Management Process and Organizational Behavior 5

8/3/2019 Management Process and Organizational Behavior 5

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PRINCIPLES OFMANAGEMENT


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Features of Management Management is universal

Management is purposeful

Management is a unifying force

Management is a social process

Management is multidisciplinary

Management is a continuous process

Management is intangible

Management is situational

Management is essentially an executive function

Management is an are as well as science


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Management as an artThe main elements of art

Personal skills

Practical know-how

Result orientation

Creativity Constant practice aimed at perfection


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Why mgmt is an art? A manager applies his knowledge and skills to

coordinate the efforts of his people

Management seeks to achieve concretepractical results

Management is creative

Management is a personalized process Effective management leads to realization of

organizational and other goals.


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Management as a ScienceThe essential elements of science are:

Science is a systematized body of knowledge

pertaining to a particular field of inquiry It contains underling principles and theories

developed thru continuous observation,experiments & research

They have universal applicability

It can be learnt in and out the classroom


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Why mgmt is a science? Systematized body of knowledge is

available

Pples of mgmt have been evolved thrupractical experience and theoreticalresearch

wide and repetitive application Management theory can be taught in

classrooms and in industry


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Management as social science It involves the study of human behavior

Its pples are not hard and fast laws. It is flexiblebased on situations

Validity of the pples cant be tested thru experiments

It cant explain clearly why and how a human beingbehaves in a particular , thereby making it a softscience.

It is an applied science. Therefore mgmt is a combination of art and science


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Schools of Management

Thought Empirical Approach Human Behaviour Approach

Social Systems Approach Socio technical Systems

Decision Theory

Management Science Systems Approach

Contingency/Situational Approach

Operational Approach

E i i


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EmpiricaApproach/Case/Management

experience Management is a study of managerial

experiences

Experience can be passed on

Studying from managers

Leads to generalisations


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Limitations No significant contribution to mgmt

A successful technique of the pastmight be of questionable use in future.


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Human Behavior Approach Developed by behavioral scientists

Managers should understand humanbehavior

Emphasis is put on increasingproductivity through motivation

Motivation,leadership,communication,parcipative mgmt and group dynamicsare the core


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Limitations Only human problems are taken into

account


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Social Systems Approach Vilfredo Paretos idea later on developed

by Chester Bernard

Organisation is a social system, a systemof cultural relationships

Relationships exist among the external aswell as internal environment

Co operation among group members forachieving organizational objves

For effective management, harmonywithin various groups is necessary


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Socio-Technical Systems

ApproachAn organization is a combination of

both social and technical systems

Social system is governed by social lawsas well as by psychological forces

Technical system consists of

technological like physical setting ofwork, rules , procedures etc


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Limitations Scope limited to shop floor level

Not a new concept


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Decision Theory Approach

Management is essentially decisionmaking

The members of the organization aredecision makers and problem solvers

Organization can be treated as a

combination of various decision centers Quality of decision affects effectiveness

All factors affecting decision making are

the subject matter of study of mgmt


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Management ScienceApproach

Management is regarded as the problemsolving mechanism with the help of

mathematical tools and techniques Managerial activity can be quantified

Covers decision making, systems analysis

and some aspects of human behavior OR, mathematical tools, simulation models

etc are basic methodologies


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Limitations

All managerial activities cannot bequantified.


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Systems Approach

A system is an assemblage of thingsconnected or interrelated so as to form

a complex unity.


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Features of a system

A system is basically a combination ofparts

Parts and sub parts are mutually relatedto each other

A system is not merely the totality of

parts and subparts but theirarrangement is more important

A system has a boundary


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Contd

Open & Closed system

System transforms inputs into output


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Management as System

Social System

Open system

Adaptive Dynamic

Probabilistic

Multilevel and multidimensional

Multivariable

Multidisciplinary


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Implications & Limitations

Integrated Approach

Organization-environment interaction

- Abstract Approach

-

Lack of universality


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Pioneers of mgmt- F.W Taylor

Father of scientific management

Defined management as the art of

knowing exactly what you want men todo and seeing that they do it in the bestand cheapest way

Famous book-Principles of scientificmanagement 1911


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Pples of Taylor

Develop a true science for each element of aworkers job to replace rule of thumb

Scientific selection, training and developmentof workers for each job

An equal division of responsibility betweenmanagement and workers. Planning anddoing should be separated

Close co-operation between mgmt and labor.


