2 Unit Levels of Management

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The term Levels of Management refers to a line of demarcation between various managerial positions

an organization. The number of levels in management increases when the size of the business and wo

force increases and vice versa. The level of management determines a chain of command, the amount

authority & status enjoyed by any managerial position. The levels of management can be classified in thr

broad categories: -

1. Top level / Administrative level2. Middle level / Executory3. Low level / Supervisory / Operative / First-line managers

Managers at all these levels perform different functions. The role of managers at all the three levels

discussed below:

LEVELS OF MANAGEMENT1. Top Level of ManagementIt consists of board of directors, chief executive or managing director. The top

management is the ultimate source of authority and it manages goals and policies for an

enterprise. It devotes more time on planning and coordinating functions.

The role of the top management can be summarized as follows -

a. Top management lays down the objectives and broad policies of the enterprise.b. It issues necessary instructions for preparation of department budgets, procedures,

schedules etc.c. It prepares strategic plans & policies for the enterprise.d. It appoints the executive for middle level i.e. departmental managers.e. It controls & coordinates the activities of all the departments.f. It is also responsible for maintaining a contact with the outside world.g. It provides guidance and direction.h. The top management is also responsible towards the shareholders for the

performance of the enterprise.

2. Middle Level of ManagementThe branch managers and departmental managers constitute middle level. They are

responsible to the top management for the functioning of their department. They devote


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more time to organizational and directional functions. In small organization, there is only

one layer of middle level of management but in big enterprises, there may be senior and

junior middle level management. Their role can be emphasized as -

a. They execute the plans of the organization in accordance with the policies anddirectives of the top management.

b. They make plans for the sub-units of the organization.c. They participate in employment & training of lower level management.d. They interpret and explain policies from top level management to lower level.e. They are responsible for coordinating the activities within the division or

department.

f. It also sends important reports and other important data to top level management.g. They evaluate performance of junior managers.h. They are also responsible for inspiring lower level managers towards better

performance.

3. Lower Level of ManagementLower level is also known as supervisory / operative level of management. It consists ofsupervisors, foreman, section officers, superintendent etc. According toR.C. Davis,

Supervisory management refers to those executives whose work has to be largely with

personal oversight and direction of operative employees. In other words, they are

concerned with direction and controlling function of management. Their activities

include -

a. Assigning of jobs and tasks to various workers.b. They guide and instruct workers for day to day activities.c. They are responsible for the quality as well as quantity of production.d. They are also entrusted with the responsibility of maintaining good relation in theorganization.e. They communicate workers problems, suggestions, and recommendatory appeals

etc to the higher level and higher level goals and objectives to the workers.

f. They help to solve the grievances of the workers.g. They supervise & guide the sub-ordinates.h. They are responsible for providing training to the workers.i. They arrange necessary materials, machines, tools etc for getting the things done.j. They prepare periodical reports about the performance of the workers.k. They ensure discipline in the enterprise.l. They motivate workers.m. They are the image builders of the enterprise because they are in direct contact

with the workers.


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MANAGERS AND THEIR INFORMATION NEEDS

Information is needed for decision making at all levels of management.

Managers at different organizational levels make differenct types of decisions, control different

types of processes, and have different information needs.

Three classical levels of management include:

1. strategic2. tactical (middle)3. operational.

Titles have different values in different organizations.

For example, a vice president at a financial organization may not even be a middle

manager.

Strategic managers operate in a highly unstructured environment and use EISs, and DSSs.

Historically, the most common (organizational structure) was a generic pyramid shaped

hierarchy with a few leaders at the top and an increasing number of workers at each subsequent

lower managerial and operational level.

The pyramid is getting flatter.

In 1993 in the U.S. alone, some 450,000 middle managers lost their jobs.

Some small, knowledge-intensive companies have adopted a matrix pattern as their

organizational structure, with no one leader and leadership distributed among many more people,

varying by project, product, or discipline.

Matrix management includes having multiple bosses.

