B.com (Hons) 3rd Semester
Unit 1: Introduction
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SHORT TYPE QUESTIONS & ANSWERS
1. Define Management.
Ans: "Management is the process of working with and through others to effectively achieve organizational objectives by efficiently utilising the limited resources in the changing environment.
2.Management is all pervasive comment.
Ans: Management is all pervasive or universal because management is essential for effective performance of any organised activity. The principles and techniques of management have universal application. They can be applied to all types of organised activities - business, social, educational etc. Thus, it is all pervasive in nature.
3. Is management a goal oriented process?
Ans: Yes, management is goal-oriented process because the purpose of management is to achieve the goals of the organisation. The success of management is judged by the extent to which organisational goals are achieved.
4. Management is an art or science or both.
Ans: Management is both science and an art, management is science because it has developed certain principles which are of universal application. But the results of management depend upon the personal skills of managers and in this sense management is art.
5.Management is multi dimensional. Write one dimension.
Ans: Management can be defined as multidimensional as because it has many dimensions which can be classified mainly into three categories, such as management of work, management of people and management of operations.
6. Do you think management is a continuous process? Comment.
Ans: Management is a continuous process because it is started right from the time of establishment of the business till its dissolution. So, everymanagement system is to be done in continuous mode.
7.Earning profit is not the objective of management. Say Yes or No
Ans: No, profit earning is also the objective of management because profit is the reward for risk bearing by a businessman and profit is also essential for survival, growth and expansion.
8. Is management a dynamic function?
Ans: Yes, management is a dynamic function because according to changing of inputs the process of management will be also changed.
10. Why is it said management principles are universal?
Ans: The principles of management are universal in nature because they are applicable to all kinds of organisations and situations.
11. Planing eliminates changes and uncertainties. Do you agree? Give reason.
Ans: Yes, I agree with this statement, because planning involves forecasting or anticipation of future events and this helps to reduce or eliminates changes and uncertainties.
12. At which level business policy is framed?
Ans: At top level business policies are framed .
13. Do you think co-ordination is not the functions of • management?
Ans: No, coordination is not a separate function of management, but it is the essence of management.
14. "Anything minus management is nothing". What does this statement tell?
Ans: This statement tells that nothing is possible without management.
15. Management of any organisation strives to attain different objectives. Mention any two such objectives.
Ans: (a) Supply of quality goods at reasonable prices.(b) The basic objective of any business is survival.
16. Name the level of management the following posts belong to: (i) Purchase Manager (ii) Superintendent
Ans: (i) Top management, (ii) Middle management.
17. What do you mean by "efficiency".
Ans: Efficiency means achieving the predetermined goals at the minimum cost (i.e. optimum use of resources).
18. Which function of management ensures that actual activities conform to planned activities?
Ans: Controlling.
19. Who are regarded as middle management in a business organisation?
Ans: Divisional heads regional managers, production or operation managers, plant superintendents etc. are regarded as middle manageme in a business organisation.
20.List two social objectives of management.
Ans: Supply of quality goods at reasonable projects (b) Generation of employment opportunities
21. What is management?
Ans: Management is a process of planning, organizing, staffing, dedi co-ordinating and controlling of activities. It is function of man people. Sometime, it is defined as a body of knowledge and techni leadership also.
22. What is process of management?
Ans: Process of management implies setting objectives and taking different steps for doing the various functions of management such planning, organizing, staffing, directing and controlling. As a process management can be defined as a distinct process of its various functions which are performed by managers to make the efficient use of the available material and human resources so as to achieve the desired objectives.
23. Define management as a social process?
Ans: Management can be defined as a social process because the activities involved in the achievement of goals are related to people. So Koontz and O'Donnel define management as the establishing an effective environment for people operating in formal organizational groups. Management performs such types of activities, which are carried out when employees interact with one another. Management is a social process by which a co-operative group directs actions of others towards common goals.
24. Give the concept of management as a group?
Ans: Management is a group activities, because of the fact that it refers to the totality of all those persons, who are entrusted with the responsibility of managing a particular enterprise. So, management can be also defined as a class or section of people who together carry out various managerial ac vities. That is why, the management of a particular company in this se, implies the management body or board of directors or management mittee etc. As a group, management covers all personnel occupying agerial positions from Chief Executive to first line supervisors.
25.What is Scalar Chain?
Ans: This principle states that the chain of Superiors ranging from ultimate authority to the lowest level in the organization. The communication is to be faster and affective in the line. Under scalar chain communication should follow through in established chain of command. However, passing the established line of authority, to facilitate quick communication, may create a gangplank. But the gangplank should not be a normal practice as it underlines the established line of authority.
26. What is Esprit de corps?
Ans: This is a French word which means 'union is strength. This principle wants harmonious human relations in the organization so that the employees are loyal to the organization. Harmony promotes strength in the organization. Literally speaking Esprit de corps means the spirit of loyalty and devotion to the group to which one belongs.
27. What is work-study?
Ans: Work study means an organized objective, systematic analytical and critical assessment of the efficiency of various operations in an organization. It is a generic term, which is applied to all techniques, which are used in the analysis of human work. This will facilitate the investigation of all factors, which influence efficiency, and the economy of operations.
28. What is Differential Piece Rate System?
Ans: Piece Rate System is type of wage payment. In piece rate the payment of wages the worker who produced the maximum output are rewarded. Under this system, a worker who met the established standards of performance would earn the basic wage rate set by management. If the worker's output exceeded the set target, his wages would increase proportionately. This system has been adopted with the hope that it would motivate workers to produce more and thus help the organization perform better.
