idea about their future prospects within the organization.

Employee Socialization

Employee socialization is the process by which new employees understand the company's policies and the internal culture, how the company hierarchy works and the ways to function effectively in the organization.

Assumptions of Employee Socialization

1)   Socialization strongly influences employee performance & organizational stability.

2)   New member suffer from anxiety.

3)   Individual adjust to new situation remarkably similar way

Socialization Process

There are 3 Stages in Socialization Process that is

1)   Pre-arrival stage

2)   Encounter stage(Entry stage)

3)   Metamorphosis stage(change stage)

Pre-arrival Stage

This socialization process stage recognizes that individual arrives in an organization with a set of organizational values, attitude & expectation.

Pre-arrival sources for Socialization are

1)   Educational & training

2)   Recruitment process

3)   Selection process

Encounter stage(Entry Stage)

1)   It refers the entry of new employee in the organizations.

2)   If the expectations match the reality, socialization may not be needed.

3)   If the expectation do not match the reality, socialization will be needed. New learning will be needed.

4)   If the employee become disillusioned with the reality, they resign the job.

Outcomes pf Socialization

1)   Productivity (High Productivity)

2)   Commitment (High Commitment)

3)   Turnover (less propensity to leave the organization)

4)     Employees pursue a career.

Managers

Manager is a person who manages or is in charge of something.

Managers can control departments in companies or guide the people who work for them.

Managers must often make decisions about things.

Managers Levels

First-Line Managers

Managers who are responsible for the work of operating employees only and do not supervise other managers; they are the “first or lowest level of managers in the organizational hierarchy.

Middle Managers

Managers in the midrange of the organizational hierarchy; they are responsible for other managers and sometimes for some operating employees; they also report to more senior managers.

Top Managers

Managers responsible for the overall management of the organization; they establish operating policies and guide the organization’s interaction with its environment.

Types

Functional Manager

A manager responsible for just one organizational activity, such as finance or human resources management.

General manager

The individual responsible for all functional activities, such as production, sales, marketing and finance for an organization such as a company or a subsidiary.

360° Feedback - A Method of Self Review

The combination of peer, subordinate and self-review

Key Steps in Implementing 360° Appraisal

1)   Top management communicates the goals.

2)   Employees and managers are involved in the development of the appraisal criteria and process.

3)   Employees are trained in giving & receiving feedback.

4)   Employees are informed of the nature of the 360° appraisal instrument and process.

5)   The 360° system undergoes pilot testing

6)   Management continuously reinforces the goals of the 360° appraisal and is ready to change the process when necessary.

Organization and the Need for Management

Organization

Two or more people who work together in a structured way to achieve a specific goal or set of goals.

Goals

The purpose that an organization strives to achieve; organizations often have more than one goal, goals are fundamental elements of organizations.

Management

The process of planning, organizing, leading and controlling the work of organization members and of using all available organizational resources to reach stated organizational goals.

Manager

People responsible for directing the efforts aimed at helping organizations achieve their goals.

Managerial and Organizational Performance

Managerial Performance

The measure of how efficient and effective a manager is – how well he or she determines and achieves appropriate objectives.

Organizational Performance

The measure of how efficient and effective an organization is-how well it achieves appropriate objectives

Efficiency

The ability to minimize the use of resources in achieving organizational objectives: “doing things right”

Effectiveness

The ability to determine appropriate objectives: “doing the right things”

Management

According to Mary Parker Follett Art of getting things done through people.

According to George R. Terry Consisting of planning, organizing, actuating and controlling, performed to determine and accomplish the objectives by the use of people and resource.

Importance of Management
1)   Management is a critical element in the economic growth of a country
2)   Management is essential in all organized efforts, be it a business activity or any other activity
3)   Management is the dynamic, life-giving element in every organization

Management process

Process A systematic method of handling activities.

The four main Management Activities are
1)   Planning
2)   Organizing
3)   Leading
4)   controlling

Planning

The process of establishing goals and suitable course of action for achieving those goals.

Organizing

The process of engaging two or more people in working together in a structured way to achieve a specific goal or set of goals.

Leading

The process of directing and influencing the task-related activities of group members or an entire organization.

Controlling

The process of ensuring that actual activities conform to planned activities.

Management Level and Skills

Henry Fayol  a famous management theorist has identified three basic kinds of skills,

Technical Skills

The ability to use the procedures, techniques and knowledge of a specialized field

Human Skills

The ability to work with, understand and motivate other people as individuals or in groups

Conceptual Skill

The ability to coordinate and integrate all of an organization’s interests and activities.

