3.

0 MANAGEMENT PROCESS AND FUNCTION

3.1 PLANNING
Planning is primary function of management to ensure proper utilization of
human and material resources in an enterprise to realize profits. Planning is a
process of deciding the business targets and charting out the path of attaining
those targets. It can be described as the process of thinking before doing

3.1.1 Need for Planning

In designing an environment for the effective performance of individuals working
together in groups, a manager’s most essential task is to see that everyone
understands the group’s purposes and objectives and its methods of attaining
them. If the effort of group is to be effective, people must know what they are
expected to accomplish. This is the function of planning, most basic of all the
managerial function. Planning involves selecting missions and objectives and
the actions to achieve them. Planning bridges the gap from where we are to
where we want to go.

Planning and Control are inseparable - Siamese twins of management. Any

attempt to control without plans is meaningless, since there is no way for people
to tell whether they are going unless they first know where they want to go.
Therefore planning and controlling has to go hand in hand.

3.1.2 Objectives of planning

Objectives are defined as the important ends towards which organizational and
individual activities are directed. The goal of every manager is to create a
surplus. Objectives should be understandable and measurable. However, it has
been observed that stretched goals lead to higher performance than easy ones.
Objectives need to be met by a specific time; therefore managers must develop
plans to meet short, intermediate and long term objectives. They can be frames
as per following alternatives. Short-term Vs Long term, Profit margin Vs
Competitive position, Proft Vs Non-profit objective, or low-risk environment Vs
High-risk environment. Other types of objectives could be
 Profitability objectives
 Marketing objectives
 Productivity objectives
 Physical and financial objectives
 Quality objectives.

3.1.3 Types of plans

Plans can be classified as
1) purposes or missions

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 2) Objectives or goals
3) Strategies
4) Policies
5) Procedures
6) Rules
7) Programs and
8) Budgets

Strategies : Broad areas of an enterprise operation, normally its in light of

competitions. The firm has to decide on its growth goal and desired profitability.
Form a framework for guiding, thinking and action.

Policies : General statements that guide decision-making. Policies encourage

discretion and initiative within limits. Policies define an area within which a
decision is to be made and ensure that the decision will be consistent with, and
contribute to an objective. Policies help decide issues before they become
problems, make it unnecessary to analyze the same situation every time it comes
up, and unify other plans, thus permitting managers to delegate authority and still
maintain control over what their subordinates do.

Procedures : Establish a required method of handling future activities, they are

guides to action. They are guides to action, rather than to thinking, and they
detail the exact manner in which certain activities must be accomplished.
Procedure often cut across department lines.

Rules : Specific required action, allowing no discretion. They are usually the
simplest type of plan. “ No smoking” is a rule that allows no deviation from a
state course of action. The essence of rule is that it reflects a managerial
decision that some certain action must or must not be taken.

Programs: Programs are a complex of goals, policies, procedure, rules, task

assignments, steps to be taken, resources to be employed, and other elements
necessary to carry out a given course of action; they are ordinarily supported by
budgets.

Budgets: A budget is a statement of expected results expressed in numerical

terms. It may be called a numberized program. In fact, the financial operating
budget is often called a profit plan. A budget may be expressed in financial
terms; in terms of labor-hours units of product, or machine hours or in any other
numerically measurable term. It may be deal with operations, as the expense
budget does; it may reflect capital outlays, as the capital expenditures budget
does; or it may show cash flow, as the cash budget does.

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3.1.4 Steps in Planning

Establishing verifiable goals: Determine the current situation, including

examination of resources, market trends, economic indicators, and competitors.

Establishing planning premises : The next logical step in planning is to

establish circulate and obtain agreement to utilize critical planning premises such
as forecasts, applicable basic policies, and existing company plans. They are
assumptions about the environment in which the plan is to be carried out.
Forecasting is importing in premising: What kinds of markets will there be? What
volume of sale? What prices? What products? What tax rate and polices? What
wage rates? etc.,

Deciding the planning period :

Depending on the situation, the next logical and important step in planning is to
decide the planning period.

Finding alternative courses of action: The next step in planning is to search

for and examine alternative course of action, especially those not immediately
apparent. There is seldom a plan for which reasonable alternatives do not exist
and quite often an alternative that is not obvious proves to be the best. The more
common problem is not finding alternatives but reducing the number of
alternatives so that the most promising may be analyzed. Even with
mathematical techniques and the computer, there is a limit to the number of
alternatives that can be thoroughly examined. The planner must usually make a
preliminary examination to discover the most fruitful possibilities.

Evaluating and selecting a course of action: After seeking out alternative

courses and examining their strong and weak points, the next step is to evaluate
the alternatives by weighing them in light of premises and goals. One course
may appear to be the most profitable but it may require a large cash outlay and
have a slow payback; another may look less profitable but may involve less risk;
still another may better suit the company’s long range objectives.

There are so many alternative courses in most situations and so many variables
and limitations to be considered that evaluation can be exceedingly difficult.
Selecting a course is a point at which the plan is adopted-the real point of
decision making. Occasionally, an analysis and evaluation of alternative courses
will disclose that two or more are advisable, and the manager may decide to
follow several courses rather than the one best course.

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Developing derivative plans : When a decision is made, planning is seldom
complete, and a seventh step is indicated. Derivative plans are most invariably
required to support the basic plan.

Measuring and controlling the progress : After decisions are made and plans
are set, the final step in giving them meaning, as was indicated in the of types of
plans, is to numberize them by converting them into budgets by which the
progress can be controlled and measured. The overall budgets of an enterprise
represent the sum total of income and expenses, with resultant profit or surplus,
and the budgets of major balance sheet items such as cash and capital
expenditures. Each department or program of a business or some other
enterprise can have its own budgets, usually of expenses and capital
expenditures, which tie into the overall budget. Budgets become a means of
adding the various plans and set important standards against which planning
progress can be measured.

3.1.5 Limitations of planning

Planning is not a perfect measure against risk as reliability of forecasts are

inversely proportional to time. Planning is very costly and must justify its
existence and often delays action. Planning may give a false sense of security
as standing plans are repetitive and lead to resistance to change.