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Techniques developed byTaylor

Functional foremanship (specialization)

Differential piece rate plan

Work scheduling

Time study

Motion study


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Criticisms against Taylor

Devoid of human touch (wage-incentive)

Narrow in scope ( applicable to factoryjobs)

Separation of planning from doing

Extensive use of specialisation


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Pioneers of mgmt- Henri Fayol

Famous book- Administration Industrielle etGenerale

Managerial skills can be taught in the classroom and then at work place

Contribution can be classified into 3 heads:

Classification of Business ActivitiesFunctions of management

Management principles


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Classification of businessactivities

Technical ( Manufacturing)

Commercial ( Buying, selling& exchange

Financial ( search for & optimumutilization of capital)

Security ( protection of property &

persons)Accounting

managerial


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Functions of management

Planning

Organizing

Commanding

Co-ordinating

Controlling


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Management principles

1. Division of work

2. Authority and responsibility

3. Discipline4. Unity of command

5. Unity of direction

6. Subordination of Individual to GeneralInterest

7. Remuneration of Personnel


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Contd..

8. Centralization

9. Scalar Chain Concept ofGang- Plank

10. Order11. Equity

12. Stability of tenure of personnel

13. Initiative14. Esprit de Corps (Team Spirit and co

operation)


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Evaluation Arguments for it

Universal applicability

Practical principles of management

The need for formal training for would-be managers is important

Its the core of modern management

education Father of administrative management

theory


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Evaluation Argumentsagainst it

Too formal

Did not pay much attention to workers

How to teach mgmt was not explained

Some terms have vague explanation


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Pioneers of mgmt- GeorgeElton Mayo

Father of Human Relations Movement

Professor at the Harward business

school

Leader of the Hawthorne Experiments


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Outcome of the Experiment

Productivity could be increased not onlyby improving working conditions but

thru informal social relations among themembers of the group


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Proof relay assembly TestRoom Experiment

A small homogenous work group was selected Introduced several new elements in the work

atmosphere ( Shorter working hrs, appropriate rest

periods, improved physical conditions, friendly andinformal supervision, free social interaction with theteam)

Productivity increased during the period of theexperiment

Productivity maintained even if improvements inworking conditions were withdrawn Concluded that Socio-psychological factors held the

key for higher productivity


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Proof- Mass Interviewingprogram

Large number of workers wereinterviewed and the results confirmed

the importance of informal relations andSocio-psychological needs


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Conclusions of the Hawthorneexperiments

A factory is not just a techno-economic unit Workers spontaneously form informal groups The norms and values of such group have significant

influence on the behavior and performance of theworkers Physical conditions of work does not influence

productivity as much as Socio-psychological needs Generally workers act or react as members of a

group Informal leaders play an imp role Workers are not mere economic beings Mgmt must understand and recognize interpersonal

and group relations on job


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Evaluation Arguments for it

Human aspects is considered

Several HR concepts was developed

following the experiment


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Evaluation Argumentsagainst it

Lack of scientific analysis

The researchers had certain

preconceived perceptions

The experiments were narrow

Workers were highly conscious when

being observed ( Hawthorne Effect)


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Pioneers of mgmt- Peter FDrucker

Management Guru

Considered mgmt as the dynamic and

life giving element in an orgn.


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Contributions

Nature of management Managerial functions includes:To manage managersTo manage workersTo manage work Organization Structure

Decentralization MBO Futurity


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Contd..