Promotion

Upward or vertical movement of employees

Promotion results into more pay, prestige, responsibilities, and position with in organization

Purpose of Promotion

1)   Motivate employees

2)   Attract and retain talented people

3)   Recognize and reward efforts and efficiency

4)   Increase effectiveness and efficiency of employee

5)   Fill up higher posts form within the organization

6)   Build loyalty and morale

7)   To provide career development path

Principles of Promotions

1)   HRM must clearly established policy whether to promote from with in to fill higher vacant position or from recruitment of external candidate

2)   Basis of promotion (seniority or performance)

3)   Promotions against vacant positions or non vacant positions (time bound)

4)   Frequent promotions are not good practice

5)   Promotions decision must be made based on job analysis and performance appraisal

6)   Clear promotion policy and communication to employees

7)   Promotion based on competence must be advertised on notice board

 

Seniority based promotions

Merits

1)   Easy to administer

2)   Less subjectivity

3)   Labour unions are happy

4)   Experience is taken into account

5)   Subordinates feel relax

6)   Loyalty is rewarded

Demerits

1)   Competence is ignored

2)   Seniority issues

3)   Young and competent employees feel aggrieved and frustration

4)   Poor performer may get promoted

Performance based promotions

Merits

1)   Performance is rewarded

2)   Competent employees get motivated and retained

3)   Productivity increases

Demerits

1)   Senior employee get frustrated

2)   Favoritism and subjectivity

3)   Loyalty and service length are not considered

4)      Union leaders oppose and retaliate

Social Audit & Ethics

Social Audit

A social audit is a systematic study and evaluation of the organization's social performance as distinguished from its economic performance.

Benefits of Social Audits

1)   Supplies data

2)   Develops a sense of social awareness

3)   Cost of social programmers

4)   Necessary information to externals groups

Limitations of Social Audits

1)   Difficult to measure

2)   Classification under “good” or “bad” is not universally accepted

3)   Most of them occur outside the organization

Ethics

The credibility of a business depends on its high business ethics and integrity

How does a manager decide what is ethical or unethical?

1)   Government legislation

2)   Business codes

3)   Pressure groups

4)   Personal values of the manager

Ethics and Corruption in International Business

On an international scale, it is difficult to clearly define what constitutes corrupt business practices.

Although there exist more than 40 codes of conduct worldwide but the observance of these codes being voluntary and not legally enforceable, MNEs differ in their approach.

Studies have shown that developing and transitional economies are more prone to corruption partly because of the inadequate legal framework, weak enforcement and lack of open and independent media.

Social Responsibilities of Business

The socio-economic obligation of every business is to see that the economic consequences of its actions do not adversely affect public welfare.

The socio-human obligation of every business is to nurture and develop human values.

Different Views on Social Responsibility

Communist View

This view advocates the imposition of social responsibilities on business through the instrumentality of the State

Capitalist View

This view holds that economic expediency alone is a just standard for business decisions and that business has an unbridled and an uncontrolled right to make money free from all sorts of social responsibilities.

Pragmatic View

This view acknowledges the importance of profits but simultaneously stresses the need for social responsibility. It holds that a company cannot make a social contribution if it is not profitable.

Trusteeship View

This view advocates the retention for personal use of so much as is necessary for an honorable livelihood, no better than that enjoyed by million others; and the utilization of the rest for the welfare of the community.

Social Responsibilities of Business Towards Different Groups

1)   Towards Internal stakeholders

2)   Towards External Stakeholders

3)   Customers

4)   Suppliers

5)   Government

6)   Special-interest group

7)   Consumer advocates

8)   Labor Unions

9)   Media

Recruitment

Recruitment is the process of generating a pool of qualified candidates for a particular job in the organization. it is the process of discovering potential candidates.

Source of Recruitment

Mainly two source of recruitment are as following

Internal Recruitment

Internal source of recruitment are readily available to an organization. Internal source of recruitment are preliminary three types are as following,

Transfer

The employees are transferred from one department to another according to their efficiency and experience.

Promotion

Promotion to the employees are promoted from one job to another according to their good work.

Re-employment of ex-employees

In which employees can be invited and appointed to fill vacancies  in the concern. There are situation when ex-employees provide unsolicited application also.

External Recruitment

External source of recruitment have to be solicited from outside the organization. The main external source of recruitment are as following,

Advertisement

It is an external source which has got an important place in recruitment procedure through advertisement.

Employment exchange

There are certain employment exchanges which are run by government. Now a days recruitment in government agency has become compulsory through employment exchange.

Employment Agencies

There are certain professional organization which look towards recruitment and employment of people. i.e. Private agency.

Educational institution

There are certain professional institute which service as an external source for recruiting fresh graduates from the institute.

Recommendation

There are certain people who have experience in a particular area.

Employment at factory level

In which the application for vacancy are presented on bulled in boards outside of the factory or at the gate.

Labor contractors

These are the specialist people  who supply manpower to the factory plant. Worker are appointed on contract basis, for a particular time period

Decision Making

Decision making is a process of identifying and selecting a course of action to deal with a specific problem or take advantage of an opportunity.

Making a choice from two or more alternatives.

Decision Making Process

1.-Identifying the Problem

A discrepancy between an existing and desired state of affairs.

Characteristics of Problems

1)   A problem becomes a problem when a manager becomes aware of it.

2)   There is pressure to solve the problem.