3.1.6 Making Planning effective –Importance of the Following

Co-ordination: co-ordination means weaving together the segments of an

organization into a coherent whole in such a way that all parts operate at the
most efficient level and produce maximum profit. Co-ordination unifies the
purposes and efforts of the employees working in a concern. It can be achieved
through co-ooperation, good human relations, understanding and
communication.

Communication: Communication serves as a linking process by which parts of

an organization are tied together. Communicating means transmitting
instructions and information within the organization and to outside customers. In
effective and improper communication lead to mistrust, confusion and strikes.

Proper Climate: The present and future external environment must be assessed
in terms of threats and opportunities. The evaluation focuses on Economic,
social, political, legal, demographic and geographic factors, Technological
developments and Competitive products and services on the market.
The firm’s internal environment is evaluated in respect to its resources and its
strengths and weakness in R&D, Production, Marketing, Human and financial
resources etc.,

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3.2 ORGANIZING

3.2.1 Purpose of organization

Sound organization can contribute greatly to the success of the enterprise. A
properly designed and balanced organization will facilitate both management and
operation of the enterprise for smooth functioning with growth. Organization is a
tool of management which leads to division of work and responsibilities. It
defines and fixes the duties and responsibilities of employees. Organisation is a
step towards the achievement of established goals.

3.2.2 Process of organization

The process of organization may be described as the managerial function of
organising. The important steps involved in the process of organization are:
a. Consideration of objectives
b. Grouping of activities into departments
c. Identifying Key Departments
d. Determining levels of Decision making
e. Determining the span of management
f. Setting up co-ordination Mechanism

Consideration of objectives :
Objectives decide as to why the proposed organization to be set up (purpose)
and what will be the nature of work to be accomplished through the organization.

Grouping of activities into departments:

To achieve the objectives, the process of organization is divided into functions,
sub-functions and further sub-functions to be performed by individual. This
principle is followed to avoid duplication, confusion and wastage of men,
machinery and money.

Identifying Key Departments:

Activities of similar nature are grouped under departments, sections or divisions.
These may be grouped on the basis of use, co-ordination, policy and control etc.;
There may be different departments in an enterprise like Personnel, Finance,
Purchase, Production, Sales etc.

Determining levels of Decision-making:

Specific job assignments are made to different persons for ensuring a certainty of
work performance. Right man is put on the right job.

Determining the span of management

While the purpose of organizing is to make human cooperation effective, the
reason for levels of organization is the limitation of the span of management. In
other words organization level exist because there is a limit to the number of
persons a manger can supervise effectively, even though this limit varies

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depending on situations. A wide span of management is associated with few
organizational levels, a narrow span, with many levels.

Setting up co-ordination Mechanism:

Provision of right type of physical facilities and environment is essential for the
smooth running and prosperity of the organization which include machinery,
tools, proper lighting, ventilating, heating, cooling, reasonable working hours, rest
intervals, safety devices, human approach by management etc.,

3.2.3 Principles of organizing

There is considerable agreement among management scholars and practitioners
about a number of principles underlying the science of organizing. These
principles are truths of general applicability and are more in the nature of
essential criteria for effective organizing. The most essential guiding principles
are:

Objectives
Specialization
Span of Control
Exception
Scalar Principle
Unity of command
Delegation
Responsibility
Authority
Efficiency
Simplicity
Flexibility
Balance
Unity of Direction

Objectives: Since the objectives of the enterprise have an important bearing on

the organization structure, only those objectives should be taken up and
accomplished for which there is real need in the organization eg., measures may
be taken to increase productivity, improve product quality etc.

Specialization: The organization structure should be formulated in such a way

that the activities of the enterprise are divided according to the different functions
and the same are assigned to person according to their specialization. This
means that effective organization must include specialization.

Span of control : This refers to the number of subordinates that report to an

executive or the number of subordinates that an executive can supervise directly.
Depending upon the conditions of the business enterprise, the span of control
may vary from 2 to 20 and an executive must not have more subordinates

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looking to him for guidance, as an executive will have limited time and energy
available for his activities.

Exception : Only exceptionally complex matters should be referred to the

executives for their decision and matters of routine nature should be decided by
the subordinates themselves. This is necessary, because the executives at a
higher level instead of spending their time for deciding routine matters
concentrate on more important matters.

Scalar Principle: The clearer the line of authority from the ultimate
management position in an enterprise to every subordinate position, the clearer
will be the responsibility for decision making and the more effective will be
organizational communication.

Unity of command : The more complete an individual’s reporting relationships

to a single superior, the smaller the problem of conflicting instructions and the
greater the feeling of personal responsibility for results.

Delegation : Delegation is said to be existing when an executive instead of doing

all the thinking for the unit himself passes down to his subordinates any tasks on
which they can take themselves and perform it efficiently and effectively. By
doing so executives gives a chance to his sub-ordinates to think and develop and
keeps himself free to deal with managerial responsibilities such as handling
special problems if any, coordinating, planning improvement etc.,

Responsibilities: The responsibilities to their superiors for performance is

absolute and superiors cannot escape responsibility for the organization activities
of their subordinates.

Authority
The responsibility for actions cannot be greater than that implied by the authority
delegated, nor should it be less. Authority and responsibility should be coexisting
and both must be present for smooth functioning of the organization, the entire
process of delegation can become ineffective unless authority delegated is
commensurate with responsibility.

Efficiency : The more a position or a department has a clear definition of the

results expected, activities to be undertaken and the authority delegated and has
an understanding of authority and informational relationships with other positions,
the more adequately and efficiently the responsible individual can contribute
towards accomplishing enterprise objectives.

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Simplicity:
The organization structure should be simple with a minimum number of levels. If
the organization structure has a large number of levels, the problem of effective
co-ordination and communication may arise.

Flexibility: Organizational flexibility specifies the capacity to adjust work

assignments, personnel and facilities to temporary changes in the volume of
work. Flexibility is the ability to bend and blend without experience any serious
setback.

Balance: The application of principles must be balanced to ensure the overall

effectiveness of the structure in meeting enterprise objectives.

Unity of Direction: The more an organization structure and its delegations of

authority enable mangers to design and maintain an environment for
performance, the more they will help the leadership abilities of those managers.
Accordingly, each group of activities with the same objective must have one head
and one plan.

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3.2.4 Types of Organization
The structure of one industrial organization differs from that of another
organization and it depends upon
- Size of the organization
- Nature of the product being manufactured
- Complexity of the problems being faced
- Organisation structure marks line of authority, responsibility and co-
ordination.

