Management Theory & Organizational Behavior INTRODUCTION TO MANAGEMENT Management is universal in the modern industrial world and there is no substitute for good management. It makes human efforts more productive and brings better technology, product, and services to our society. It is a crucial economic resource and a life giving element in business. Without proper management the resources of production cannot be converted into production. Management is a must to accomplish desired goals through group action. It is essential to convert the disorganized resources of Men, Material, Machines and Methods into a useful and effective enterprise. Thus management is a vital function concerned with all aspects of the working of an organization. Meaning:- It is very difficult to give a precise meaning to the term management. The concept of management is as old as the human race itself. Ever since people began forming groups to accomplish aims they could not achieve as individuals, managing has been essential to ensure the co- ordination of the individual’s efforts. Management is the function of getting things done through people and directing the efforts of individual towards a common objective. Definition:- Management is the art of getting things done through and with the people in formally organized groups. -Harlod Koontz In the words of Henry Fayol – “To manage is to forecast and to plan, to organize, to command, to co-ordinate and to control”. QIS College of Engineering and Technology, Ongole Page 1
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Management Theory & Organizational Behavior
INTRODUCTION TO MANAGEMENT
Management is universal in the modern industrial world and there is no substitute for good management.
It makes human efforts more productive and brings better technology, product, and services to our
society. It is a crucial economic resource and a life giving element in business. Without proper
management the resources of production cannot be converted into production. Management is a must to
accomplish desired goals through group action. It is essential to convert the disorganized resources of
Men, Material, Machines and Methods into a useful and effective enterprise. Thus management is a vital
function concerned with all aspects of the working of an organization.
Meaning:-
It is very difficult to give a precise meaning to the term management. The concept of management is as
old as the human race itself. Ever since people began forming groups to accomplish aims they could not
achieve as individuals, managing has been essential to ensure the co-ordination of the individual’s
efforts.
Management is the function of getting things done through people and directing the efforts of
individual towards a common objective.
Definition:-
Management is the art of getting things done through and with the people in formally organized groups. -Harlod Koontz In the words of Henry Fayol – “To manage is to forecast and to plan, to organize, to command, to co-
ordinate and to control”.
According to Lawrence A Appley – “Management is the development of people and not the direction of
things”.
According to F.W Taylor, management is the art of knowing what you want to do and then seeing that is
done in the best and cheapest way.
NATURE, SCOPE AND CHARACTERISTICS OF MANAGEMENT:
Management is Goal-Oriented: The success of any management activity is accessed by its achievement
of the predetermined goals or objective. Management is a purposeful activity. It is a tool which helps use
of human & physical resources to fulfill the pre-determined goals. For example, the goal of an enterprise
is maximum consumer satisfaction by producing quality goods and at reasonable prices. This can be
achieved by employing efficient persons and making better use of scarce resources.
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Effectiveness ensures that the organisation is in a position to achieve its objective due to
increased efficiency of the organisation.
10. Reduces the Cost of Performance: Planning assists in reducing the cost of performance. It
includes the selection of only one course of action amongst the different courses of action that
would yield the best results at minimum cost. It removes hesitancy, avoids crises and chaos,
eliminates false steps and protects against improper deviations.
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11. Concentration on Objectives: It is a basic characteristic of planning that it is related to the
organizational objectives. All the operations are planned to achieve the organizational objectives.
Planning facilitates the achievement of objectives by focusing attention on them. It requires the
clear definition of objectives so that most appropriate alternative courses of action are chosen.
12. Helps in Co-ordination: Good plans unify the interdepartmental activity and clearly lay down
the area of freedom in the development of various sub-plans. Various departments work in
accordance with the overall plans of the organisation. Thus, there is harmony in the organisation,
and duplication of efforts and conflict of jurisdiction are avoided.
13. Makes Control Effective: Planning and control are inseparable in the sense that unplanned
action cannot be controlled because control involves keeping activities on the predetermined
course by rectifying deviations from plans. Planning helps control by furnishing standards of
performance.