Technology aside, the politics of information within an organization can undermine optimal

business decision making if it is not taken into account when developing systems, and deciding

how people will support these systems.

Sub-optimization -- the optimization of an individual or a department at the expense of the larger

organization.

In many organizations, clerical and shop floor workers make up the largest group of workers.

Operational managers are responsible for daily operations. They make decisions concerning a

narrow time span about the deployment of small groups of clerical and/or shop floor workers.

Middle, or tatical, managers receive strategic decisions from above as general directives. Using

those directives as guidelines, they develop tatics to meet those strategic directives. That is, they


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make decisions concerning how and when specific resources will be utilized. Usually, a middle

manager will be responsible for several operational managers.

Responsible for finding the best operational measures to accomplish their superiors'

strategic decisions.

While a tactical decision concentrates on how to do something, a strategic decision

focuses on what to do.

Strategic managers, and directors, that make decisions that affect the entire organization, or

large parts of it, and leave an impact in the long run.

People in different management levels have different information needs.

Most of the information that managers require is used to make decisions.

The decision making process of middle managers and above is less structured than that of

operational managers;

In general, strategic decisions have no proven methods for selecting a course of action that

guarantees a predicted outcome.

Data Characteristics determine where and how the data will be used.

Data range refers to the amount of data from which information is extracted&

Time span refers to how long a period of time the data covers.

Level of detail is the degree to which the information generated is specific.

Internally or externally sourced.

Structured data are numbers and facts that can be conveniently stored and retrieved in an

orderly manner.

Unstructured data are drawn from meeting discussions, private conversations, textual

documents, graphics, graphical representations, and other non uniform sources.

The higher the manager, the less structured the decisions that a manager faces


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Objectives in Strategic Management

OBJECTIVES ARE TARGETS IN STRATEGIC MANAGEMENT.

In strategic management, there are strategic objectives and financial objectives. Additionally, all

objectives are either short-run or long-run types. When planning a firm's strategy it is important

to have objectives in mind and to understand the differences between the types of objectives.

1. Strategic Objectiveso Strategic objectives deal with the firm's position in the model. You might do this,

for example, by positioning the firm relative to the external forces -- bargaining

power of customers, bargaining power of suppliers, threat of new entrants, threat

of substitutes, and competition within the industry -- that can impact a business.

Strategic objectives might include expanding market share, changing market

position or under-cutting a competitor's costs.

Financial Objectives

o Managers use financial objectives to measure strategic performance. For example,if the firm's strategic objective is to increase efficiency, the financial objective

could be to increase return on assets or return on capital. Financial objectives,

derived from management accounting, are more concrete.

Short-run Objectives

Financial and strategic objectives can either be short-run or long-run objectives. Short-run objectives deal with the immediate future. They typically focus on tangible goals that

management can realize in a short time. An example of a short-run objective might be to

increase monthly sales.

Long-run Objectives

Long-run objectives target the firm's long-term position. While short-run objectives focuson a firm's annual or monthly performance, long-run objectives concern themselves with


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the firm's development over several years. Examples of long-term objectives might be to

become the market leader or to attain sustainable growth.

decisions are divided into 3 categories: Strategic Planning Decisions: Strategic planning decisions are those decisions in which

the decision-maker develops objectives and allocates resources to achieve these

objectives. Such decisions are taken by strategic planning level (top level) managers.

Management Control Decisions: Management control decisions are taken by

management control level (middle level) managers and deal with the use of resources in

the organization.

Operational Control Decisions: Operational control decisions deal with the day-to-day

problems that affect the operation of the organization. These decisions are taken by themanagers at operational level (bottom level) of the organization.

Levels of Programmability

Simon on the basis of level of the programmability of a decision, proposed two types of

decisions:

Programmed, also known as structured decisionsNon-programmed, also known as unstructured decisions.

Programmed/Structured Decisions Programmed or structured are those decisions, which are well defined and some specified

procedure or some decision rule might be applied to reach a decision. Such decisions are

routine and repetitive and require little time for developing alternatives in the designphase. Programmed or structured decisions have traditionally been made through habit,

by operating procedures or with other accepted tools.