A few commonly known forms of organization types are

a) Line, Military or Scalar organization
b) Functional organization
c) Line and staff organization

Line organisation
It is a simplest form of organization structure. It was called military organization
because it resembled to olden military organization. Line organization is based
upon relative authority and responsibility rather than on the nature and kind of
operation or activities. The authority flows directly from the works manager (WM
to Superintendent to Foremen and from them to workers. Line organization is
direct and different levels know to whom they are accountable. The immediate
superior gives orders to the subordinates, assigns duties, dismisses and takes
disciplinary action against them. Any enterprise that starts small probably starts
with a line type of organization. Line organization is suitable for small concerns
free from all complexities and automatic and continuous process industries such
as paper, sugar, textile, etc.

Advantages :

It is simple and easy to understand

It is flexible, easy to expand and contract
It makes clear division of authority
There is clear channel of communication, with no confusion at all
It encourages speedy action
It is strong in discipline as it fixes responsibility on an individual
It is capable of developing the all round executive at the higher levels of
authority.

Disadvantages:

It neglects specialists
It overloads a few key executives
It requires a high type of supervisory personnel to meet the challenges imposed
in the absence of specialists as advisors
It is limited to very small concerns
It encourages dictatorial way of working

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In line organizations provisions are seldom made to train, develop and replace
top executives
Due to lack of specialization perhaps there is more wastage of materials and
man-hours.

Line and staff organization

Line organization gradually developed to shape as the line and staff organization.
Taylor’s functional organization hastened its development. As the industry grew
in size and complexity, the line executives could not perform all other functions
such as R&D, planning, distribution, legal. Public relations etc besides looking
after production. They arouse the need for employing special executives to assist
line executives and they were known as STAFF as they were recruited to
perform staff or specialist functions. The line executives retain supervisory
authority and control over the work of their subordinates whereas the staff
executives relieve line executives of certain specialized work and advise on
matter referred to them. The final decision whether to accept and implement the
recommendations of the staff executive remain in the hands of the line executive.

Advantages
Expert advice from specialist staff executives can be made use of
Line executives are relieved of some of their loads and are thus able to devote
more attention towards production.
Less wastage of material, man and machine hours
Quality of product is improved
There is no confusion as exists in functional organization
Line and staff organization possesses practically all the advantages of both the
line and functional organization.

Disadvantages
Product cost will increase because of high salaries of staff executives
At times the staff department may infringe upon the rights and responsibilities of
the line organization, thus weakening the line organization when its (i.e, staff
department’s) true function strengthen this organization.
Line and staff organization may get confusion in case functions are not clear
Frictions are jealousies of developed between line and staff executives may
cause harm to enterprises.
Line executives if they start depending too much on staff executives may lose
loose their initiative drive and ingenuity.

Functional organization
F.W. Taylor suggested functional organization because it was difficult to final
round persons qualified to work at middle management levels in the line
organization. Functional organization is also a line type of organization with the
difference that instead of one foreman there are eight functional foremen, four of
them located on the shopfloor and the remaining four in the office, but everyone

10
having direct and equal authority over the workers. Each functional foreman who
is a specialist in an activity is incharge of one function.

Advantages
 Since a foreman is responsible for one function, he can perform his duties
in a better manner
 Functional organization makes use of specialists to give expert advise to
workers
 It relives line executives of routine, specialized decision
 Expert guidance reduces the number of accidents and wastage of
materials, man and machine hours.
 It relieves pressure of need to search a large number of all-round
executives.
 Quality of work is improved.

Disadvantages
 Coordination of the efforts of various functional foreman is difficult.
 It is difficult to maintain discipline as each worker is responsible to eight
foremen
 It is very difficult to fix up the responsibility to any one foreman in case
something goes wrong.
 Workers always remain confused about the authority and activity of each
foreman
 It makes industrial relationships more complex
 Workers are not given opportunity to make use of their ingenuity, initiative
and drive.
 All round executives cannot be developed.

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3.2.5 Delegation and Decentralization

Purpose of Delegation and Decentralization

Any manager may delegate authority to his subordinate. Delegation may thus be
highly individualized relationship. When delegation is used systematically and
extensively throughout an organization the arrangement may be described as
decentralization. In decentralized organization, authority and decision making
have been pushed downward throughout the organization. Decentralization thus
necessitates delegation, but delegation, on the other hand, might be used by a
particular manager without being part of decentralization program.

Differentiate between Authority and Power

AUTHORITY POWER
Institutionalized right of a superior to Ability of person to influence another
command and compel his subordinate person
to perform of certain act
It rests in position. With the change in Rests in the individual. Hence, even
position, the authority of the individual when his position changes, his power
also changes remains intact.
Delegated to an individual by his Earned by an individual through its
superior own efforts
Well defined, shown on the Undefined, inconspicuous and infinite
organization chart and commensurate
with responsibility
What exists in the eye of law What exists in fact
Serves as a basis of formal Serves as a basis of informal
organization organization

Distinction between Delegation and Decentralization

Delegation
Authority and responsibility must be delegated throughout a firm to promote the
efficiencies of an organizational structure. Delegation of authority is necessary
wherever a manger must rely on another to help accomplish an objective.

Delegation means conferring authority from one manger or organizational unit to

another in order to accomplish particular assignments. Although authority and
responsibility may be delegated by a manager, they can never be abdicated.

Delegation has a dual characteristic. As a result of delegation, the subordinate

receives authority from the superior, but at the same time the superior retains all
original authority.

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Customarily, delegation is considered as coming from a higher to a lower level,
but it can also be from a lower to higher level or between levels on the same
plan. Thus, delegation can be downward, upward, or sideward.

Decentralization
Organization authority is merely the discretion conferred on people to use their
judgement to make decisions and issue instructions. Decentralization is the
tendency to disperse decision-making authority in an organized structure. It is a
fundamental aspect of delegation, to the extent that authority is not delegated, it
is centralized.

There could be absolute centralization of authority in one person implying no

subordinate managers and therefore no structured organization. On the other
hand, there cannot be absolute decentralization, for if managers delegated all
their authority, their status as managers would cease, their positions would be
eliminated and there would be no organization.