14. Encouragement to Innovation: Planning helps innovative and creative thinking among the
managers because many new ideas come to the mind of a manager when he is planning. It
creates a forward-looking attitude among the managers.
15. Increase in Competitive Strength: Effective planning gives a competitive edge to the enterprise
over other enterprises that do not have planning or have ineffective planning. This is because
planning may involve expansion of capacity, changes in work methods, changes in quality,
anticipation of tastes and fashions of people and technological changes etc.
16. Delegation is Facilitated: A good plan always facilitates delegation of authority in a better way
to subordinates.
Steps involved in Planning:
Planning is a process which embraces a number of steps to be taken. Planning is an intellectual exercise
and a conscious determination of courses of action. Therefore, it requires courses of action. The
planning process is valid for one organisation and for one plan, may not be valid for other organizations
or for all types of plans, because various factors that go into planning process may differ from
organisation to organisation or from plan to plan. For example, planning process for a large organisation
may not be the same for a small organisation. However, the major steps involved in the planning process
of a major organisation or enterprise are as follows:
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1. Establishing objectives: The first and primary step in planning process is the establishment of
planning objectives or goals. Definite objectives, in fact, speak categorically about what is to be
done, where to place the initial emphasis and the things to be accomplished by the network of
policies, procedures, budgets and programmes, the lack of which would invariably result in
either faulty or ineffective planning. It needs mentioning in this connection that objectives must
be understandable and rational to make planning effective. Because the major objective, in all
enterprise, needs be translated into derivative objective, accomplishment of enterprise objective
needs a concrete endeavor of all the departments.
2. Establishment of Planning Premises: Planning premises are assumptions about the future
understanding of the expected situations. These are the conditions under which planning
activities are to be undertaken. These premises may be internal or external. Internal premises are
internal variables that affect the planning. These include organizational polices, various
resources and the ability of the organisation to withstand the environmental pressure. External
premises include all factors in task environment like political, social technological, competitors'
plans and actions, government policies, market conditions. Both internal factors should be
considered in formulating plans. At the top level mainly external premises are considered. As
one moves downward, internal premises gain importance.
3. Determining Alternative Courses: The next logical step in planning is to determine and
evaluate alternative courses of action. It may be mentioned that there can hardly be any occasion
when there are no alternatives. And it is most likely that alternatives properly assessed may
prove worthy and meaningful. As a matter of fact, it is imperative that alternative courses of
action must be developed before deciding upon the exact plan.
4. Evaluation of Alternatives: Having sought out the available alternatives along with their strong
and weak points, planners are required to evaluate the alternatives giving due weight-age to
various factors involved, for one alternative may appear to be most profitable involving heavy
cash outlay whereas the other less profitable but involve least risk. Likewise, another course of
action may be found contributing significantly to the company's long-range objectives although
immediate expectations are likely to go unfulfilled.
5. Evidently, evaluation of alternative is a must to arrive at a decision. Otherwise, it would be
difficult to choose the best course of action in the perspective of company needs and resources as
well as objectives laid down.
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6. Selecting a Course of Action: The fifth step in planning is selecting a course of action from
among alternatives. In fact, it is the point of decision-making-deciding upon the plan to be
adopted for accomplishing the enterprise objectives.
7. Formulating Derivative Plans: To make any planning process complete the final step is to
formulate derivative plans to give effect to and support the basic plan. For example, if Indian
Airlines decide to run Jumbo Jets between Delhi an Patna, obliviously, a number of derivative
plans have to be framed to support the decision, e.g., a staffing plan, operating plans for fuelling,
maintenance, stores purchase, etc. In other words, plans do not accomplish themselves. They
require to be broken down into supporting plans. Each manager and department of the
organisation is to contribute to the accomplishment of the master plan on the basis of the
derivative plans.