29. What is functional foremanship?
Ans: The object of this concept is to segregate planning and performance on the shop floor and to introduce specialization. F.W. Taylor recommended the appointment of eight foremen in all to control the various aspects of production, Four need to be in the planning department, such as rule clerk,instruction card clerk, time and cost clerk and shop disciplinarian Remaining four are for shop level, such as Gang Boss, Speed Boss, Repair Boss and inspector.
30. What is Human Relation Approach?
Ans: This approach focuses on human aspect of industry. Elton Mayo, Fritz Roethlisberger, TN. Whitehead and William Dickson advocated this approach. They modified the classical theory by emphasizing the fact that organization is a social system and the human factor is the most important element within it. Elton Mayo is generally recognized as the father of Human Relations Approach.
Management Principle and Application Unit 1: Introduction Notes For B.com 3rd Semester
LONG TYPE QUESTIONS & ANSWERS
1. Explain the Features of Management by Objectives MBO.
2. Ans: Features Of Management By Objectives MBO are explained below:
(i) 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.
(ii) 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
(iii) 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.
(iv) Makes way to attain maximum result: MBO is a systematic re 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.
(v) 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.
2.What are the features of bureaucracy?
Ans: Bureaucracy is an administrative system designed to accomplish large scale administrative tasks by systematically co-ordinating the work of many individuals. Following are the features of bureaucracy.
(i) Division of work: Work of the organisation is divided on the basis of specialisation to take the advantages of division of labour. Each office in the bureaucratic organisation has specific sphere of competence. Thus division of labour ensures that each office has its clear defined area of competence and no work is left uncovered.
(ii) Administrative class: Bureaucratic organisations generally have administrative class responsibility for maintaining coordinative activities of the members.
(iii) Official Rules: In bureaucratic structure, administrative process is continuous and governed by official rules.
(iv) Impersonal relationships: Official positions in bureaucracy are free from personal involvement, they are governed through of system of official authority and rules.
(v) Official Record: Another feature of bureaucracy is maintenance of proper official records.
3. Explain in brief importance of management.
Ans: The importance or benefits of management are :
(i) Helps in achieving business objectives: Management brings human and material resources together and mobilises people to help in reaching business goals.
(ii)Management increases efficiency: The aim of a manager is to reduce costs and increases productivity through better planning, organising, staffing and controlling the activities of the organisation.
(iii) Management helps in achieving personal objectives: A manager motivates and lead his team in such a manner that individual member are able to achieve personal goals while contributing to the organisation.
(iv) Better quality goods: A good management helps in producing better quality goods at minimum of cost.
(v) Social benefits: Management help in raising standard of living of the people by providing them with quality goods and services at the lowest possible cost.
(vi) Minimising the element of risk: Risk is an integral part of every business but an efficient management always tries to control or minimise it.
4.What are the objectives of management? Explain in details..
Ans: Objectives are the goals or ends toward which the activities of a business are directed. From the point of view of management, objectives may be grouped under three heading namely (i)organisational (ii) social.and (iii) individual.(i)Organisational objectives: The main purpose of any organisation is to utilise human and material resources to fulfill its economic objectives. The economic objectives of a business are survival, profit and growth as discussed below:
(a) Survival: The basic objective of any business is survival. In order to survive an organisation must earn enough revenues to cover cost of operation.
(b) Profit: Mere survival is not enough for business.The management must earn sufficient profit to meet the various cost of business and also cover the various business risks.
(c) Growth: It is very important for the business to grow. To remain in the market, management must exploit fully the growth potential of the organisation.
(ii) Social objectives: Management is an organ of the society so it must have social objectives.
Social objectives include the following:
(a) Supply of quality goods at reasonable prices.
(b) Generation of employment opportunities.
(c) Providing financial support to community projects.
(d) Controlling environment pollution.
(e)Using environment friendly methods of production.
(iii) Personal objectives: Personal objectives relate to the employees. Every employee has some aspirations when he joins a job.
-He expects these aspirations to be fulfilled by the organisation :
(a) Good salary and other benefit.
(b)Opportunities for training, promotion etc.
(c) Good and healthy conditions
(d) Recognition of meritorious work.
(e) Treat employees as a part of business.
5. What are the characteristics of management? Explain in details.
Ans: To understand the nature of management, it is essential to know the features or characteristics of management.
The basic features or characteristics of management are as follows:
(i) Management is goal-oriented : Management is always goal oriented. In the first function of management i.e. planning. The desired goal of the business is determined. Thereafter, through proper organising. staffing, directing and controlling the goal are achieved.
(ii) Group activity Management is an essential part of a group activity. Whenever, there is an organised group of people working towards a common goal, some type of management becomes essential. Management makes the people realise the objectives of the group and directs their effects towards the achievement of these activities.
(iii) Management is universal in character: Management is applicable in all types of organisation. The basic principles of management are of universal application and can be applied in all organisation whether they are business, social, religious, cultural, sports etc.
(iv) Multidimensional Management can be defined as multidimensional as because it has many dimensions which can be classified mainly into three categories, such as management of work, management of people and management of operations.
(v)Management is a continuous process Management is a continuous process i.e. its functions are repeated time and again. Management does not stop anywhere. It is started right from the time of establishment of the business till its dissolution.
(vi) Dynamic function: Management is a dynamic function. According to changing of inputs the process of management will be also changed. So, management is called dynamic function.
6. Explain the basic functions of Management.
Ans: Regardless of size, nature and type of organization, all the managers have to perform some basic functions which are as follows:
(a) Planning: Planning is always the first function performed by every manager. Planning refers to "deciding in advance what to do, how to do, when to do, and who is going to do it. Planning bridges the gap between where we stand today and where we want to reach". Every manager starts with deciding in advance the objectives of an enterprise and how to accomplish these objectives. Planning is the base of all other functions of management.