Advantages of effective delegation

 The effective delegation relieves the burden on senior management, to

speed up the decision making process etc.,
 Effective delegation contributes to growth of individual (subordinate) and
overall morale.

Advantages of Decentralization

 A decentralized organization structure stresses delegation of decision –

making and lightens the load of top managers.
 The development of generalists rather than specialists is encouraged,
thereby facilitating succession into positions of general managers.
 Intimate personal ties and relationships are promoted, resulting in greater
employee enthusiasm and co-ordination.
 Familiarity with important aspects of special work is readily acquired.
 Efficiency is increased since mangers are near the activities for which they
are held responsible and trouble spots can be located and remedied
easily.
 For multiunit enterprises keyed to geographic dispersion, full advantage of
local conditions can be obtained.
 Plans can be tried out on an experimental basis in one plant, modified and
proven before being supplied to similar plants of a company.
 Risks involving possible losses of personnel, facilities and plants are
spread out.

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3.3 Direction : Principles of Direction

The principles to be observed by Management in direction of its subordinates are

as follows:
a) Harmony of objectives : The management should bring out co-ordination of
individual objectives of the subordinates working in the organization with those of
the enterprise. Directing should be such that it would make the subordinates
identify themselves with the company and integrate their objectives with those of
the company.

b) Maximum individual contribution: The technique of direction adopted by

the management should be such that it should be in a position to inspire the
employees to contribute their maximum for the achievement of the enterprise
objectives.

c) Unity of command: This principle requires that the employees should

receive orders and institutions only from one superior. The violation of this
principle may lead to disorder, confusion and indiscipline which may affect the
efficiency of business

d) Direct supervision : Every superior must maintain direct contact with his
subordinates. Personal touch and face to face communication with the
subordinates ensure successful direction. Further, direct supervision also
develops feed-back information.

e) Flow of information : Effective direction is largely dependent upon the flow

of information and the efficiency with which it is disseminated among the
subordinates. The management may be helped if it uses both formal and
informal channels of communication.

f) Appropriateness of direction technique : The technique that is used by the

management for direction should be appropriate so as to ensure effective
direction. The techniques that are normally used are I) consultative 2) free-rein
and 3) autocratic and these should be selected according to circumstances.

g) Efficiency of direction : The Principle requires that there should be an

effective network of communication, effective supervision, farsighted leadership
and good motivation for ensuring the success of direction.

h) Comprehension : According to this principle, how much information is

correctly understood by subordinates is more important than what is said and
how it is said. This principle can be observed only if the management makes
provision for a proper feed-back system of communication.

i) Effective leadership : It is necessary for the boss to possess the qualities of a

good leader for getting the work done by the subordinates. Subordinates also

14
would be happy if they get effective leadership from their boss. The boss should
guide and counsel the workers not only on the work problems but also on the
personal problems of his subordinates.

j) Effective motivation : The workers, if they are properly induced and

motivated, will volunteer themselves for the accomplishment of the goals.
Hence, direction should be such that it inspires the workers to contribute their
maximum with enthusiasm for the purpose of the organization.

k) Follow through : Direction is not only telling subordinates what they should
do but also seeing to it that they do it in the desired way. This requires the
management to provide continuous guidance, supervision, advice and help to the
subordinates in their activities.

Direction of the management

Direction is a vital managerial function and also is the essence of management.

For the effective implementation of any administrative decision, planning,
organizing and staffing are not enough the manager must stimulate action by
giving direction to his subordinates through orders and also supervise their work
to ensure that the plans and policies achieve the desired actions and results.
Planning and organizing are concerned only with the preparations for work
performance and it is direction which alone stimulates the organization and its
staff to execute the plans. Hence, it is also called management in action.

Order giving
An order is a fundamental tool used by the management for directing its
subordinates. It may be stated that the terms “order” , “instruction”, “Directive”
and “command” are used interchangeably. An order can be issued by a superior
only and he has the right to enforce the order to be followed by his subordinates.
According to Koontz and O’Donnell, “ As a directional technique, an instruction is
understood to be a charge by a superior requiring a subordinate to act or refrain
from acting in a given circumstance”.

Characteristics of good order

The characteristics of a good order are as follows
a) an order should be reasonable and enforceable
b) it should be clear and easily understandable
c) it should be compatible with the purpose and objectives of the enterprise
d) it should be complete
e) it should stimulate willing, enthusiastic acceptance by the subordinate.
f) preferably, the order should be in writing
g) the tone of the order should be appropriate; and
h) it should specify the time within which the order should be carried out and
completed.

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Techniques of simplification of direction

The techniques of direction that are used by the mangers are as follows:

a) Consultative direction : Under this method, the executive takes a decision

and issues a direction only after consultation his subordinates regarding the
feasibility and workability of the problem. One advantage of this method is that
as the subordinate also has been consulted about the feasibility and workability
of the problem, his best co-operation and enthusiasm can be secured in carrying
out the direction. This method however, suffers from one disadvantage, i.e., at
time, the subordinate may consider it his right to be consulted before the
executive takes a decision.

b) Free-rein direction : Under this method, the subordinate is encouraged and

enabled to show his own initiative and give independent thought to the solution of
the problem. The manager assigns the task in general terms and not in a
specific way. The subordinates must take the initiative and find a solution to the
task assigned and carry it out. This technique of direction may profitability be
used only if the subordinate is highly educated, efficient and sincere.

c) Autocratic direction : Under this method , the subordinates the not allowed
to take any initiative in solving the problem. The executive himself solves the
problem and gives orders to his subordinates with instructions as to how and
what is to be done by them.

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3.4 Communication

Introduction
Communication is the art of developing and attaining understanding between
people. It is process of exchanging information and feeling between two or more
people, and is essential to effective management.

Communication is the transfer of information from a sender to a receiver, with the

information being understood by the receiver.

Process of Communication

There are seven steps in the process of communication. They are:

Step 1: Sender – planner

The communication or message sender must conceptualize the message
mentally before it is encoded. This is planning of the communication process

Step 2: Encoding
Encoding involves selecting the medium through which to communicate the
planned message. The object of encoding is to select the best medium that will
be most accurately comprehend by the receiver. The goal is mutuality of
understanding between sender and receiver; lack of mutuality results in
misunderstanding and improper response to the message.

Step 3: Message and medium

This step involves the actual transmission of the conceptualized message.