8. Establishing Sequence of Activities: Timing an sequence of activities are determined after
formulating basic and derivative plans, so that plans may be put into action. Timing is an
essential consideration in planning. It gives practical shape and concrete form to the
programmes. The starting and finishing times are fixed for each piece of work, so as to indicate
when the within what time that work is to be commenced and completed. Bad timing of
programmes results in their failure. To maintain a symmetry of performance and a smooth flow
of work, the sequence of operation shaped be arranged carefully by giving priorities to some
work in preference to others. Under sequence it should be decided as to who will don what and at
what time.
9. Feedback or Follow-up Action: Formulating plans and chalking out of programmes are not
sufficient, unless follow-up action is provided to see that plans so prepared and programmes
chalked out are being carried out in accordance with the plan and to see whether these are not
kept in cold storage. It is also required to see whether the plan is working well in the present
situation. If conditions have changed, the plan current plan has become outdated or inoperative it
should be replaced by another plan. A regular follow-up is necessary and desirable from
effective implementation and accomplishment of tasks assigned.
10. The plan should be communicated to all persons concerned in the organisation. Its objectives and
course of action must be clearly defined leaving no ambiguity in the minds of those who are
responsible for its execution. Planning is effective only when the persons involved work in a
team spirit and all are committed to the objectives, policies, programmes, strategies envisaged in
the plan.
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Management by Objectives (MBO)
Management by objectives (MBO), also known as management by results (MBR), is a process of
defining objectives within an organization so that management and employees agree to the objectives
and understand what they need to do in the organization in order to achieve them. The term
"management by objectives" was first popularized by Peter Drucker in his 1954 book The Practice of
Management.
The essence of MBO is participative goal setting, choosing course of actions and decision making. An
important part of the MBO is the measurement and the comparison of the employee’s actual
performance with the standards set. Ideally, when employees themselves have been involved with the
goal setting and choosing the course of action to be followed by them, they are more likely to fulfill their
responsibilities.
According to George S. Odiorne, the system of management by objectives can be described as a process
whereby the superior and subordinate jointly identify its common goals, define each individual's major
areas of responsibility in terms of the results expected of him, and use these measures as guides for
operating the unit and assessing the contribution of each of its members.
Definition of MBO:
According to John Humble, MBO is "a dynamic system which seeks to integrate the company's needs to
clarify and achieve its profits and growth goals with the manager's need to contribute and develop
himself. It is a demanding and rewarding style of managing a business."
Unique features and advantages of the MBO process:
Behind the principle of Management by Objectives (MBO) is for employees to have a clear
understanding of the roles and responsibilities expected of them. Then they can understand how their
activities relate to the achievement of the organization's goal. Also places importance on fulfilling the
personal goals of each employee.
Some of the important features and advantages of MBO are:
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1. Motivation – Involving employees in the whole process of goal setting and increasing employee
empowerment. This increases employee job satisfaction and commitment.
2. Better communication and coordination – Frequent reviews and interactions between superiors
and subordinates helps to maintain harmonious relationships within the organization and also to
solve many problems.
3. Clarity of goals
4. Subordinates tend to have a higher commitment to objectives they set for themselves than those
imposed on them by another person.
5. Managers can ensure that objectives of the subordinates are linked to the organization's
objectives.
6. Everybody will be having a common goal for whole organization. That means, it is a directive
principle of management.
Features of Management by Objectives:-
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1. Superior-subordinate participation: MBO requires the superior and the subordinate to
recognize that the development of objectives is a joint project/activity. They must be jointly
agree and write out their duties and areas of responsibility in their respective jobs.
2. Joint goal-setting: MBO emphasizes joint goal-setting that are tangible, verifiable and
measurable. The subordinate in consultation with his superior sets his own short-term goals.
However, it is examined both by the superior and the subordinate that goals are realistic and
attainable. In brief, the goals are to be decided jointly through the participation of all.
3. Joint decision on methodology: MBO focuses special attention on what must be accomplished
(goals) rather than how it is to be accomplished (methods). The superior and the subordinate
mutually devise methodology to be followed in the attainment of objectives. They also mutually
set standards and establish norms for evaluating performance.