(b) Organising: After setting up of plans next function of every manager is to organise the activities and establishing an organisation structure to execute the plan. Setting up organisational structure means deciding the framework of working how many units and sub-units or departments are needed, how many posts or designations are needed in each department, how to distribute the authority and responsibility among different people. Once these decisions are taken an organisational structure gets set up.
(e) Staffing: Staffing is the third step or function of a manager. It refers to recruiting, selecting, appointing the employees, assigning them duties, maintaining cordial relations and taking care of grievances of employees. It also includes training and developing the employees, deciding their remuneration, promotion, increments, etc., evaluating the performance, maintaining personal records of employees.
(d) Directing: Once the employees are appointed there is need to instruct them and get the work done. Directing refers to giving directions or instructions to employees by motivating them, supervising the activities of employees, communicating with them. Managers act as leaders and guide them to right direction, so directing function includes, supervising, motivating, communicating and leadership.
(e)Controlling: This is the last function of managers. In this function managers try to match the actual performance with the planned performance and if there is no match between both then managers try to find out the reasons of deviation and suggest corrective measures to come on the path of plan. Controlling functions refer to all the performance measurements and follow up actions that keep the actual performance on the path of plan.
(f) Co-ordination: Co-ordination is concerned with harmonious and unified action directed toward a common objective. It ensures that all groups and persons work efficiently, economically and in harmony. Co ordination requires effective channels of communication. Person-to-person communication is most effective for coordination.
(g)Communication: It means transfer of information and under standing from person to person. Communication also leads to sharing of information, ideas and knowledge.
All managers at all levels of every organization perform these functions, but the amount of time a manager spends on each one depends on both the level of management and the specific organization.
7. Explain the Importance of Coordination.
Ans: The need and importance of coordination can be judged from three points__
(a)Coordination encourages team spirit: There exists many conflicts and rivalries between individuals, departments, between a line and staff, etc. Similarly, conflicts are also between individual objectives and organizational 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 organization. This increases the team spirit of the employees.
(b) Coordination gives proper direction: There are many departments in the organization. Each department performs different activities. Coordination integrates (bring together) these activities for achieving the common goals or objectives of the organization. Thus, coordination gives proper direction to all the departments of the organization.
(c)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.
(d)Coordination makes optimum utilization of resources: Coordination helps to bring together the human and material resources of the organization. It helps to make optimum utilization of resources. These resources are used to achieve the objectives of the organization. Coordination also minimizes the wastage of resources in the organization.
(e) Coordination helps to achieve objectives quickly : Coordination helps to minimize the conflicts, rivalries, wastages, delays and other organizational problems. It ensures smooth working of the organization. Therefore, with the help of coordination an organization can achieve its objectives easily and quickly.
(f) Coordination improves relations in the organization: The Top Level Managers coordinates the activities of the Middle Level Managers and develop good relations with them. Similarly, the Middle Level Managers coordinate the activities of the Lower Level Managers and develop good relations with them. Also, the Lower Level Managers coordinate the activities of the workers and develop good relations with them. Thus, coordination, overall improves the relations in the organization.
(g) 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 utilization of resources it results in more returns and low cost. Thus, coordination leads to higher efficiency.
(h) Coordination improves goodwill of the organization : Coordination helps an organization to sell high quality goods and services at lower prices. This improves the goodwill of the organization and helps it earn a good name and image in the market and corporate world.
8. Why Coordination is called the Essence of Management ?
Ans: "Co-ordination is the Essence of Management." The meaning of this sentence implies, Co-ordination affects all the functions of management. In other words, Co-ordination affects Planning, Organising, Staffing, Directing, Communication, Leading, Motivating and Controlling.
(a) Planning and Coordination: According to Harold Koontz and Cyril O'Donnell, "Planning is deciding in advance what to do, how to do it, when to do it and who is to do it."
There are many departmental plans in a business. These include, Purchase Plan, Sales Plan, Production Plan, Finance Plan, etc. All these plans must be coordinated (brought together) and one Master Plan must be made for the full business. Therefore, Planning is affected by Coordination.
(b) Organising and Coordination: There are many steps in Organising. All these steps must be coordinated, for achieving the objectives of the business. The Top Level Managers must coordinate the efforts of the Middle Level Managers. Similarly, the Middle Level Managers must coordinate the efforts of the Lower Level Managers. Furthermore, the Lower Level Managers must also coordinate the efforts of the workers. Therefore, Organisation is affected by Coordination.
(c) Staffing and Coordination : Staffing involves Recruitment and Selection, Training, Placement, Promotion, Transfer, etc. All these steps must be properly coordinated. Similarly, the efforts of all the individuals, groups and departments must be coordinated for achieving the objectives of the business. Therefore, Staffing is affected by Coordination.
(d) Directing and Coordination : Directing means giving necessary information, proper instructions and guidance to sub-ordinates. This results in coordination. Therefore, Direction is affected by Coordination.
(e) Communicating and Coordination: Many types of communication methods are used in a business. These methods include, Formal communication, Informal Communication, Upward Communication, Downward Communication, Oral Communication, Written Communication, etc. It is important to note that, all these types of communication must be properly coordinated. Lack of proper coordination will hinder the smooth functioning of the communication process. Furthermore, it will also restrict the important information flow and cause many economic problems to the business. Thus, Communication is affected by Coordination.
f) Motivating and Coordination: There are many types of Motivation. These are, Positive Motivation, Negative Motivation, Financial Motivation, and Non-Financial Motivation. All these types of Motivation must be properly coordinated. Therefore, Motivation is affected by Coordination.