Step 4: Receiving
This simply involves the physical reception of the message, hearing, seeing,
feeling, sensing and so on.

Step5 and 6 : Decoding and response

Decoding is the receiver’s interpretation of the message. It involves the mental
process of asking: what does this mean to me? And what should I do about it?
This is affected by many factors, such as perception of the sender, past
experience within similar communication, interpretation of body language, etc.

Step 7 : Feed back

The receiver’s reaction to the message is a form of communication back to the
sender and follows on the same step-by-step process

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Types of communication

a) Formal and Informal

b) Written and Verbal

c) Upward, Downward and Horizontal

Formal communication
It implies the flow of information along the lines of hierarchy formally established
in each enterprise. Orders by superiors to subordinates, reports and suggestions
by subordinates to superiors as per the routine evolved in the administration,
constitute formal communication

Informal communication.
It has no procedural basis, but is associated with expression of gesture, smile,
nod, glance etc., without any formalities. Informal communication is not official or
authoritative but spontaneous expression of ideas. It is often termed as
“Grapevine”.

Written communication
It means transmission of messages in the form of letters, memos, circulars,
boards, magazines, reports, instruction cards, publications etc. Written
communications are preferred for following merits:
i) When lengthy messages are to be conveyed
ii) When the sender and the receiver are at distant places
iii) When the communication is to be clear without ambiguity.
iv) Written communication constitute reliable records for future reference
v) Written messages can be quoted as legal evidence if the situation
demands.

Verbal or oral communication

It is the conveying of messages through spoken words, visual media, gestures
etc.

Oral orders, face to face interviews, personal conversation, lectures, discussions

at meetings etc are examples of oral communication. The verbal communication
will be more effective and in emergencies it is the only mode of quick
communication and also less expensive. It can be easily grasped and if doubt
arises it can be clarified then and there.

Downward communication
It signifies the transmission of orders, instructions etc., from the upper levels of
management to the subordinates of the organization. The object of the
communication from top to lower levels is to pass orders, information,
instructions.

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Upward communication
It is the flow of facts from the lower layers of the organization to the top levels of
authority such as reports, suggestions, grievances, representations etc. The
purpose is to inform the superiors about the work and difficulties encountered by
them, suggestions they have in mind about improvements grievances which they
desire to settle etc.

Horizontal communication
This is interchange of ideas among the managers at the same level and other
personnel of the same rank. Consultations between managers, meetings of
workers of the same class to discuss a problem, belong to this mode of
communication.

Barriers of communication:
A barrier to successful communication does not permit the transmission of
accurate and full information at the receiving end. It breaks down, obstructs,
delays, distorts and tends to give another colour to the information by the time it
reaches the destination. The various barriers to communication are:
 Long and ill-instructed channels of communications
 Heavy work-loads at certain levels in the organization structure.
 Attitude-either not to hear or to hear what one expects to hear
 Prestige and superiority complex
 Sender and receiver having different perception
 Sender unable to symbolize the information correctly
 Prejudiced and biased attitude of the receiver
 Receiver unable to get the information (subject to different meanings)
clarified.
 Receiver ignoring conflicting information
 Receiver tending to evaluate information from his own angle
 Receiver emotionally upset.

Measures to improve communication

 Sending direct and simple messages

 Feedback system to know whether the message has been understood
correctly or not
 Using many communication channels
 Adopting face-to-face communication
 Be sensitive to the private world of the receiver, try to predict the impact of
what you say on his feelings and attitude and tailor your message to fit
receiver’s vocabulary, interests and values
 Time the message carefully. Communicate when the receiver is
motivated to listen and he is not worried about other things

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 Reinforce the words with actions, eg., employees are more likely to accept
the change when they themselves participate in the process of change.
 Introduce a proper amount of redundancy in the message, i.e, some
amount of repetition of information so that the information is not
misunderstood
 Create cordial and peaceful atmosphere in the organization.

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Transactional analysis
One of the most insightful and certainly one of the most popular approaches to
understanding interpersonal communication is that of transactional analysis
which is an approach to or a means for analyzing and improving transactions
between people.

Definition :
Transactional Analysis is a technique for examining the nature of the
interpersonal communication between two individuals and to analyze whether or
not effective communication is taking place. Every piece of conversation is
treated as a transaction.

Theory of Dr. Eric Berne

Transactional Analysis is a theory developed by Dr. Eric Berne in the 1950's.

Originally trained in psychoanalysis, Berne wanted a theory which could be
understood and available to everyone and began to develop what came to be
called Transactional Analysis (TA). Transactional Analysis is a social psychology
and a method to improve communication. The theory outlines how we have
developed and treat ourselves, how we relate and communicate with others, and
offers suggestions and interventions which will enable us to change and grow.
Transactional Analysis is underpinned by the philosophy that:

 people can change

 we all have a right to be in the world and be accepted

Initially criticised by some as a simplistic model, Transactional Analysis is now

gathering worldwide attention. It originally suffered much from the popularised
writings in the 1960's. Also, summarised explanations, such as this, which can
only touch on some of the concepts in Transactional Analysis, led their readers to
believe that there was very little to it. Many did not appreciate the duration and
complexity of the training.

Today there is greater understanding of Transactional Analysis. More and more

people are taking the four to five year part-time training courses to qualify, and
increasingly universities are accrediting these courses for masters degrees.
Those taking training include psychiatrists, organizational and management
consultants, teachers, social workers, designers, engineers and the clergy.

Today Transactional Analysis is used in psychotherapy, organisations,

educational and religious settings. Books have been written for all ages, from
children through to adults, by people all over the world. Transactional Analysis is
truly an international theory relating to a diverse range of cultures.

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Theoretical concepts within the Transactional Analysis world are constantly being
challenged and developed making it a rich dynamic process. Berne died in July
1970 at the age of 60. However, Transactional Analysis has not stood still and
continues to develop and change, paralleling the processes we encourage in
ourselves and others.

Three Ego states in human being and their characteristics

There three ego states are

1. Parent ego state
2. Adult ego state
3. Child ego state

All of us transact from all three states from time to time, each one of us generally
tends to have a dominant ego from which we transact most of the time. The
parent ego is authoritarian (protective and critical), the adult ego is rational
(mature and objective) and the child ego is impulsive (immature, joyful and
rebellious).