4. Makes way to attain maximum result: MBO is a systematic and rational technique that allows
management to attain maximum results from available resources by focussing on attainable
goals. It permits lot of freedom to subordinate to make creative decisions on his own. This
motivates subordinates and ensures good performance from them.
5. Support from superior: When the subordinate makes efforts to achieve his goals, superior's
helping hand is always available. The superior acts as a coach and provides his valuable advice
and guidance to the subordinate. This is how MBO facilitates effective communication between
superior and subordinates for achieving the objectives/targets set.
Steps in Management By Objectives Planning:-
1. Goal setting: The first phase in the MBO process is to define the organizational objectives.
These are determined by the top management and usually in consultation with other managers.
Once these goals are established, they should be made known to all the members. In setting
objectives, it is necessary to identify "Key-Result Areas' (KRA).
2. Manager-Subordinate involvement: After the organizational goals are defined, the
subordinates work with the managers to determine their individual goals. In this way, everyone
gets involved in the goal setting.
3. Matching goals and resources: Management must ensure that the subordinates are provided
with necessary tools and materials to achieve these goals. Allocation of resources should also be
done in consultation with the subordinates.
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4. Implementation of plan: After objectives are established and resources are allocated, the
subordinates can implement the plan. If any guidance or clarification is required, they can
contact their superiors.
5. Review and appraisal of performance: This step involves periodic review of progress between
manager and the subordinates. Such reviews would determine if the progress is satisfactory or
the subordinate is facing some problems. Performance appraisal at these reviews should be
conducted, based on fair and measurable standards.
Essential Conditions for Successful Execution of MBO:
1. Support from all: In order that MBO succeeds, it should get support and co-operation from the
management. MBO must be tailored to the executive's style of managing. No MBO programme
can succeed unless it is fully accepted by the managers. The subordinates should also clearly
understand that MBO is the policy of the Organisation and they have to offer cooperation to
make it successful. It should be a programme of all and not a programme imposed on them.
2. Acceptance of MBO programme by managers: In order to make MBO programme successful,
it is fundamentally important that the managers themselves must mentally accept it as a good or
promising programme. Such acceptances will bring about deep involvement of managers. If
manages are forced to accept NIBO programme, their involvement will remain superfluous at
every stage. The employees will be at the receiving-end. They would mostly accept the lines of
action initiated by the managers.
3. Training of managers: Before the introduction of MBO programme, the managers should be
given adequate training in MBO philosophy. They must be in a position to integrate the
technique with the basic philosophy of the company. It is but important to arrange practice
sessions where performance objectives are evaluated and deviations are checked. The managers
and subordinates are taught to set realistic goals, because they are going to be held responsible
for the results.
4. Organizational commitment: MBO should not be used as a decorative piece. It should be based
on active support, involvement and commitment of managers. MBO presents a challenging task
to managers. They must shift their capabilities from planning for work to planning for
accomplishment of specific goals. Koontz rightly observes, "An effective programme of
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managing by objective must be woven into an entire pattern and style of managing. It cannot
work as a separate technique standing alone."
5. Allocation of adequate time and resources: A well-conceived MBO programme requires three
to five years of operation before it provides fruitful results. Managers and subordinates should be
so oriented that they do not look forward to MBO for instant solutions. Proper time and
resources should be allocated and persons are properly trained in the philosophy of MBO.
6. Provision of uninterrupted information feedback: Superiors and subordinates should have
regular information available to them as to how well subordinate's goal performance is
progressing. Over and above, regular performance appraisal sessions, counseling and
encouragement to subordinates should be given. Superiors who compliment and encourage
subordinates with pay rise and promotions provide enough motivation for peak performance.
Advantages:
1. Develops result-oriented philosophy: MBO is a result-oriented philosophy. It does not favor
management by crisis. Managers are expected to develop specific individual and group goals,
develop appropriate action plans, properly allocate resources and establish control standards. It
provides opportunities and motivation to staff to develop and make positive contribution in
achieving the goals of an Organisation.