Drucker had identified 8 key result areas in whichclear objectives must be laid down:

1. Market standing

2. Innovation3. Productivity4. Physical and financial resources5. Profitability6. Managerial performance and development7. Worker performance and attitude8. Public responsibility


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Types of business entity-Soleproprietorship

type of business entity which legally has noseparate existence from its owner

Limitations of liability enjoyed by a corporation

and limited liability partnerships do not apply tosole proprietors All debts of the business are debts of the

owner

A sole proprietorship essentially refers to aindividual doing business in his or her ownname and in which there is only one owner

it does not pay corporate taxes


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Disadvantages

Will likely have a hard time raising capital Hiring employees may also be difficult

This form of business will have unlimitedliability, so that if the business is sued, theproprietor is personally liable

The life span of the business is alsouncertain

The business owner must also be an all-rounder


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Partnerships

Partnership is a type of business entity, where youpartner with other individuals to own and run thebusiness.

On a higher level, they can be viewed as collection ofsole proprietors.

By partnering with other individuals, you get accessto a bigger pool of capital, skills and other resourcesto fund and run your business.

All partners contribute capital equally, share profitsand losses equally and have an equal say in businessdecisions.


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Advantages

Access to larger pool of resources andcapital

You do not have the confidence to startthe business on your own and needsome one to shoulder the responsibility

Access to complementary skills


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Disadvantages

If your partner makes a business mistake,without your knowledge or consent, and itadversely affects your business, you are

equally liable to bear the consequences -even though you had no role to play in themistake

If your partner goes bankrupt, his share inthe business can be seized by his creditors.

Although you are not liable for his personaldebts, your business may be put into

jeopardy


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Legal side of partnership

have a legal document that highlightsthe partnership agreement between

partners - the profit sharing, duration ofpartnership, admitting-expellingadditional partners, dissolving the

partnership etc.


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Limited company

Alimited company is whose liability islimited by law

There are three main types of limitedcompanies:

1. private company limited by shares(Ltd.)

2. private company limited by guarantee

3. public limited company

Wh P bli P i


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What are Public or Privatecompanies? These companies are also know asjoint stock companies.

The companies in India are governedby the Indian Companies Act, 1956

company is an artificial person createdby law, having a separate legal entity,with perpetual succession and acommon seal

the company is different from the

investors


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Characteristics

Legal formation

Artificial person

Separate legal entity

Common seal

Perpetual existence

Limited liability

Democratic management

S i l h t i ti f P t


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Special characteristics of PvtLtd Co.

These companies can be formed by at least twoindividuals having minimum paid-up capital ofnot less than Rupees 1 lakh.

As per the Companies Act, 1956 the totalmembership of these companies cannot exceed50.

The shares allotted to its members are also not

freely transferable between them. These companies are not allowed to raise money

from the public through open invitation.

They are required to use Private Limited after

their names.

S i l h t i ti f


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Special characteristics ofPublic Ltd Co.

A minimum of seven members are required to form apublic limited company.

It must have minimum paid-up capital of Rs 5 lakhs.

There is no restriction on maximum number ofmembers. The shares allotted to the members are freely

transferable. These companies can raise funds from general public

through open invitations by selling its shares oraccepting fixed deposits. These companies are required to write either public

limited or limited after their names.

P i t li it d b


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Private company limited byguarantee

This type of Company does not haveshare capital but is guaranteed by its

"members", who agree to pay a fixedamount in the event of the company'sliquidation


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Cooperative

an autonomous association of persons unitedvoluntarily to meet their common economic,social, and cultural needs and aspirations

through a jointly-owned and democratically-controlled enterprise A cooperative may also be defined as a

business owned and controlled equally by thepeople who use its services or who work at it

Cooperatives may be generally classified aseither consumer cooperatives orproducer cooperatives.


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Cooperatives are based on the values of self-help, self-responsibility,

democracy and equality.

In the tradition of their founders, cooperative members believe in the

ethical values of honesty, openness, social responsibility and caring for

others.

Membership is open.

Economic benefits are distributed proportionally according to each

member's level of participation in the cooperative, for instance by a

dividend on sales or purchases, rather than divided according to capital

invested.


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Multinational Corporations

Multinational corporation (MNC) ortransnational corporation (TNC) is a

corporation or enterprise that managesproduction or delivers services in morethan one country


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Many MNCs are large in relation to thenational income of the countries in whichthey are located

MNCs generate jobs and incomes

MNCs help training of local workers in newand potentially transferable skills

Technology transfer is also an incentive The local community would benefit since land

would develop

attractive both for the company and a host

country's government

M lti ti l t


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Multinational corporatestructure

Horizontally integrated multinationalcorporations (example: McDonald's)

Vertically integrated multinationalcorporations (example: Adidas or Nike,Inc.)