(g) Leading and Coordination : Every manager must be a good leader. He must coordinate the efforts of his subordinates for achieving the objectives. That is, he must coordinate the human resource. He must also coordinate the material and financial resources of the organisation. In short, a leader cannot survive without coordination. In other words, leadership cannot be performed without coordination. Therefore, Leadership is affected by Coordination.
(h) Controlling and Coordination : In Controlling the standards are first fixed. Then the performances are measured. Performances are compared with the standards, and the deviations are found out. Then the deviations are corrected. So, controlling involves many steps. All these steps must be properly coordinated. If coordination is not proper, Control will surely fail. Therefore, Control is also affected by Coordination.
Now we can conclude that all the functions of management are affected by coordination. Hence coordination is essential for achieving the objectives of the organisation. It is also required for the survival, growth and profitability of the organisation. Coordination encourages team spirit, gives right direction, motivates employees, and makes proper utilisation" of resources. Therefore, Coordination is rightly called the "Essence of Management".
9. Explain the Evolution of Management Thought with diagram.
Or
Briefly discuss the various theories of management.
Ans: Management and organization theory may be defined as the study of structure, functioning and performance of organization and the behavior of groups and individuals working in the organization. These theories provide the ground for management activities. Various theories of management and organization have been evolved. They may be broadly grouped into three categories, namely
(i) O Classical Theory (upto 1930)
(ii) Neo-Classical Theory (1930-1950)
(iii) Modern Theory (1950 onward) Each of them are discussed below:
(a) Classical Theory: The term "Classical" means something long established and traditionally accepted. The classical theories are the beginning of systematic study of management. The classical management thinkers view an organization as a machine and human being as different components of that machine. Therefore, this theory has been termed as machine theory. It is also called the Traditional Theory of Management. The classical theory is based upon contributions from a number of sources including
(1) Scientific management of F.W. Taylor.
(ii) Administrative management theory of Henry Fayol.
(iii) Bureaucratic model of Max Weber.
(iv) Micro economics
(v) Public administration
(a) Division of Labor: It is the corner stone among the four elements.
(b) Scalar and Functional Process: They deal with vertical and horizontal growth of the organization.
(c) Structure: It is the logical relationship of functions in an organization.
(d) Span of Control: This concept relates to the number of subordinates that a manager can effectively supervise.The classical concept represents an important part of management theory. Many of the classical concepts hold valid even today and provide guidance for designing of an organization. Criticism of the theory:
However, the points of criticism put forward against this theory are as follows:
(i) Goal Structure: This was a very narrow approach as it concentrated more on line and staff structure. It have not expressly mentioned about the goal structure.
(ii) Decision Making Process: Little attention was paid to the decision making process.
(iii) Economic concept of Motivation: They have ignored the socio psychological and motivational aspect of human behavior. For example, Taylor recognized that workers could be motivated by money.
(iv) Role structure: Role structure refers to organizational positions and their interrelationship. Classical theorists have viewed organizations having no interaction with environment. This assumption is totally unrealistic.
(b) Neo-classical Theory: Neo-classical management theory has started its development from the findings of the famous Hawthorne Experiments. Afterwards, many contributions have been added to this field. Beside Prof. Elton Mayo, this theory is based on contributions of behavioral scientists and social scientists as M. P. Follet, C.I. Barnard, Rensis Likert, A.H. Maslow, Douglas Mc. Gregor and many others. Rensis Likert, A.H. Maslow, Douglas Mc. Gregor and many others.
The essence of neo-classical theory is contained in two points:
(i) An organization should be viewed in social as well as in economic and technical terms.
(ii) The social process of group behavior can be understood in terms of clinical method.
The main propositions of the neo-classical theory are as follows -
(i) The organization is a social system. The social environment of the job affects people and is also affected by them.
(iii) Informal organization also exists within the formal organization.
(iv) Human being has diverse motivational pattern and try to fulfill different types of needs.
(v) Communication is necessary as it conveys the feelings and sentiments of people who work in the organization.
(vi) Team work is essential for co-operation among people.
Neo-classical theory has given a new dimension to the design and management of the organization. It has recognized such important factors, which were almost ignored by the classical theory like informal organization, informal leader, non-economic motivation and so on. Thus, neo-classical theory has tried to overcome many of the deficiencies of the classical theory.
This theory is more humanistic. The neo-classicalist has introduced behavior science in the study of management. The theory laid to the organizational design and management in the following ways___
(i)This theory suggests flat structure as against tall structure suggested by classical theory.
(ii) This theory suggests decentralization in organization structure.
(iii) It points out the importance of informal organization. However, neo-classical theory is not free from its shortcomings. It suffers from lace of united approach. In fact, it is not a new theory at all. It is mere modification and extension of the classical model.
(c) Modern Theory: Modern management theories made further refinement and extension of the classical and neo-classical approaches to management. These trends started after 1950. Modern management has made use of various mathematical formulae, statistical tools, economic models and engineering knowledge to find out solutions to managerial and decision-making problems. It has also emphasized the need for study of socio psychological aspects in understanding human behavior.There are three streams under modern management theory.
(i) Quantitative Approach: The quantitative school of management is also called "Operation Research" or management science. New mathematical and statistical tools are being applied in the field of management, particularly in decision-making on complex problems. The more commonly used techniques are linear programming, game theory, simulation and probability. Computer is used to find out solutions to complex management problems.