2. Formulation of dearer goals: Goal-setting is typically an annual feature. MBO produces goals
that identify desired/expected results. Goals are made verifiable and measurable which
encourage high level of performance. They highlight problem areas and are limited in number.
The meeting is of minds between the superior and the subordinates. Participation encourages
commitment. This facilitates rapid progress of an Organisation. In brief, formulation of realistic
objectives is me benefit of M[BO.
3. Facilitates objective appraisal: NIBO provides a basis for evaluating a person's performance
since goals are jointly set by superior and subordinates. The individual is given adequate
freedom to appraise his own activities. Individuals are trained to exercise discipline and self
control. Management by self-control replaces management by domination in the MBO process.
Appraisal becomes more objective and impartial.
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4. Raises employee morale: Participative decision-making and two-way communication
encourage the subordinate to communicate freely and honestly. Participation, clearer goals and
improved communication will go a long way in improving morale of employees.
5. Facilitates effective planning: MBO programmes sharpen the planning process in an
Organisation. It compels managers to think of planning by results. Developing action plans,
providing resources for goal attainment and discussing and removing obstacles demand careful
planning. In brief, MBO provides better management and better results.
6. Acts as motivational force: MBO gives an individual or group, opportunity to use imagination
and creativity to accomplish the mission. Managers devote time for planning results. Both
appraiser and appraise are committed to the same objective. Since MBO aims at providing clear
targets and their order of priority, employees are motivated.
7. Facilitates effective control: Continuous monitoring is an essential feature of MBO. This is
useful for achieving better results. Actual performance can be measured against the standards
laid down for measurement of performance and deviations are corrected in time. A clear set of
verifiable goals provides an outstanding guarantee for exercising better control.
8. Facilitates personal leadership: MBO helps individual manager to develop personal leadership
and skills useful for efficient management of activities of a business unit. Such a manager enjoys
better chances to climb promotional ladder than a non-MBO type.
Limitations:
1. Time-consuming: MBO is time-consuming process. Objectives, at all levels of the Organisation,
are set carefully after considering pros and cons which consumes lot of time. The superiors are
required to hold frequent meetings in order to acquaint subordinates with the new system. The
formal, periodic progress and final review sessions also consume time.
2. Reward-punishment approach: MBO is pressure-oriented programme. It is based on reward-
punishment psychology. It tries to indiscriminately force improvement on all employees. At
times, it may penalize the people whose performance remains below the goal. This puts mental
pressure on staff. Reward is provided only for superior performance.
3. Increases paper-work: MBO programmes introduce ocean of paper-work such as training
manuals, newsletters, instruction booklets, questionnaires, performance data and report into the
Organisation. Managers need information feedback, in order to know what is exactly going on in
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the Organisation. The employees are expected to fill in a number of forms thus increasing paper-
work. In the words of Howell, "MBO effectiveness is inversely related to the number of MBO
forms.
4. Creates organizational problems: MBO is far from a panacea for all organizational problems.
Often MBO creates more problems than it can solve. An incident of tug-of-war is not
uncommon. The subordinates try to set the lowest possible targets and superior the highest.
When objectives cannot be restricted in number, it leads to obscure priorities and creates a sense
of fear among subordinates. Added to this, the programme is used as a 'whip' to control
employee performance.
5. Develops conflicting objectives: Sometimes, an individual's goal may come in conflict with
those of another e.g., marketing manager's goal for high sales turnover may find no support from
the production manager's goal for production with least cost. Under such circumstances,
individuals follow paths that are best in their own interest but which are detrimental to the
company.
6. Problem of co-ordination: Considerable difficulties may be encountered while coordinating
objectives of the Organisation with those of the individual and the department. Managers may
face problems of measuring objectives when the objectives are not clear and realistic.
7. Lacks durability: The first few go-around of MBO are motivating. Later it tends to become old
hat. The marginal benefits often decrease with each cycle. Moreover, the programme is
deceptively simple. New opportunities are lost because individuals adhere too rigidly to
established goals.