Transactional Analysis first order structural model

Berne devised the concept of ego states to help explain how we are made up, and how we
relate to others. These are drawn as three stacked circles and they are one of the building
blocks of Transactional Analysis. They categorise the ways we think, feel and behave and
are called Parent, Adult, and Child. Each ego state is given a capital letter to denote the
difference between actual parents, adults and children.

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Parent ego state

This is a set of feelings, thinking and behaviour that we have copied from our
parents and significant others.

As we grow up we take in ideas, beliefs, feelings and behaviours from our

parents and caretakers. If we live in an extended family then there are more
people to learn and take in from. When we do this, it is called introjecting and it is
just as if we take in the whole of the care giver. For example, we may notice that
we are saying things just as our father, mother, grandmother may have done,
even though, consciously, we don't want to. We do this as we have lived with this
person so long that we automatically reproduce certain things that were said to
us, or treat others as we might have been treated.

As we grow up we take in ideas, beliefs, feelings and behaviours from our

parents and caretakers. If we live in an extended family then there are more
people to learn and take in from. When we do this, it is called introjecting and it is
just as if we take in the whole of the care giver. For example, we may notice that
we are saying things just as our father, mother, grandmother may have done,
even though, consciously, we don't want to. We do this as we have lived with this
person so long that we automatically reproduce certain things that were said to
us, or treat others as we might have been treated.

Adult ego state

The Adult ego state is about direct responses to the here and now. We deal with
things that are going on today in ways that are not unhealthily influenced by our
past.

The Adult ego state is about being spontaneous and aware with the capacity for
intimacy. When in our Adult we are able to see people as they are, rather than
what we project onto them. We ask for information rather than stay scared and
rather than make assumptions. Taking the best from the past and using it
appropriately in the present is an integration of the positive aspects of both our
Parent and Child ego states. So this can be called the Integrating Adult.
Integrating means that we are constantly updating ourselves through our every
day experiences and using this to inform us.

In this structural model, the Integrating Adult ego state circle is placed in the
middle to show how it needs to orchestrate between the Parent and the Child
ego states. For example, the internal Parent ego state may beat up on the
internal Child, saying "You are no good, look at what you did wrong again, you
are useless". The Child may then respond with "I am no good, look how useless I
am, I never get anything right". Many people hardly hear this kind of internal
dialogue as it goes on so much they might just believe life is this way. An
effective Integrating Adult ego state can intervene between the Parent and Child

23
ego states. This might be done by stating that this kind of parenting is not helpful
and asking if it is prepared to learn another way. Alternatively, the Integrating
Adult ego state can just stop any negative dialogue and decide to develop
another positive Parent ego state perhaps taken in from other people they have
met over the years.

Child ego state

The Child ego state is a set of behaviours, thoughts and feelings which are
replayed from our own childhood.

Perhaps the boss calls us into his or her office, we may immediately get a
churning in our stomach and wonder what we have done wrong. If this were
explored we might remember the time the head teacher called us in to tell us off.
Of course, not everything in the Child ego state is negative. We might go into
someone's house and smell a lovely smell and remember our grandmother's
house when we were little, and all the same warm feelings we had at six year's of
age may come flooding back.

Both the Parent and Child ego states are constantly being updated. For example,
we may meet someone who gives us the permission we needed as a child, and
did not get, to be fun and joyous. We may well use that person in our imagination
when we are stressed to counteract our old ways of thinking that we must work
longer and longer hours to keep up with everything. We might ask ourselves "I
wonder what X would say now". Then on hearing the new permissions to relax
and take some time out, do just that and then return to the work renewed and
ready for the challenge. Subsequently, rather than beating up on ourselves for
what we did or did not do, what tends to happen is we automatically start to give
ourselves new permissions and take care of ourselves.

Alternatively, we might have had a traumatic experience yesterday which goes

into the Child ego state as an archaic memory that hampers our growth. Positive
experiences will also go into the Child ego state as archaic memories. The
positive experiences can then be drawn on to remind us that positive things do
happen.

The process of analysing personality in terms of ego states is called structural

analysis. It is important to remember that ego states do not have an existence of
their own, they are concepts to enable understanding. Therefore it is important to
say "I want some fun" rather than "My Child wants some fun". We may be in our
Child ego state when we say this, but saying "I" reminds us to take responsibility
for our actions.

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Contamination of the Adult ego state

The word contamination for many conjures up the idea of disease. For instance,
we tend to use the word for when bacteria has gone into milk. Well, this is similar
to the case with the contaminated Integrating Adult ego state. This occurs when
we talk as if something is a fact or a reality when really this is a belief. Racism is
an example of this. The Integrating Adult ego state is contaminated in this case
by the Parent ego state. If we are white we might have lived with parents or
significant others who said such things as "Black people take our jobs". Growing
up it is likely, that having no real experience to go by, we believed this. We might
also have been told that Black people are aggressive. In our Child ego state may
well lodge some scared feelings about Black people and in this ego state we may
start to believe "All Black people are scary". This would mean that there would be
a double contamination of the Integrating Adult ego state. However, we would
think that such statements were facts rather than beliefs and when this happens
we say that this is Integrating Adult ego syntonic. That is, they fit with the
Integrating Adult ego state and only those people outside of our situation and
sometimes outside of our peer group or culture can see that, objectively, such
beliefs are just that and therefore they can be changed.

Transactional Analysis - The Descriptive Model

This model shows how we function or behave with others. The model used here
is divided up into nine and we have used S. Temple's (1999) term "mode" as it
differentiates it from the structural ego state model mentioned above. We colour
the different modes in red and green for those who find colour helpful as a tool.
Effective communication comes from the green modes, (just as with traffic lights
we get the go ahead when the green light comes on), and ineffective
communication come from the red modes (as with the red traffic light). When we
come from the red modes we invite a negative response, and vice versa from the
green modes.

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3.5 Motivation:

Motivation is the need or drive within an individual that drives him or her towards
goal oriented action. The extent of drive depends on the perceived level of
satisfaction that can be achieved by the goal. Motivation refers to the drive and
effort to satisfy a want or goal.

Need for Motivation:

The aim of motivation is instigation to do work by all the employees working in
any organization so that more results are attained through less efforts. Effects of
motivation comes to all acts of the organization. Any concern may have best
instruments, raw materials in sufficient quality and sufficient persons and
finances but their proper use is not possible till the working persons do not use
them properly.