Diversified multinational corporations(example: Microsoft )


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Threats caused by MNCs

The Rise of Corporations

Corporations and Human Rights

Market Withdrawal Evasion of Tax and Other Responsibilities

Corporations and the Environment

Corporate Influence on Children Corporations and Workers Rights

E ol tion of management


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Evolution of managementPre Scientific Mgmt Period

Period before Taylors Scientific era

Pioneers of this era includes Robert

Owen, Charles Babbage, Hendry VernunPoor, Hendry Robinson, James Watt,Mathew Boulton and Captain

HendryMetcalfe.


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Robert Owen - Contributions

Manager of a group of textiles in Scotland. Workers performance was influenced by the total

working atmosphere

Employees are vital machines Maintenance of workers are as necessary as that for

machines Co-operation between workers and management Human capital is the most worthy New ideas of human relation ( shorter working hrs,

housing facilities, canteens, education of children,rest places)


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Charles Babbage-Contributions

Prof of Mathematics in Cambridge University Use of science and mathematics in

manufacturing operations Division of work acc to skills Avoid opinions and intuitions while decision

making Emphasis on cost reduction Participative decision making and profit

sharing Invention of an analytical machine


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Hendry Vernun Poor

Editor of the American Railroad journal

He noticed the railroads being mismanaged

3 pples to railroad managers- organisation,communication and information

Need for a structured organisation structure

Unity and co operation among workers

James Watt & Mathew


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James Watt & MathewRobinson

Applied the following management techniquesin their Engineering Factory:

Market research and forecasting Standardisation of components and parts

Production planning

Elaborate statistical records Cost accounting procedures

Provision for employee welfare

Approaches to management-


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pp gClassical /Traditional/Empirical

approach Management is viewed as a systematic network of

inter related functions The mechanics with which each function is performed

and their inter relation is the core of classical app. Principles are developed based on experiences of

practicing managers Functions, principles and skills of management are

considered universal.

Formal education to would be managers (case studymethod) Emphasis is placed on economic efficiency and formal

organizational structure People are motivated by economic gains


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Uses and Limitations

Case study method used is very usefulwith future applicability

Focuses more on what mangers shouldactually do

Highlights the universal nature of

management It has a scientific base


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Devoid of human touch

The environment dynamics and their

effect on management is ignored Too much depending on past

experiences

Case study method is very effective inunderstanding the totality of thesituation


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Behavioral Approach

Emphasis is on the human aspects ofmanagement

Developed by George Elton MayoA developed version of HR movement

An extension of Hawthorne Experiments


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Basic Propositions

An organization is a socio technical system A wide range of factors influence

interpersonal and group behavior There should be a fusion between

organizational goals and human needs Several differences in attitudes, perceptions

and values of employees exist and influence

their behavior and performance Some degree of conflicts are inevitable and

even desirable in organizations


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HR v/s. Behavioral Approach

Human Relation

Focus on interpersonalrelations

Study of individual

Motivation and jobsatisfaction

Originated fromHawthorne exp

Behavioral

Focus on group relation

Study of groups andgroup behavior

Group dynamics andinformal organisationare main concepts

Wider version of HR


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Quantitative approach

Management is a series of decision making. The manger has to secure the best solution out of a

series of inter related variables These variables can be presented in a mathematical

model ( a prototype of the decision situation) If the model is properly formulated and equations

correctly solved, the best soln can be got Organizations exist for the achievement of specific

and measurable economic goals In order to achieve these goals optimal decisions

must be made The quality of management is judged by the qlty of

decisions made in diverse situations


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Uses and Limitations

Emphasis on diverse situational changesof decision making

Intuitions is replaced by factual dataand logical analysis

Thereby precision and perfection ofdecision making can be achieved

Several OR techniques have beenevolved from then.