(ii) System Approach: It considers an organization as a dynamic concept. A system approach acknowledges environmental influences, which were denied by the classical theory. Rigid rules cannot deal with uncertain and uncontrollable events. An organization influences the environment or is influenced by it. System approach lays emphasis on interrelationship and interdependence of all components. It considers all organization as an open, adaptive system, which has to adjust to changes in its environment. System approach includes operation research (OR), behavior sciences, social technical system, management information system (MIS) and industrial dynamics.
(iii) Contingency Approach: Contingency approach points out that all types of organization and all types of leadership can work under certain circumstances. Situational factors play an important role in designing of an appropriate organization structure and suitable managerial style. The following factors affect organization structure and managerial style.
(a) Environment
(b) Technology
(c) People
(d) Size of the organization
Thus, contingency approach suggests that the organization structure, which integrates the above forces, will be more effective. There is no "One best way to manage and organize. The successful managerial decisions depend upon the situations and circumstances in which such decisions are made. Depending on the type of situation and contingency, the management would devise appropriate strategies to adequately handle the situation.
10. Explain the feature and limitations of Classical Approach.
Ans: Classical approach signifies from the following features:
(i) Classical theory concentrate on anatomy of formal organisation through division of labour, specialization, structure, scalar, functionalprocesses and span of control.
(ii) Management is the study of managerial experiences. If the experiences are studied and certain generalizations are deducted there from, these will help the practicing managers.
(iii) Classical Approach treats organisation as a closed system.
(iv) Formal organisation structure coordinates the activities of the organisation. They ignored the element of human beings.
(v) Principles and functions of management have universal application.
(vi) Scientific management emphasized efficiency of lower levels of organisations.
(vii) Work force were supposed to be rational economic force, they could be motivated through economic incentives.
(viii) Classical approach emphasized on 'centralization of authority".
The classical approach suffers from several limitations :
(i)The classical ignored the human relations aspects and undermines the role of human factor.
(ii)Classical viewed organisation as a closed system, i.e., having no interaction with external environment.
(iii) Economic rewards assumed as the main motivator of work force. They have ignored non-monetary factors.
(iv) The classical principles are based on managerial experiences and their limited observations. These are not empirical.
(v) Classical approach is based on oversimplified assumptions. Its principles are ambiguous and contradictory.
(vi) This school emphasized on strict adherence to rules and regulations. The scope for individual initiative is thus limited.
11. What is the philosophy of Taylor's Scientific Management?
Ans: The philosophy or principles of Taylor's scientific management is/are discussed as follows:
(i) Develop a science to replace rules of thumb: Taylor wanted to term management as a science. He, therefore, recommended that every activity of an organization must rest on well-organized, clearly defined principles instead of depending on more or less hazy ideas. Every manager must develop and use scientific methods rather than intuition and expertise to find out the best way of doing every activity in an organization.
(ii) Labor-management co-operation: Taylor regarded co-operation between workers and management as the heart of scientific management. Through co-operation of all, managers can get the things done in the best and cheapest way. This will ultimately contribute to the welfare of the society as a whole.
(iii) Maximization of output or production: Taylor believed in maximum output instead of restricted output. It is because the prosperity for both employer and employees could be achieved only through maximizing productivity.
(iv) Equal division of responsibility: There should be equal division of responsibility between managers and workers. Managers must fulfill their responsibility of planning and organizing effectively. On the other hand, workers must fulfill their responsibility by executing the work as per the directions of the bosses.
(v) Job specialization: Taylor believed that each worker should be specialist in his job. At the same time, different specialist supervisors must supervise each worker. For this, Taylor introduced the concept of functional foremanship.
(vi) Scientific selection, training and development of workers: Taylor realized the importance of right person for the right job to attain highest efficiency. He, therefore, stressed the need for proper selection and training of the workers. He suggested that tests should be used to determine the suitability of a person for a particular job.
(vii) Planning and scheduling of work: Taylor believed that everything in the organization should be done by plan. Therefore daily as well as yearly plans should be prepared. Plans must be prepared for individual worker as well for the organization as a whole. Moreover, scheduling for getting people and the materials at the right place, right time, and proper condition should be done.
(viii) Standardization: Taylor believed standardization of methods, tools, time, materials etc. for each activity is very important. Therefore, standardsshould be fixed for each of them.
(ix) Wage incentives: Taylor believed that wage incentives should be integral part of each job. Taylor suggested the differential wage rates for different jobs. According to these rates workers to receive a bonus in addition to normal wages if they did their job before the standard time fixed for the job.
(x) Mental revolution: Taylor firmly believed that the principles of scientific management could succeed only when there is a complete mental revolution on the part of management and worker. In other words, both the parties should change their mental attitudes. For this, he suggested the following three things:
(i)They must create a spirit of mutual trust and confidence.
(ii)Both must make efforts to increase production and productivity.
(iii)Both must develop a scientific attitude towards the work and should not leave their arbitrary approach. Thus the mental revolution requires change in the attitudes of both. Management must create congenial working conditions and develop best methods and looks for optimum efficiency of the workers. On the other hand, workers should also the review the working habits as well as the attitude towards the management and problems of the organization. They should not indulge in strikes and wastage of resources. Both should trust each other. This will result in increased production, productivity and profitability with which both will be benefited.
12. Discuss the various Techniques of Scientific Management.
Ans: In order to blend philosophy and principles of scientific management into practice, Taylor developed the following techniques or mechanism :
(a) Scientific task setting: Taylor suggested that the task of every worker for every day should be determined through scientific investigation. Taylor called it "a fair day's work". Every manager must know in advance the fair day's work for each worker. The day's work should neither be higher than the average capacity of the workers nor lower than the capacity of the worker for whom work is determined.