Non-programmed /Unstructured Decision

Decisions, which are not well defined and have not pre-specified procedures decision rule

are known as unstructured or non-programmed decisions.

Knowledge of Outcomes

Another approach of classifying decisions is the level of knowledge of outcomes. An

outcome defines what will happen, if a decision is made or course of action taken. When

there is more than one alternative, the knowledge of outcome becomes important. On the

basis of the level of knowledge of outcomes, decision-making can be classified into three

categories. Decision under certainty: Decision-making under certainty takes place when the

outcome of each alternative is fully known. There is only one outcome for eachalternative.

Decision under risk: Decision-making under risk occurs when there is a possibility of

multiple outcomes of each alternative and a probability of occurrence can be attached toeach outcome.

Decision under uncertainty: Decision-making under uncertainty takes place when thereare a number of outcomes for each alternative & the probabilities of their occurrences arenot known.


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INFORMATION REQUIREMENTS OF MANAGERS

Your ObjectivesCreate a management information plan to:

Effectively manage the specific information requirements of your organization Ensure that information is readily accessible to all users and employees Ensure the most reliable and best suited system of information management for your

organization

How We Can Help

Help you improve upon existing systems of Information Managemento Examine and review the existing informational needs of your organizationo Review how management makes use of informationo Project and account for any possible future changes to information needso Assess the suitability, strengths and weaknesses in the existing information

management structure

o Identify key strengths and areas that work well to be learned from and expandedupon

o Identify key weaknesses and determine how to avoid themo Help to determine, based on the needs and capabilities of your organization, what

changes need to be made to existing information management systems and

processes

Help you acquire and integrate a new system of Information Managemento Assist in the definition of the role and goals of your department or organization,

and its informational requirements

o Determine the resources available to fulfill information management requirementso Determine the core processes necessary to fulfill the overriding goal or objective

of your organizationo Assist in the articulation of what needs to be managed such as the nature of the

information, and what it is needed for

o Determine what tools would work best to manage the specific information needsof your group

o Assess with an objective outside viewpoint the strengths and weaknesses in eachoption

o Provide recommendations on what sort of systems and tools to put in place inorder to make best use of information

Benefit

You benefit by:

Having the "right" information system in place for your needs Enabling management and staff to function optimally with the best information Making a sound and informed decision on an issue that is capable of directly affecting the

success of your organization

Avoiding information management practises that are no longer useful, cost-effective, orapplicable

Being able to project and plan for future informational needs Avoiding the costs associated with ineffective information management systems


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Our ExperienceOur experience includes:

Identification of management information requirements, for example as part of a systemsreview for a large service oriented organization.

MIS STRUCTURE

Structure of MIS may be understood by looking at the physical components of the information

system in an organization. The physical components of an organizational information system

may be hardware, software, database, manual procedures and operating persons.

Hardware refers to the physical data processing equipment and peripheral devices, For example,

CPU, monitor, keyboard, printer, drives, tapes, communication devices, etc.

Software

Software is a broad term given to the instructions or programs that direct the operating of the

hardware. Software could be of two types, i.e. system software and application software.

Database

The database consists of all data utilized by application software. Data is stored in files.

Procedures

Formal operating procedures, which are required to operate a system, such as manuals, are alsoregarded as physical elements.

Operating Personnel

Personnel like Computer Operators, Computer Programmers, System Analysts, System

Managers, etc., are the operating people of the information systems.

Input and OutputVarious physical inputs and outputs from the information system, existing in

forms like printout, reports etc.

MANAGEMENT INFORMATION SYSTEM

Information is the basis for every decision taken in an organization. The efficiency of

management depends upon the availability of regular and relevant information. Thus it is

essential that an effective and efficient reporting system be developed as part of accounting

system. The main object of management information is to obtain the required about the operating

results of an organization regularly in order to use them for future planning and control.