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Systems Approach

A system is a set of distinguishable but interdependent and inter related parts operatingin a logical manner or sequence in order to

achieve a goal Each part affects the others and the system

as a whole

Every system operates in a wider system

Systems are of several types ( Static,Dynamic, Open and Closed systems)


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Basic Propositions

An organization is a system consisting ofseveral sub systems

The position and function of each sub systemcan be analyzed only in relation with othersub systems or the organization as a whole

An organizational system has a boundary

which separates it from other systems An organization is a dynamic system


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Limitations

Some concepts are vague and abstract

It cant be directly applied to problems

Contingency Approach /


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Contingency Approach /Situation Approach

Management is entirely situational

Fit the approaches acc to the situation

Sharpen diagnostic skills

No one best way to mange

Management techniques and tools arenot universal


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Uses and limitations

Emphasis on situation orientation

Open minded

Innovation and creativity power ofmanagers is necessary

Practical

Ifthen pple

Lacks theoretical base

Recent trend in Management


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Recent trend in Managementthoughts

Information Technology

Professionalisation

Flexible organization

Situational approach

HR

Futurology

Community Leader


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Vision statement

AVision statementoutlines what theorganization wants to be.

It concentrates on the future. It is a source of inspiration. It provides

clear decision-making criteria

A vision statement should be SMART(Specific, Measurable, Achievable,Relevant and Time bound)

Features of an effective vision


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Features of an effective visionstatement

Clarity and lack of ambiguity

Vivid and clear picture

Description of a bright future

Memorable and engaging wording

Realistic aspirations

Alignment with organizational valuesand culture


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McDonald's vision is to be the world'sbest quick service restaurant

experience.


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Mission statement

Amission statement is a brief statement ofthe purpose of a company, organization, orgroup

A mission statement should : Define what the company is Define what the company aspires to be Limited to exclude some ventures Broad enough to allow for creative growth Distinguish the company from all others Serve as framework to evaluate current activities Stated clearly so that it is understood by all


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It should be brief, flexible and distinctive

TCS MissionTo help customers achieve

their business objectives by providinginnovative, best-in-class consulting, ITsolutions and services, and to actively engageall stakeholders in a productive, collaborative,

and mutually beneficial relationship


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Values are guiding principles for theorganization to achieve its vision.

integrity, leading change, excellence,respect for the individual, and fosteringan environment of learning and

sharingTCS Values


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Objectives

Goals established to guide the efforts ofa company and each of its components

The activities of any organization isdirected towards the objectives

Characteristics of


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Characteristics ofOrganizational objectives

An orgn has multipleobjectives

Objectives have timespan

Objectives formhierarchy

CorporateObjective

s

Departmental

Objectives

Group Objectives

Individual Objectives


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Importance of Objectives

Legitimacy

Direction

Facilitates planning

Individual motivation

Performance control


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Essentials of Valid objectives

Clear and specific

Stated in measurable terms

Result oriented and time bound Challenging but realistic

Acceptable by employees

Social sanction Laid down in KRAs

Some flexibility


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Process for forming an


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Process for forming anorganization structure

A process involving decisions about six keyelements: Work specialization

Departmentalization Chain of command Span of control Centralization and decentralization

Formalization

Need and significance of


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Need and significance ofOrganization Structure

Facilitates administration

Facilitates growth and diversification

Permits optimum utilization oftechnological improvements

Greater employee satisfaction

Stimulates creativity


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Features of a good structure

Unity of objective Specialisation Span of control

Scalar principle Functional definition Exception principle(Authority level pple) Unity of command Efficiency Flexibility Facilitation of leadership Coordination

Simple Structure -


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S p e S uc u echaracteristics

Prime co-ordinating mechanism: directsupervision

Key part of organization: strategic apex Main design parameters: centralization,

organic structure

Situational factors: young, small,simple, non-complex technical system


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Simple structures lack:

support workers, formal structures,differentiated units, behaviour

formalization, hierarchies of managers,planning, training, liaison

The simple structure representeddiagrammatically


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diagrammatically

Operating core

Strategic

apex


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Simple structure - limitations