(b) Experimentation or work-study: The work for each worker must be determined through proper experiments or work-study. Work study means organized, systematic and objective analysis and assessment of the operational efficiency of all the elements connected with the work The main areas of work-study are as follows:
(i) Method Study: It is a survey of production process. It aims toevolve the best method of doing a particular job by simplifying the productionprocess, methods, tools etc.
(ii)Motion Study: Motion study relates to the study of movements ofa worker or a machine in doing a job. It aims at eliminating unnecessarymotions and to find out the best method of doing a job efficiently. Thisresults in conservation of energy and increased efficiency and productivityof the resources.
(iii) Time Study: Time study is the process of recording the exact time taken for doing a job with a view to find out a standard time for doing the job.
(iv) Fatigue Study: Fatigue study is the study of the reduction of human energy or capacity in doing his job. Fatigue is caused by over-work without rest, poor working conditions, stress, strain etc.
(c) Planning: Taylor advocated that planning function should beseparate from the doing function. Planning department should decide aboutthe type, shape and quality of the goods to be produced and the timeschedule for delivery of the products. It should also prepare detailedinstructions for the workers as to quality, quantity and shape of productsand time schedule of production. Nothing should be left for workers toplan.
(d) Scientific selection and training of workers: Taylor realizedthe importance of the right person on the right job. Therefore, he advised for proper selection of the workers and their training. Tests and interview should be used to judge the suitable person on the job. Scientifically selected persons should be trained to use scientific methods of doing jobs.
(e) Specialization: Taylor suggested that scientifically selected and trained workers should be allocated the tasks according to their specialization. Moreover, different functional bosses must supervise each worker.
(f) Standardization: Taylor advocated for standardization of materials, tools, equipments, methods etc. Standardized working environment should also be provided to the workers. Standardization will increase efficiency.
Management Principle and Application Unit 1: Introduction Notes For B.com 3rd Semester
13. What are benefits and limitations of Scientific management?
Ans: Taylor's scientific management has been regarded very important contributions on the following grounds or benefits
(i) It promotes the use of scientific methods in place of traditional rule of thumb method. It promotes co-operation between management and workers.
(iii) It encourages having right persons on the right job through scientific selection and training.
(iv) It promotes standardization of products through standardized material, tools, techniques, methods etc.
(v) It promotes better utilization of resources through proper planning, scheduling, cost accounting etc.production.
(vi) It helps maximizing production and productivity in place of restricted (vii) It motivates people to work by using the incentive wage payment systems.
(viii) It helps to provide goods at lower prices by eliminating or minimizing wastage and inefficiency.
(ix) People get better quality of products. Owners get more profits.
(xi) As a resuit of all the above facts, the society and nation as a whole is benefited.
_Criticism : Taylor's scientific management or Taylor's contribution has been criticised by some of the employers, workers and academicians. It is due to the following limitations of the scientific management:
(i) Production-Centered: Scientific management is production centered management. It lays emphasis on production aspect of management. It ignores almost all other areas of management such as finance, marketing, accounting etc. Peter Drucker, March and Simon have also criticised it on the ground that it neglects highly important areas of problem solving.
(ii) Neglect of human aspect: Workers, trade owners, psychologists usually criticise this that it neglects human aspect or lacks human face. They allege that it forces the worker to over speed the work. Moreover, it renders the work monotonous. Even the wages of the workers do not increase in proportion of increase in production. It, therefore, leads to loss of worker's initiative and skills.
(iii) Wrong assumptions: Behavioural scientists have criticised scientific management for its wrong assumptions. Scientific management assumes that workers are rational economic beings and cannot plan. This is not fair. One expert has gone to the extent of saying that "Taylor has deduced a God-given right of planning". Behaviour scientists argue that workers are human beings and can effectively plan their activities.
(iv) Over-specialization: Scientific management is also criticised for over-specialization. Allocation of work is made on the principle of division of labour. Moreover, supervision system under this management is based on the principle of specialization i.e. functional foremanship. This leaves little freedom to workers in their job.
(v) Theoretical: Scientific management is more theoretical than applied science. For instance, it suggests for separation of planning function from 'doing' or execution function. Thus, scientific management does not expect and allow workers to think.
(vi) Restricted application: Scientific management techniques can be applied to production activities at the supervisory level. These cannot be successfully applied to the activities at higher level of management. Moreover, these techniques cannot be applied the activities of service sector.
(vii) Anti-social: Dr Myers regards that scientific management is anti social because it aims at excluding as for as possible the average man
(viii) It is an approach only: Some academicians' object to call it scientific management. They say it is simply a scientific approach to management..
In the light of above stated facts for and against scientific management, it may be concluded that it can be useful approach for managing shop floor level activities.
14. Describe the contribution of Fayol to management?
Ans: Henry Fayol (1841-1925) was a French mining engineer and chief executive officer of a coal mine company. He propounded the administrative or functional theory of management. He first expressed his views in 1900 at the international mining and metallurgical congress. Then he presented his theory in a book entitled Administration Industrially it General in French language in 1915. Later, it was translated into English as General and Industrial Management in 1929. Fayol's contribution may be discussed under the following heads.
(a) Classification of business activities: Fayol classified all activator of a business organization into the following six groups:
(i) Technical activities consisting of production or manufacturing.
(ii) Commercial activities consisting of buying, selling and exchange.
(iii) Financial activities relating to search for and optimum use of capital.
(iv) Security activities relating to protection of property and persons.
(v)Accounting activities relating to maintenance of accounts,caves hantion not and statistics.
(vi) Administrative activities relating to the planning organizing, commanding, co-ordinating and controlling.