Kinds of motivation

Positive motivation : Positive motivation means worker may be instigated to

work with some facilities or giving some prize so that the may do good or more
than was done previously and with less supervision. Prize or facilities may be
financial or non financial. To give more wages for work is the financial
motivation, while appraisal of the worker’s work, promotion, appreciation etc. are
non-financial position.

Negative motivation : This is based on punishment or fines if the labours is not

encouraged for work. For less work or for not doing work he must be punished or
fined, This is of two kinds, the financial or non-financial.

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3.5.1 Theories of Motivation:

Maslows’s hierarchy of human needs

One of the most widely mentioned theories of motivation is the hierarchy of
needs theory put forth by psychologist Abraham Maslow. Maslow saw human
needs in the form of a hierarchy ascending from the lowest to the highest, and he
concluded that when one set of needs is satisfied, this kind of need ceases to be
a motivator.

1. Physiological needs : These are the basic needs for sustaining human life
itself, such as food, water, warmth, shelter and sleep. Until these needs are
satisfied to the degree necessary to maintain life other needs will not motivate
people.

2. Security, or safety needs : These are the needs to be free of physical

danger and of the fear of losing a job, property, food or shelter.

3. Affiliation, or acceptance needs : Since people are social beings, they need
to belong, to be accepted by others.

4. Esteem needs: According to Maslow, once people being to satisfy their need
to belong; they tend to want to beheld in esteem both by themselves and by
others. This kind of need produces such satisfaction as power, prestige, status
and self –confidence.

5. Need for self actualization : Maslow regards this as the highest need in the
hierarchy. It is the desire to become what one is capable of becoming to
maximize one’s potential and to accomplish something.

Maslow’s concept of a hierarchy to needs has been subjected to considerable

research. Edward Lowler and Lloyd Suttle found little evidence to support
Maslow’s theory that human need form a hierarchy. They did note, however, that
there were two levels of needs –biological and other needs and other needs
would emerge only when biological needs were reasonably satisfied. They found
that at predominated, while in other self-actualization needs were strongest.

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McGregor’s Theory “X” and Theory “Y” :

Douglas MC Gergor developed a philosophical view of humankind with his

Theory X and Theory Y. These are two opposing perceptions about how people
view human behaviour at work and organizational life.

Theory X
People have an inherent dislike for work and will avoid it whenever possible
People must be coerced, controlled, directed or threatened with punishment in
order to get them to achieve the organizational objectives.
People prefer to be directed, do not want responsibility, and have little or no
ambition
People seek security above all these.

With Theory X assumptions, management’s role is to coerce and control

employees.

Theory Y
Work is as natural as play and rest
People will exercise self –direction if they are committed to the objectives (the
are NOT lazy).
Commitment to objectives is a function of the rewards associated with their
achievement
People learn to accept and seek responsibility
Creativity, ingenuity, and imagination are widely distributed among the
population. People are capable of using these abilities to solve an organizational
problem.
People have potential.

With Theory Y assumptions, management’s role is to develop the potential in

employees and help them to release that potential towards common goals.

Theory X is the view that traditional management has taken towards the
workforce. Many organizations are now taking the enlightened view of Theory Y.
A boss can be viewed as taking the Theory X approach, while a leader takes the
Theory Y approach.

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Herzberg’s Theory of motivation

Frederick Herzberg and his associates categorized various needs of individuals

into two groups
1. Dissatisfies and
2. Satisfiers

Dissatisfiers : In the first group of needs are such things as company policy and
administration, supervision, working conditions, interpersonal relations, salary,
job security and personal life. These were found by Herzberg and his associates
to be only dissatisfied and not motivators. If they exist in a work environment in
high quantity and quality, they yield no dissatisfaction. Their existence does not
motivate in the sense of yielding satisfaction; their lack of existence would,
however, result in dissatisfaction. Herzberg called them maintenance, hygiene or
job context factors.

Satisfiers: In the second group, Herzberg listed certain satisfiers all related to
job content. They include achievement, recognition, challenging work,
Advancement and growth in the job. Their existence will yield feelings of
satisfaction or no satisfaction.

The satisfiers and disatisfiers identified by Herzberg are similar to the factors
suggested by Maslow as shown in the figure below.

The first group of factors, the dissatisfiers, will not motivate people in an
organization, yet they must be present or dissatisfaction will arise. The second
group, the job contents factors, Herzberg found to be the real motivators because
they have the potential of yielding a sense of satisfaction.

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3.6 Co-ordination and control.

Need and importance of co-ordination.

A large-scale business consists of a number of departments in which a large
number of persons employed. Each department and employee has to contribute
harmoniously towards realizing the objective of the concern. Generally, the
larger the size of the enterprise, the greater is the need for co-ordination. The
need for co-ordination arises because of the following factors.

1. Large-scale business enterprises employing a large number of persons

require to co-ordinate the efforts or interests of individuals in pursuit of a common
purpose. Each individual is a unique and distinct personality and has his own
way of doing things. The departments and self-directed efforts of individual
members of the enterprise may move in opposite direction due to which the
enterprise may find it difficult to achieve its objectives. Sometimes, the method
adopted by an individual for going anything may even be detrimental to the
interests of the concern as a whole. It may also lead to chaos in the
organization. It is, therefore, necessary to acquaint the individual member in
clear terms with the enterprise goals and the methods to achieve them.

2. If the efforts of employees are closely co-ordinate, their total accomplishment

will be far greater than the sum total of individual achievements. Co-ordination by
preventing duplication of efforts increases total production.

3. Large business enterprises consists of a number of departments such as

production, purchase sales, finance, personnel etc. Departmental heads who are
in charge of these departments are often in conflict with each other. To realize
the enterprise objectives, all departmental heads must act as well-balance team.
But very often, the departmental heads give so much importance to their
departmental objectives that they neglect the enterprise objective. Hence, to
make all departmental heads function as well-balanced team to realize the
enterprise objectives, there is need for co-ordination.

4. An enterprise employs persons of different types. Though they may be

working in the same type of work, some of them may have a strong personality,
others may be just frail. Some may be well-qualified and quick to grasp; while
some others may not be adequately qualified and also cannot grasp quickly. To
bring about a balance between these different degrees of qualities, there is need
for co-ordination.