Limited by the ability of one person tocontrol everything

If the leader doesnt function, neitherdoes the organisation

Restrictive and un-democratic for

workers their decision makingcapability not called upon


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Advantages

It exists in all organizations at some level

Specialisation that leads to optimum

utilization It ensures the performance of all activities

It facilitates delegation of authority

Avoids duplication of work

It simplifies training


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Disadvantages

Too much emphasis on specialisation

There may be conflicts between depts

There may be problems in coordinatingthe activities of different depatments


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Multi divisional structure

1. Product departmentalisation

Every major product is organized as a

separate department Useful for organizations producing and

marketing products of significant

difference


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Advantages

All activities regarding a particularproduct line is well integrated

Facilitates product expansion anddiversification

The contribution of each product line to

overall results can be easily evaluated


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Disadvantages

There is duplication of functions

Advantages of centralisation of certain

activities are not available There may be under utilization of plant

capacity

More people are required

Product departmentalisation


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p

BOD

Managing director

Plastics division Metals divisionChemicals division

Finance

Production

Sales

Personnel


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2. Territorial Departmentation

When the business is spread over in

large geographical areas One functional manager cannot

manage efficiently

Regional managers for differentregions


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Advantages

Local operations made easy

Savings in freight charges

Every regional manager can specializein the peculiar problems of his region

When business exists across borders


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Disadvantages

Communication problems

More number of people with managerial

skills are required Control of all branches from head office

can be less effective

Duplication of physical activities


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3. Market Departmentation

Activities are grouped according to the

type of customers eg: Wholesale, retail, export etc


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Advantages

More attention can be given tocustomers

The benefits of specialisation can bederived

Customer needs can be more satisfied

thereby more profits


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Disadvantages

Departmentation is applied only to salesfunctions

Duplication of work


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Matrix Structure

Combination of two structures

For complex organizations


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Advantages

Oriented towards end results

Disadvantages Conflicts can arise

Matrix Structure


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Matrix Structure

Project D

Project A

Project B

Project C

Director

Chief ArchitectChief of

preliminary

Design

ChiefElectrical

Engineer

ChiefMechanical

Engineer


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MBO

Process whereby the superior and thesub ordinate managers of an enterprise

jointly identify its common goals, defineeach individuals major areas ofresponsibility in terms of the resultsexpected of him, and use these

measures as guides for operating theunit and assessing the contribution ofeach of its members


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Objectives

To measure and judge performance To relate individual performance to organizational

goals To clarify what is to be achieved To foster the increasing competence and growth of

the sub ordinates To serve as a basis for judgements about salary and

promotion To stimulate the sub ordinates motivation To serve as a device for organizational control and

integration


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Features

Goal oriented rather than work oriented Involves participation of subordinate managers in

goal setting MBO stresses measurable and verifiable goals in

KRAs MBO is a dynamic system Maximum utilization of resources is the overall

philosophy Linkage between organizational goals and individual

goals Continuous process It sets an evaluative mechanism


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Steps in MBO process

Preliminary goal setting

Setting subordinates goals

Recycling objectivesAction planning

Periodic performance reviews

Final appraisal


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f O


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Limitations of MBO

Goal setting problems

Time consuming

Increased paper work Pressure oriented

Undermining leadership

Participation problem

H k MBO ff i


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How to make MBO effective

Purpose

Top management support

Orientation and trainingAdequate time and resources

Decentralization

Timely feedback

PLANNING


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PLANNING

A function that determines in advancewhat should be done.

It consists of selecting enterpriseobjectives, policies, programmes,procedures and other means of

achieving these objectives.

N t f l i


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Nature of planning

Goal oriented

Planning is a primary function

Planning is all pervasive Planning is an intellectual or rational process.