8. Problems related to goal-setting: MBO can function successfully provided measurable
objectives are jointly set and it is agreed upon by all. Problems arise when: (a) verifiable goals
are difficult to set (b) goals are inflexible and rigid (c) goals tend to take precedence over the
people who use it (d) greater emphasis on quantifiable and easily measurable results instead of
important results and (e) over-emphasis on short-term goals at the cost of long-term goals.
9. Lack of appreciation: Lack of appreciation of MBO is observed at different levels of the
Organisation. This may be due to the failure of the top management to communicate the
philosophy of MBO to entire staff and all departments. Similarly, managers may not delegate
adequately to their subordinates or managers may not motivate their subordinates properly. This
creates new difficulties in the execution of MBO programme.
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Decision Making
Introduction:
Decision making is a daily activity for any human being. There is no exception about that. When it
comes to business organizations, decision making is a habit and a process as well. Effective and
successful decisions make profit to the company and unsuccessful ones make losses. Therefore,
corporate decision making process is the most critical process in any organization. In the decision
making process, we choose one course of action from a few possible alternatives. In the process of
decision making, we may use many tools, techniques and perceptions. In addition, we may make our
own private decisions or may prefer a collective decision. Usually, decision making is hard. Majority of
corporate decisions involve some level of dissatisfaction or conflict with another party. Let's have a look
at the decision making process in detail.
Steps of Decision Making Process:
Following are the important steps of the decision making process. Each step may be supported by
different tools and techniques.
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1. Identification of the purpose of the decision: In this step, the problem is thoroughly analysed.
There are a couple of questions one should ask when it comes to identifying the purpose of the decision.
What exactly is the problem?Why the problem should be solved?Who are the affected parties of the problem?Does the problem have a deadline or a specific time-line?
2. Information gathering: A problem of an organization will have many stakeholders. In addition,
there can be dozens of factors involved and affected by the problem.
In the process of solving the problem, you will have to gather as much as information related to the factors and stakeholders involved in the problem. For the process of information gathering, tools such as 'Check Sheets' can be effectively used.
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3. Principles for judging the alternatives: In this step, the baseline criteria for judging the alternatives
should be set up. When it comes to defining the criteria, organizational goals as well as the corporate
culture should be taken into consideration.
As an example, profit is one of the main concerns in every decision making process. Companies usually do not make decisions that reduce profits, unless it is an exceptional case. Likewise, baseline principles should be identified related to the problem in hand.
4. Brainstorm and analyze the different choices: For this step, brainstorming to list down all the ideas
is the best option. Before the idea generation step, it is vital to understand the causes of the problem and
prioritization of causes.
For this, you can make use of Cause-and-Effect diagrams and Pareto Chart tool. Cause-and-Effect diagram helps you to identify all possible causes of the problem and Pareto chart helps you to prioritize and identify the causes with highest effect.
Then, you can move on generating all possible solutions (alternatives) for the problem in hand.
5. Evaluation of alternatives: Use your judgment principles and decision-making criteria to evaluate
each alternative. In this step, experience and effectiveness of the judgment principles come into play.
You need to compare each alternative for their positives and negatives.
6. Select the best alternative: Once you go through from Step 1 to Step 5, this step is easy. In
addition, the selection of the best alternative is an informed decision since you have already followed a
methodology to derive and select the best alternative.
7. Execute the decision: Convert your decision into a plan or a sequence of activities. Execute your
plan by yourself or with the help of subordinates.
8. Evaluate the results: Evaluate the outcome of your decision. See whether there is anything you
should learn and then correct in future decision making. This is one of the best practices that will
improve your decision-making skills.
Conclusion
When it comes to making decisions, one should always weigh the positive and negative business consequences and should favor the positive outcomes.
This avoids the possible losses to the organization and keeps the company running with a sustained growth. Sometimes, avoiding decision making seems easier; especially, when you get into a lot of confrontation after making the tough decision.