5. The need for co-ordination is also felt because of the existence of line and
staff structure of organization in which the members often may not be clear as to
their basic role. There may be confusion as to where the staff authority ends and
line authority begins. Further, there may be friction between the line and staff
officers. All these would lead to the violation of the principle of unity of

30
command. Hence, there is need for the management to co-ordinate the
functions of line and staff authority.

6. Various other functions of management such as planning, organizing, staffing,

etc. can be effectively performed by means of co-ordination. It is said that co-
ordination is the key to these functions. Mooney and Reiley have rightly stated
that “Co-ordination is a force without which attainment of enterprise objectives
become difficult, if not impossible”. The importance of the function of co-
ordination in the management of an enterprise is so much that now it is not
regarded as a separate function of management. According to Koontz and
O‘Donnel, co-ordination is the very essence of management.

Tools for co-ordination

In order to make co-ordination effective, it should be based on certain

fundamental principles. They are:

1. Early start : There should be co-ordination even in the early stages of

planning and policy making. For example, there should be consultant among the
concerned officials while preparing the plan itself. By this, the task of adjustment
and integration in the process of implementation of the plan will be easier and
also there would be any resistance from the concerned officials.

2. Direct contact: Co-ordination is easier by direct personal contract among the

people concerned. One special advantage of direct personal contact is that the
concerned persons can avoid misunderstanding or misinterpretation.
Co-ordination can be achieved more easily by direct interpersonal, vertical and
horizontal relationships of people in a business undertaking.

3. Continuity: Co-ordination is the basis of an organization structure and so

long as the enterprise continues to function, co-ordination is a must. Co-
ordination must start from the stage of planning and should go on all the time as
it is a continuous process.

4. Dynamism: There may be changes in the external environment, which

influences the activities of the business. Further, internal actions and decisions
may be changed or altered depending upon circumstances. In view of this,
co-ordination to modified to suit the changes in the external environment and
internal actions and decisions. In other words, co-ordination should not be rigid.
The achievement of co-ordination itself modifies the strength of the contending
forces and will create new conditions.

5. Simplified organization : The management may consider rearrangement or

reorganization of departments in order to have better co-ordination among the
department heads. The operations and functions which are closely related and

31
connected may be put under the charge of one executive and this would
facilitate the taking of necessary action for better co-ordination, even dissimilar
activities may also be put under one executive for ensuring effective
co-ordination.

6. Clear-cut objectives: Another requisite for securing effective co-ordination in

an enterprise is the clear-cut objective. The manager of different departments
should be clearly explained the objectives of the enterprise and also they should
be prevailed upon to work for the achievement of the common objective of the
enterprise. A clear cut objective and its effective communication to the heads of
different departments is bound to produce uniformity of action.

7. Clear definition of authority and responsibility : A clear definition of

authority and responsibility for each individual and department also facilitates
effective co-ordination in an enterprise. Clear-cut authority helps in reducing
conflicts among the different officers and also helps in making them carry out
their job with unit of purpose. Further, a clearly defined authority helps the
manager in case they violate the limits and for any other irregularities.

8. Effective communication ; For proper co-ordination there is also a need for

effective communication. Through communication, individual and departmental
differences can be resolved. Further effective communication helps in discussing
changes, adjustment of programmes, programmes future etc. In addition, there
will be a possibility for directing the efforts of the entire staff harmoniously
towards the realization of enterprise objectives, the various devices used for
communication are the personal contact, written communications, committee
meetings and group meetings.

9. Effective leadership: Effective leadership also helps in proper

communication. By effective leadership, co-ordination of the activities of the
people at all stages is ensured. Further, it creates confidence in the
subordinates and enhances their morale.

10. Effective supervisions : Though it is the duty of the top executive to see
that the subordinates perform their work as planned, he may entrust the task to
the supervisors. With the help of supervisors, any deviation from the planned
course of action can be easily located and immediate steps may be taken to
ensure that the activities of subordinates conform to the planned activities. Thus,
supervisors can also play an important role in achieving effective co-ordination.

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3.6.1 Techniques of control

Establishing standards :
Plans are the yardsticks against which managers devise controls, the first step in
the control process logically would be to establish plan. Since plans vary in detail
and complexity, and the mangers cannot usually watch everything, special
standards are established. Standards are simply criteria of performance. They
are the selected points in an entire planning programme at which measures of
performance are made so that mangers can receive signals about how things are
going and thus do not have to watch every step in the execution of plans. Every
objective, every goal, every activity, every policy , every budget become
standards against which actual or expected performance might be measured.
The types of standards are a) Physical standards, b)cost standards, c) capital
standards d) Revenue standard e) program standards f) intangible standards
7) goals as standards and strategic plans as control points for strategic control.

Checking and comparing performance with standards

If standards are appropriately drawn and if means are available for determining
exactly what subordinates are doing, appraisal of actual or expected
performance is fairly easy. There are many activities for which it is difficult to
develop accurate standards. It may be quite simple to establish labour0hour
standards for the production of a mass-produced item, and it may be quite simple
to measure performance against these standards, but if the item is custom-made,
the appraisal of performance may be a formidable task because standards are
difficult to set.

Taking corrective measure

An adequate system will disclose where failures are occurring and who is
responsible for them, and it will ensure that some corrective action is taken.
Control is justified only if deviations from plans are corrected through appropriate
planning, organizing, staffing and leading.

Budgeting and budgetary control

Budgeting is the formulation of plans for a given future period in numerical terms.
As such, budgets are statements of anticipated results, either in financial terms-
as in revenue and expense and capital budgets-or in non-financial terms as in
budgets of direct-labour-hours, materials, physical sales volumes, or units of
production. It has sometimes been said for example, that financial budgets
represent the dollarizing of plans. The various types of functional budgets are a)
Master budget b) Sales budget c) Production Budget e) Financial Budget f)
Capital Expenditure Budget g) Cash Budget h) Material and purchase budget I)
Direct labour budget.

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As we have already discussed the budget as an” estimate of future requirements
about the activities of the concern for a particular period”, therefore, a process
known as budgetary control is very helpful which is a “process of comparing the
actual result with the corresponding budget data to know the actual cause of
differences”.

34