(b) Elements of administration or management functions: Fayol costing described five elements of administration or management functions.
Theyare as follows:
(i) Planning, consisting of activities for making plans to achieve goal of the organization. This function includes forecasting and decision-making.
(ii) Organizing, consisting of activities necessary for mobilizing human and other resources of the organization to implement the plans.
(iii) Commanding which consists activities relating to directing, leading, motivating and communicating for getting things done.
(iv) Co-ordinating, which is concerned with activities necessary for harmonizing the efforts of all in order to achieve a common goal.
(v) Controlling which is concerned with ensuring performance in accordance with plans.
(c) Principles of management: Fayol proposed fourteen principle.of management. He believed that these principles should guide the thinking of managers in doing their job.
The principles are as follows: (i) Division of labour.(ii)Authority and Responsibility.(iii) Discipline.(iv) Unity of Command.(v) Unity of direction.(vi) Subordination of Individual interest to the common interest.(vii) Remuneration. (viii) Centralization.(ix) Scalar chain.(x)Order.(xi) Equity.(xii) Stability of tenure of personnel.(xiii) Initiative and(xiv) Esprit de corps.
(d) Flexible and adaptable principles: Fayol made it clear that the principles of management are flexible and adaptable to every need. The managers must be flexible in applying them because these principles are hardly ever used twice in the same way due to the changing conditions
(e)Universal Principles: He believed that principles of management are universally applicable. The principles are applicable in all organizations large or small, industrial, commercial, political, religions, or any other. Moreover, he assumed that all the managers perform the same basic functions. This was the basic assumption of Fayol's work.
(f) Qualities of manager: Fayol also stressed the need for learning and developing certain skills by managers. According to him a manager should possess the following qualities:
(i) Physical qualities i.e. good health, vigor and vitality. (ii) Mental qualities i.e., ability to learn, and to apply the knowledge.(iii) Moral qualities i.e., energy, firmness to accept responsibility, ability to take initiative, loyal etc.(iv) Educational qualities i.e., general education and knowledge ofmatters not belonging to his job. (v) Technical or professional qualities i.e., ability to perform his job efficiently. (vi) Experience, i.e. knowledge arising from doing the job over the time.(g) Management education and training: Fayol realised the need for management education and training. He strongly pleaded for introducing management education and training in schools and universities. He also suggested for conducting organizational "in house' training programmes... He preferred it over on the job experience method of learning and training
15.Discuss the principles of management given by Fayol? Henry Fayol, who is recognized as the father of modern theory o agement formulated a set of 14 principles. They are as follows:
(i) Division of Work or specialization: Fayol's first principle related to division of work. Taylor and some economists call it the principle of specialization.
The principle of division of work states that the total work should be sub divided into small components/parts and each part of the work should be allocated to the worker who specializes in that part of the work.
(ii) Authority and responsibility: Authority creates responsibility. Whenever, a person exercise authority, responsibility arises. Responsibility is the essential counter part of authority. Therefore, this principle states that authority and responsibility must go together. Moreover, there must be parity of authority and responsibility.
(iii) Discipline: According to Fayol, discipline is absolutely essential of the smooth running of business. Without it no business can prosper. He believed that discipline results from these things:
(a) Good leadership at all levels of the organization.
(b) Fair agreement between the firm and its employees.
(c) Fairness in the application of penalties. He also believed that punishment should be rarely awarded.
(iv) Unity of Command: The principle of unity of command states that each subordinate should receive orders from only one boss or superior. It is because an individual cannot serve two bosses at the same time. When an employee gets orders and instructions from more than one boss, confusion and conflict tend to arise.
(v) Unity of direction: The principle of unity of direction states that there should be "one head and one plan" for a group of similar activities having the same objective. It means that only one manager must direct similar activities under a particular plan. This will ensure unity of action and result in sound organization structure.
(vi) Subordination of individual interest to general interest: This principle states that the interest of one employee or a group of employees should not prevail over the interest of the organization as a whole.
(vii) Remuneration: Fayol stressed that the remuneration or compensation for work done should be fair to both employees and the firm. It should neither be low nor high. The mode of payment day-rate,piece-rate, profit sharing etc. should depend on the specific circumstances but it should satisfy both the employees and employers.
(viii) Centralization: Decreasing the role of subordinates in decision making is centralization of authority and increasing their role in it is decentralization of authority. Fayol believed that managers should retain final responsibility but should at the same time give their subordinates enough authority to do their job properly. Thus, a balance between centralization and decentralization should be maintained.
(ix) Scalar chain or hierarchy of authority: Scalar chain refers to the unbroken chain or line of authority running from the top management to the lowest levels of the organization. This is also known as hierarchy of authority.
Fayol realized that sometimes it becomes absolutely essential to short circuit the chain of command or to depart from the prescribed route with a view to ensure communication fast and effective. In such a case, gang plank should be used. Fayol's gang-plank allows two individuals to deal directly with each other without weakening the chain of command. Fayol's gang-plank concept is shown in Figure.
16. Describe the Bureaucratic Model of Max Webber.
Ans: Bureaucratic organization, in Webber's views, is the most efficient form of organization. He names it as rational legal. It is rational because specific objectives of the organization are laid down and organization is designed to achieve them and it is legal because authority stemmed from a clearly defined set of rules, procedures and roles. According to Webber, "a bureaucracy is a highly structured, formalized, and impersonal organization."
Webber's bureaucratic model included the following:
(i) There is clear separation between superior and subordinate.
(ii)There is a division of labour based upon compliance and functional specialization.
(iii)There is a clear divorce between pe. onal and official matters.
(iv)There is a system of rules, regulations and rocedures.