It is a continuous process

Planning is forward looking

Planning involves choice

It is directed towards efficiency

I t f l i


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Importance of planning

Focuses attention on objectives and results Reduces uncertainty and risk Provides sense of direction

Encourages innovation and creativity Helps in coordination Guides decision making Provides a basis fro decentralization Improves efficiency Facilitates control

Problems in planning(Li it ti )


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(Limitations)

Lack of accurate info

Time and cost

Inflexibility Lack of ability to plan

False sense of security

Environmental constraints

P i i l f l i


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Principles of planning

Contribution to objectives

Efficiency of plans

Primacy of planning Principle of timing

Principle of alternatives

Principle of limiting factor

Principle of commitment

Principle of flexibility

Hi h f l i (S )


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Hierarchy of planning (Scope)

Corporate

planning

Divisional orfunctional planning

Group or sectional planning

Hi h f l i (Ti )


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Hierarchy of planning (Time)

Long range strategic planning

Medium term or Intermediate planning

Short term operational planning

St i l i


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Steps in planning

Identify goals

Develop planning premises

Determine alternative courses of action Evaluate the alternatives

Select a course of action

Formulate derivative plans

Li d t ff i ti


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Line and staff organization

Line organization- Features

i. Lines of authority are vertical flowing fromtop to bottom

ii. The command is through a straight ,unbroken line

iii. All persons at the same level areindependent of each other

iv. The authority and responsibility of eachposition is clearly defined

Ad t


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Advantages

Simple

Prompt decision

Effective discipline Orderly communication

Unity of command

Economical

Fixed responsibility

Co ordination

Disad antages


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Disadvantages

Lack of specialization

Overloading

Autocratic approach Low morale

Succession problems

Suitability


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Suitability

Small scale business

Routine nature of work

Where machines are used more thanexpertise of foremen

Line and staff


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Line and staff

Decision Making


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Decision Making

A decision is a course of action which isconsciously chosen from among a set of

alternatives to achieve a desired result. The process of doing it is decision

making

Features of decision making


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Features of decision making

Goal oriented process

Set of alternatives are available

Dynamic Environment related

Implies freedom to the decision maker

Continuous process

Intellectual process

Types of decisions


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Types of decisions

Programmed and non programmeddecisions

Organisational and personal decisions Individual and group decisions

Decision making process


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Decision making process

Identify the problem

Diagnose the problem

Discover alternatives Evaluation of alternatives

Risk

Economy of effort

Timing

Limitation of resources

Contd


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Contd..

Select the best alternative

Implementation and follow up

Summed to 3 phases: Intelligence activity

Decision activity

Choice activity

The Environment for decisionmaking


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making

Certainty

Risk

Uncertainty

Limitations of scientificdecision making


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decision making

Inadequate goal formulation

Vaguely defined problems

Imperfect knowledge Limited time and resources

Human limitations

Power politics

Environmental dynamics

Group think

Objectives- Strategies andPolicies


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Policies

A complex plan for bringing theorganization from a given posture to a

desired position in a future period oftime

A response to external environmentforces

Importance of strategies


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Importance of strategies

Helps in facing environmentalchallenges

Provides direction Optimum utilization of resources

Facilitates coordination and control

Competitive strength

Essentials of a good strategy


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Essentials of a good strategy

Internal consistency

Consistency with environment

Appropriate time horizon Realistic

Acceptable degree of risk

Feasibility

Social sanction

St i t t f l ti


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Steps in strategy formulation