The old techniques like intuition, rule of thumb, personal whim and prestige, etc. are now

considered useless in the process of decision taking. Modern management is constantly on look


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out for such quantitative and such information, which can help in analyzing the proposed

alternative actions and choosing one as its decision. Thus, modern management functions are

information-oriented more popularly known as management by information. And the system

through which information is communicated to the management is known as management

information system (MIS). The management needs full information before taking any decision.

good decisions can minimize costs and optimize results. Management information system can be

helpful to the management in undertaking management decisions smoothly and effectively.

Management information system can be analyzed thus:

1. Management: management covers the planning, control, and administration of theoperations of a concern. The top management handles planning; the middle management

concentrates on controlling; and the lower management is concerned with actual

administration.

2. Information: information, in MIS, means the processed data that helps the managementin planning, controlling and operations. Data means all the facts arising out of the

operations of the concern. Data is processed i.e. recorded, summarized, compared andfinally presented to the management in the form of MIS report.

3. System: data is processed into information with the help of a system. a system is made upof inputs, processing, output and feedback or control.

Thus MIS means a system for processing data in order to give proper information to the

management for performing its functions.


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APPROACHES FOR SYSTEM DEVELOPMENT

System development includes those activities that go into producing an information system

solution to organizational problems or to take advantages of environmental opportunities. System

development consists of two broad phasesanalysis and design. System analysis includes analysis

of a problem which the organization will try to solve with an information system. It is a phase of

system development process in which the system analyst or system development teamdetermines what the new system should accomplish. System design provides details of how a

system will meet the information requirements as determined by the system analyst/system

development team. It is a phase of system development process in which the general

requirements defined in the analysis phase are converted into detailed specifications for the

new system.

Different approaches can be used for system development which can be

classified as follows :

1. System development life cycle.

2. Prototyping.

3. Rapid application development.4. End-user development.

In some of these approaches, top-down method is followed while in some others, bottom-up

method is followed. Further an integrative method can be followed by integrating the top-down

and the bottom-up methods. Therefore,, before going through the details of system development

approaches, it is desirable to go through top-down, bottom-up, and integrative methods. Top-

down Method. Under top-down method, the development of an information system starts from

the identification of organisational objectives, its environment, and constraints under which it

operates. On the basis of these, following steps are followed :

1. The strategic and tactical decisions are made for achieving organizational objectives.

2. Major functions and activities are identified which are relevant for carrying out these

decisions.

3. From the functions and activities. the major information requirements are determined.

4. Based on information requirements, model of information flow in the organization is

developed which acts as a guide for designing the information systems.

5. By using the model of information flow. various information subsystems are defined. Each

subsystem comprises various modules. A module is a basic unit for information system

development. The selection of a module for developing the system is made on the basis of

priority assigned to various modules.

6. Various subsystems and their modules are coordinated and integrated. The information systemso developed is viewed as a total system fully integrated rather than being a collection of loosely

coordinated subsystems. In top-down method. top management of the organization takes

initiative in formulating organizational objectives and strategies and communicates these

down the line to middle and lower management levels for translating these into performance

results. Managers at the middle and lower levels seldom play any role in objective and strategy

formulation: they focus their attention on strategy implementation and operational control.

Bottom-up Method. In bottom-up method. the development of information system starts from

the identification of life stream systems which are essential for the day-to-day business

operations. For example, payroll, sales order, inventory control etc. Initially, information systems


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for these life streams are developed which are in the form of transaction processing systems.

Other systems are developed subsequently based on the user needs. Following steps are followed

in bottom-up method of system development:

1. For each life stream, basic transactions, information file requirements, and information

processing programs are identified.

2. Based on basic transactions, information file requirements, and information processing

programs, information system for each life stream is developed.

3. After thoroughly examining various applications, files, and records, data kept in different filesof each information system are integrated. Integration of data enhances share ability of database.

It also ensures that uniform data are being used by all programs and also provides added

capability for enquiry processing as well as ad hoc requests for reports.

4. After database is created, various planning and decision support systems are developed for

management planning and control.

5. After the planning and decision support systems start functioning, these are integrated into a

model base having a variety of models including regression analysis, operations research models

etc.