Importance of decision making
1. Implementation of managerial function: Without decision making different managerial function
such as planning, organizing, directing, controlling, staffing can’t be conducted. In other words, when an
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employee does, s/he does the work through decision making function. Therefore, we can say that
decision is important element to implement the managerial function.
2. Pervasiveness of decision making: the decision is made in all managerial activities and in all
functions of the organization. It must be taken by all staff. Without decision making any kinds of
function is not possible. So it is pervasive.
3. Evaluation of managerial performance: Decisions can evaluate managerial performance. When
decision is correct it is understood that the manager is qualified, able and efficient. When the decision is
wrong, it is understood that the manager is disqualified. So decision making evaluate the managerial
performance.
4. Helpful in planning and policies: Any policy or plan is established through decision making.
Without decision making, no plans and policies are performed. In the process of making plans,
appropriate decisions must be made from so many alternatives. Therefore decision making is an
important process which is helpful in planning.
5. Selecting the best alternatives: Decision making is the process of selecting the best alternatives. It
is necessary in every organization because there are many alternatives. So decision makers evaluate
various advantages and disadvantages of every alternative and select the best alternative.
6. Successful; operation of business: Every individual, departments and organization make the
decisions. In this competitive world; organization can exist when the correct and appropriate decisions
are made. Therefore correct decisions help in successful operation of business.
CO-ORDINATION:
The synchronization and integration of activities, responsibilities, command and control structures to
ensure that the resources of an organization are used most efficiently in pursuit of the specified
objectives. Along with organizing, monitoring, and controlling, coordinating is one of the key functions
of management.
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Definition:
According to Charles Worth, “Co-ordination is the integration of several parts into an orderly hole to achieve the
purpose of understanding”.
Characteristics of Co-ordination in an Organization:
Co-ordination is a process to establish harmony among the different activities of an organisation, so that
the desired objectives can be achieved. Definitions of coordination present the following facts about its
characteristics:
Characteristics of coordination in an organisation:
(1) Co-ordination Integrates Group Effort:
The need for coordination is felt when group effort is needed for the accomplishment of an objective. In
short, it can be said that coordination is related to group effort and not individual effort. The question of
coordination does not arise, if the job is done by one person only.
(2) Co-ordination Ensures Unity of Action:
The nature of coordination is of creating unity in action. It means during coordinating process an effort
is made to create unity among the various activities of an organisation. For example, the purchase and
sales departments have to coordinate their efforts so that supply of goods takes place according to
purchase orders.
(3) Co-ordination is a Continuous Process:
It is not a job which can be performed once and for all, but its need is felt at every step. Many activities
are performed in a business. Sometimes or the other, if any one of the activities goes on fluctuating
either for more or less than required, the whole organisational balance is disrupted. Thus, a close watch
has to be kept on all the activities to maintain the balance.
(4) Co-ordination is an All-pervasive Function:
Pervasiveness refers to that truth which is applicable to all spheres (business and non-business
organisations) and places uniformly. The nature of coordination is pervasive. Like making of timetable
in an educational institution is an apt example of establishing coordination.
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In the game of cricket, the placement of players at pre-determined positions is nothing but coordination.
In the same manner, to synchronise the activities of different departments, like purchase, sales,
production, finance, etc. in a business organisation is coordination.
(5) Co-ordination is the Responsibility of All Managers:
Co-ordination is needed at all the three, i.e., top, middle and lower managerial levels. Different activities
performed at all the levels are equally important. Thus it is the responsibility of all the managers that
they make efforts to establish coordination. That is why, it could not be said that coordination is of more
importance to any one particular managerial level or a manager.
(6) Co-ordination is a Deliberate Function:
Co-ordination is never established by itself but it is a deliberate effort. Only cooperation does not suffice
but coordination is also needed. For example, a teacher aspires to teach effectively (this is cooperation)
but the timetable is not prepared in the school (this is lack of coordination).