Mission and objectives

SWOT analysis (Self appraisal &

Environmental analysis) Strategic decision making

Strategy implementation and control

Types of strategies


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Types of strategies

Stability strategy

Growth strategy

Retrenchment strategy Combination strategy

Competitive strategy

Grand or master strategy

Policies


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Policies

A broad statement formulated toprovide guidance in decision making at

lower levels of management

Importance of policies


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Importance of policies

Operationalise objectives

Save time and effort

Facilitate delegation of authority Speed up decision making

Types of policies


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Types of policies

Originated policy

Appealed policy

Imposed policy

Steps in policy formulation


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Steps in policy formulation

Defining the policy area

Identification of policy alternatives

Evaluation of alternatives Choice of policy

Communication of policy

Policy application

Policy review and appraisal


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Characteristics


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Characteristics

Superior grants a discretion to the subordinate

Entire authority cannot be delegated

The extent of delegation depends uponseveral factors

Delegation is not reduction in authority

Delegation does not mean abdication ofresponsibility

Delegation is an art

Importance of delegation


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Importance of delegation

Distribution of routine work

Quick decision making

Improves the work life of sub ordinates Increases interaction

Helps to ensure continuity in business

Process of delegation


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Process of delegation

Determination of results expected

Assignment of duties

Granting of authority Creating accountability for performance


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Delegation Decentralization


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Delegation Decentralization

It is a process

Denotes relationshipb/w a superior and

subordinate It is essential for

mgmt process

Delegation can

happen withoutdecentralization

It is the end resultof delegation

Denotes relationship

b/w the top mgmtand various depts

It is optional

Decentralization

cant happen withoutdelegation

Degree of decentralization ameasure


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measure

Number of decisions

Importance of decisions

Effects of decisions Checking of decisions


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Factors determiningdecentralization


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decentralization

Size and complexity of the orgn

Dispersal of operations

Degree of diversification Outlook of the top mgmt

Availability of competent personnel

Nature of functions

Communication system

Span of management


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Span of management

Number of sub ordinates that reportdirectly to a single manager

Factors determining span


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Factors determining span

Nature of work

Type of technology

Ability of manager

Capacity of sub ordinates

Degree of decentralization

Policies and procedures

Staff assistance

Time available for supervision

Empowerment


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Empowerment

giving employees power and authority tomake decisions on their own

When people are allowed to work with

minimal interference from their superiors andare given the authority and responsibility tomake decisions, they are said to beempowered

Employees can be empowered by ensuringtheir participation in decision-making


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Pre-requisites essential forparticipation


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participation

adequate time

potential benefits of participation should

be greater than the costs involved the employees must also have the

relevant abilities and skills

should be interested in that particulararea of work

Effectiveness


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Effectiveness

doing "right" things, i.e. setting right targets toachieve an overall goal

Effectiveness is a quality metrics meaning how gooda person is at doing a task.

Efficiency Vs Effectiveness Efficiency is a quantity metrics Efficiency = output (number of customer service calls

taken per hour)

Effectiveness = outcome (customers who aresatisfied with the answers received)

Management by restructuring-Benchmarking


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Benchmarking

process of comparing the cost, time orquality of what one organization doesagainst what another organization does

Its a continuous process Involves measurement

Comprehensive

Self examination

Goal oriented

Types


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ypes

Internal benchmarking

Functional benchmarking

Competitive benchmarking

Phases and steps inbenchmarking process


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g p

Planning

Analysis

IntegrationAction

Maturity

Steps


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p

Identify what is to be benchmarked

Identify best competitor

Determine data collection methodology

Determine current performance GAP Project future performance levels

Communicate benchmark findings

Establish functional goals

Implement specific action and monitor progress Recalibrate benchmarks

Maturity

Management by restructuring-BPR


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The fundamental rethinking and radicalredesign of business processes toachieve dramatic improvements incritical, contemporary measures ofperformance, such as cost, quality,service and speed


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Fundamental rethinking: Why does the companydo what it does? Why does it do it the way it does? Itconcentrates on what should be done.

Radical Redesign: Discard all existing oldstructures and procedures and invent new ways ofdoing things

Dramatic improvements: No marginal

improvements only quantum leaps Key processes

Companies that go for it


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p g

Companies that are in deep trouble

Companies that foresee trouble

Companies that are aggressive andambitious

Objectives of BPR


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j

Redesigning the key business processto improve quality and reduce cost

Flattening the organization and

encouraging teamwork Training and developing HR

Improving information technology

Identifying core competencies andmanaging environmental changes

Entrepreneurship


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p p

Entrepreneurship is the practice ofstarting new organizations orrevitalizing mature organizations,particularly new businesses generally inresponse to identified opportunities

Advantages ofentrepreneurship


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p p

Self-employment, offering more jobsatisfaction and flexibility of the workforce

Employment for others, often in betterjobs

Income generation and increased

economic growth More goods and services available

Entrepreneurs...Traits


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Self-confident and optimistic

Able to take calculated risk

Respond positively to changes Flexible and able to adapt

Knowledgeable of markets

Abl t t l ll ith th

Documents

Management Process and Organizational Behavior 5