6. At the last stage, strategic planning models are added to the information system by collecting

and storing the external information relevant for strategic planning.

Thus, in bottom-up method, a system grows in real response to user needs. However. this method

suffers from one basic limitation that is integration of various subsystems may need redesigned

system due to the changing requirements and new interfaces with other subsystems.

Integrative Method: Integrative method tries to overcome the limitations of topdown and

bottom-up methods by balancing both the methods. In integrative method, managers at all-levels

are permitted to play role in system development. In this method, top management initiates the

structure and design of the information system suitable to the organization which is presented to

managers at middle and lower levels for soliciting their views and necessary modifications. The

managers at these levels are advised to suggest changes, additions, deletions and return thedesign along with their suggestions to the top management. Based on these suggestions, a revised

design is drawn which is again sent down the line for comments and necessary modifications.

This process continues till a system design is finalized which is satisfactory to personnel at all

the levels.

System Development Life Cycle

System development life cycle (SOLC), or simply called system life cycle (SLC), is based on the

life cycle stages of natural systems. Natural systems go through the four stages of life cycle-

birth, growth, maturity, and decay. In the same way an information system, which is a man-made

system, passes through different stages though it is not necessary that these stages exactly

resemble the stages of natural systems. An information system development life cycle has

different stages. The system developer may progress from one stage to another methodologically

solving the problems involved and achieving the desired results. However, there is a need for

caution in isolating various stages of SOLC. These stages have been isolated in a sequence for

learning purpose and in actual practice they may overlap. Each stage may act as a basis for

modifying earlier actions. For example, based on performance criteria a particular proposed

system has very high ranking but if it requires a hardware system which is not feasible, the

system may not be considered useful for further action and fresh system development

process may begin.

Therefore, various stages of SOLC should be taken in this perspective.


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They are: Project Definition: Project definition stage determines whether or not the organization

has a problem and whether or not the problem can be solved by launching a new system. Thus, at

this stage, the need for a new system is recognized. The basis for a new system is the recognition

of a need for improving an information system or a procedure. This need leads to a preliminary

surveyor an initial investigation to determine whether an alternative system can solve the

problem. It entails looking into the duplication of effort, bottlenecks, inefficient

existing procedures, or whether parts of the existing system need computerization. If the problem

is serious enough, the management may want to have an analyst to look at it. Such an assignmentimplies a commitment specially if the analyst is hired from outside the organization. In larger

organizations, where, formal procedures are the norm, the analyst's first job is to prepare a

statement specifying the scope and causes of the problem. He may then review it with the users

for accuracy.

System Analysis : At this stage, an analysis of the problems of the existing system is undertaken

and how the new system is likely to overcome these problems is specified. For this purpose, a

system analysis is undertaken which is a detailed study of various operations performed by a

system and their relationship within and outside the system. During analysis, data are collected

about the available files, decision points, and transactions handled by the existing system. There

are various tools which are used for analysis, such as data flow diagrams, questionnaires,

interviews, on-site observations, etc. Once this analysis is completed, the analyst has a firm

understanding of what can be done to overcome various problems. Various alternative systems

are evolved and feasibility study is undertaken to determine their suitability.

System Design : System design is the most creative and challenging phase of system life cycle.

System design describes how a chosen system will be developed. It prescribes the technical

specifications (analogous to the -- engineer's blueprints) that will be applied in the chosen

system. It also includes the construction of program and program testing. System design involves

certain steps. The first step is to determine how the input is to be produced. The second step

involves designing input data and database that meet the output requirements. Data processingphases are handled through program construction and testing. including the list of the programs

needed to meet the system's objectives and complete documentation.

Implementation. System implementation phase is less creative than the design phase. It is

basically related to user training, site preparation, and file conversion. Depending on the nature

of the new system, user training is planned and conducted. Site preparation is required when the

new system is quite different as compared to earlier one like the use of communication network

by the new system. Conversion from old to new system takes place either at the time of user

training or little later.

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2 Unit Levels of Management