3)   The manager must have the authority, information or resources needed to solve the problem.

2.-Identifying Decision Criteria

Decision criteria are factors that are important (relevant) to resolving the problem such as:

1)   Costs that will be incurred (investments required)

2)   Risks likely to be encountered (chance of failure)

3)   Outcomes that are desired (growth of the firm)

3.-Allocating Weights to the Criteria

Decision criteria are not of equal importance

Assigning a weight to each item places the items in the correct priority order of their importance in the decision-making process.

4.-Developing Alternatives

Identifying viable alternatives

Alternatives are listed (without evaluation) that can resolve the problem

5.-Analyzing Alternatives

Appraising each alternative’s strengths and weaknesses

An alternative’s appraisal is based on its ability to resolve the issues identified in steps 2 and 3.

6.-Selecting an Alternative

Choosing the best alternative

The alternative with the highest total weight is chosen

7.-Implementing the Alternative

Putting the chosen alternative into action

Conveying the decision to and gaining commitment from those who will carry out the decision

Characteristics of an Effective Decision-Making Process

1)   It focuses on what is important.

2)   It is logical and consistent.

3) It acknowledges both subjective and objective thinking and blends analytical with intuitive thinking.

4)   It requires only as much information and analysis as is necessary to resolve a particular dilemma.

5) It encourages and guides the gathering of relevant information and informed opinion.

6)   It is straightforward, reliable, easy to use and flexible

Making Decisions

Rationality

Managers make consistent, value-maximizing choices with specified constraints.

Assumptions are that decision makers

1.   Are perfectly rational, fully objective, and logical.

2.   Have carefully defined the problem and identified all viable  alternatives.

3.   Have a clear and specific goal.

4. Will select the alternative that maximizes outcomes in the organization’s interests rather than in their personal interests

Bounded Rationality

Managers make decisions rationally, but are limited (bounded) by their ability to process information.

Assumptions are that decision makers

1.   Will not seek out or have knowledge of all alternatives.

2. Will satisfy—choose the first alternative encountered that satisfactorily solves the problem—rather than maximize the outcome of their decision by considering all alternatives and choosing the best.

Influence on decision making

Escalation of commitment: an increased commitment to a previous decision despite evidence that it may have been wrong.

Decision Making Conditions

Certainty

A situation in which a manager can make an accurate decision because the outcome of every alternative choice is known.

Risk

A situation in which the manager is able to estimate the likelihood (probability) of outcomes that result from the choice of particular alternatives

Uncertainty

Limited information prevents estimation of outcome probabilities for alternatives associated with the problem and may force managers to rely on intuition, hunches and “gut feelings

Common Decision-Making Errors and Biases

Heuristics-Using “rules of thumb” to simplify decision making.

Overconfidence Bias-Holding unrealistically positive views of oneself and one’s performance.

Immediate Gratification Bias-Choosing alternatives that offer immediate rewards and that to avoid immediate costs

Anchoring Effect-Fixating on initial information and ignoring subsequent information.

Selective Perception Bias-Selecting, organizing and interpreting events based on the decision maker’s biased perceptions.

Confirmation Bias-Seeking out information that reaffirms past choices and discounting contradictory information.

Framing Bias-Selecting and highlighting certain aspects of a situation while ignoring other aspects.

Availability Bias-Losing decision making objectivity by focusing on the most recent events.

Representation Bias-Drawing analogies and seeing identical situations when none exist.

Randomness Bias-Creating unfounded meaning out of random events

Sunk Costs Errors-Forgetting that current actions cannot influence past events and relate only to future consequences.

Self-Serving Bias-Taking quick credit for successes and blaming outside factors for failures.

Hindsight Bias-Mistakenly believing that an event could have been predicted once the actual outcome is known (after-the-fact).

Job Transfers

Change in job (change in place) horizontal or lateral movement

Reasons of Transfer

1)   Shortage/surplus of employees in one department

2)   Conflict (incompatibility) between supervisor or co workers

3)   To correct initial misplacement decisions

4)   Change in interests and capabilities of individual

5)   Productivity of employee has declined due to monotony of job

6)   The employee health or age may inhibit him to work effectively in present job

7)   Family issues (spouse job)

8)   Keeping employee motivated and develop knowledge level of employee

Principles of Transfers

1)   The frequency and period of transfer should be decided and communicate to employees

2)   Authority to make transfer must be clear

3)   The criteria for transfer must be well documented

4)   The area of transfer must be clear

5)   The effect on pay and seniority must be clearly defined

6)   Permanent or temporary transfer

7)   The performance evaluation of employee must be made before transfer

8) The job descriptions and specification must be considered before transferring employee

9)   Performance evaluation of transferee (after transfer) must be made with in reasonable time frame

Three broad categories

1)   Enhance training and development

2)   Adjustment to volume of work

3)   Correct poor placement

Types

1)   Production Transfer

2)   Replacement Transfer

3)   Versatility Transfer

4)   Shifts Transfer

5)    Remedial Transfer