In this situation, classes cannot be arranged for. Here, the effort made by the teacher is meaningless, in
the absence of coordination. On the other hand, in the absence of cooperation, coordination dissatisfies
the employees. Thus, both are required at a given point of time.
Why Co-ordination is necessary:
According to management experts, co-ordination is necessary because :-
"Co-ordination is the Essence of Management." i.e. co-ordination effects all the functions of
management, viz., Planning, Organising, Staffing, etc.
Co-ordination is a function of management.
Co-ordination is a principle of management, and all other principles are included in this one
principle, i.e. co-ordination is the "Mother Principle".
According to Mary Parker Follett, Co-ordination is the "Plus value of the group". That is, if there
is good Co-ordination then the combined group achievement will be greater than the total of the
individual achievement, i.e. 2+2=5. This is impossible in the physical world, but it is possible in
human affairs through co-ordination.
Importance of Co-ordination:
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1. Coordination encourages team spirit:
There exist many conflicts and rivalries between individuals, departments, between a line and staff, etc.
Similarly, conflicts are also between individual objectives and organisational objectives. Coordination
arranges the work and the objectives in such a way that there are minimum conflicts and rivalries. It
encourages the employees to work as a team and achieve the common objectives of the organisation.
This increases the team spirit of the employees.
2. Coordination gives proper direction:
There are many departments in the organisation. Each department performs different activities.
Coordination integrates (bring together) these activities for achieving the common goals or objectives of
the organisation. Thus, coordination gives proper direction to all the departments of the organisation.
3. Coordination facilitates motivation:
Coordination gives complete freedom to the employees. It encourages the employees to show initiative.
It also gives them many financial and non-financial incentives. Therefore, the employees get job
satisfaction, and they are motivated to perform better.
4. Coordination makes optimum utilisation of resources:
Coordination helps to bring together the human and materials resources of the organisation. It helps to
make optimum utilisation of resources. These resources are used to achieve the objectives of the
organisation. Coordination also minimise the wastage of resources in the organisation.
5. Coordination helps to achieve objectives quickly:
Coordination helps to minimise the conflicts, rivalries, wastages, delays and other organisational
problems. It ensures smooth working of the organisation. Therefore, with the help of coordination an
organisation can achieve its objectives easily and quickly.
6. Coordination improves relations in the organisation:
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The Top Level Managers co-ordinates the activities of the Middle Level Managers and develops good
relations with them. Similarly, the Middle Level Managers co-ordinates the activities of the Lower Level
Managers and develops good relations with them. Also, the Lower Level Managers co-ordinates the
activities of the workers and develops good relations with them. Thus, coordination overall improves the
relations in the organisation.
7. Coordination leads to higher efficiency:
Efficiency is the relationship between Returns and Cost. There will be higher efficiency when the
returns are more and the cost is less. Since coordination leads to optimum utilisation of resources it
results in more returns and low cost. Thus, coordination leads to higher efficiency.
8. Coordination improves goodwill of the organisation:
Coordination helps an organisation to sell high quality goods and services at lower prices. This improves
the goodwill of the organisation and helps it earn a good name and image in the market and corporate
world.
Co-ordination as integral part of Managerial functions:
a. Co-ordination through Planning - Planning facilitates co-ordination by integrating the various
plans through mutual discussion, exchange of ideas. e.g. - co-ordination between finance budget
and purchases budget.
b. Co-ordination through Organizing - Mooney considers co-ordination as the very essence of
organizing. In fact when a manager groups and assigns various activities to subordinates, and
when he creates department’s co-ordination uppermost in his mind.
c. Co-ordination through Staffing - A manager should bear in mind that the right no. of personnel
in various positions with right type of education and skills are taken which will ensure right men
on the right job.
d. Co-ordination through Directing - The purpose of giving orders, instructions & guidance to the
subordinates is served only when there is a harmony between superiors & subordinates.
e. Co-ordination through Controlling - Manager ensures that there should be co-ordination
between actual performance & standard performance to achieve organizational goals.
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