(v) There is a hierarchy in positions based on legal authority and power. Webber's model will be preferred in those organizations where change is not anticipated or where rate of change can be predicted. Large business houses and government departments use this type of organization. Webber is credited for attempting classification of organization for the first time Of course, Webber's model suffers from certain limitations. It has rigidity, impersonality, excessive cost of control, and excessive dependence on superiors, tendency to ignore organizational goals. Some critics say that this approach destroys individual creativity and the flexibility to respond to compels changes in the global environment. Inspite of certain limitations this model is very useful in large organizations. The principal characteristics of bureaucracy are strict division of labour, adherence to formal rules and regulations, and impersonal application of rules and controls.
17. Write an essay on Hawthorne Experiments.
Ans: Harvard university research team conducted a series of studies. George Elton Mayo, F.J Roethlisberger, W.J. Diction and other were the conducted at Hawthorne plant of the Western Electric Company, Chicago (USA) between 1924 and 1932. In all, the following four studies were conducted at the Hawthorne plant -
(i) Illumination or test room study: The illumination study was conducted to determine the relationship between light intensity and productivity or efficiency of workers. For this purpose, three different experiments were conducted in which researchers changed light intensity. Researchers were surprised to note that productivity of select group of employees tended to improve inspsite of the change in their physical surroundings. Productivity increased even when the lights were dimmed to moonlight intensity. Therefore, they concluded that lighting was a minor factor affecting the productivity of workers.
(ii) The relay assembly test room study: The relay assembly test room study was conducted to ascertain the factors other than the light intensity, affecting the productivity. In this study six persons (five girl assemblers and a layout operator) were placed in a room. In addition, the researchers put an observer with them in the room. The observer was to record everything that happened in the room and to maintain friendly atmosphere therein. The researchers changed working conditions such as rest periods, length or workdays, refreshments, temperature, wage rates etc. during the study. In addition, girls were allowed to talk more freely among themselves. With the introduction of each change, productivity increased. Then researchers decided to return to the original conditions of work. They were surprised to note that productivity continued to rise. Therefore, they concluded that most likely cause of higher productivity was the change in social situations on the work group. They also noted that the test room observer had become de Facto supervisor who created a more relaxed social environment. Therefore, in order to ascertain the true factors involved in the productivity, a massive interviewing study programme was initiated.
(iii) Mass interviewing study: The third study was the mass interviewing programme. Under this programme over 21,000 employees at the Hawthorne plant were interviewed over a period of three years. Initially, employees were directly asked about the supervision, company policies, the work environment i general etc. But employees often gave guarded and stereo typed answ... Thus, it became quickly clear that the employees do not want to answer such questions.
The researchers, therefore, switched indirect questioning. Under this approach, the employees were allowed to talk about what they felt important. The interviewers patiently heard their views. Consequently, a plethora of useful information could be gathered. The researchers reached to the conclusion that work performance and individuals status in the organization are determined not by the person himself but by his group members as well. His peer also affects his performance. Moreover, personal problem also have an effect on the feelings about his job.
(iv) Bank wiring observation room study: In order to observe and analyse informal group behaviour more accurately, bank wiring observation room study was undertaken. This study was conducted in a room of the bank-wiring department. In this room, 14 employees performing three interrelated jobs of the department were placed. An observer was also deputed in the room for watching and recording the activities and behaviour of the group. Without interacting with the group. The observation and recording continued for six months.
18. Explain the conclusions and limitations of Hawthorns studies.
Ans: The main conclusions or contributions of Hawthorne studies are as follows:
(i) Work is a group activity: Mayo concluded that work is a group activity workers work better in groups.Informal groups: Workers form internal informal social groups.Such groups may not be based on their occupation.
(iii) Influence of social groups: The informal social groups within the work place greatly affect the behaviour and productivity of individual worker.
(iv) Norms by social groups: The social group determines informal 'norms' or standards of work, which are lower than the official norms. The members of the group usually follow the same. Thus informal groups exert strong control over the workers at work.
(v) Group co-operation is planned: Group cooperation or collaboration does not occur accidentally. It must be planned and developed.
(vi) Worker is not only relational economic being: A worker is not only a rational economic being. He is not motivated solely by monetary means. His social needs have a powerful influence on his behaviour and productivity. Therefore, satisfaction of social needs plays a crucial role in motivating workers.
(vii) Role of supervisor's behaviour: The behaviour of supervisors does affect the behaviour of workers, when supervisors provide a more relaxed work environment, by paying special attention to the workers social situation changes. That change increases productivity. Thus situation was labeled as "Hawthorne effect."
(viii) Communication: Free flow of communication affects the attitude of workers towards work. It ultimatums results in greater cooperation and participation of workers in decision-making.
(ix) Complaints may not be statements of facts: Complaints are not always objective statements of facts. They are often symptoms of deep-seated discontent and dissatisfaction.
(x) Birth of human relations movement: The most important contribution of the Hawthorne studies is that it gave rise to the 'Human Relations Movement'. Human relations movement caused managers to lay more and more emphasis on social needs of the workers.
19. Write about the implications of Hawthorne Experiments?
Ans. Following are the implications of Hawthorne experiments:
(i)Social factors in output: An organisation, according to Hawthorne experiments is basically influenced by social factors. Since people are social beings, their social characteristics determine the output and efficiency in the organisation.
(ii) Group influence: Workers being social beings, they create groups which may be different from their official group. In fact, groups are formed to overcome the shortcomings of formal relationship. So, there is group. influence in an organisation
(iii) Conflicts:-The informal relations of workers create groups andhere may be conflict between organisations and groups so created.
(iv) Leadership: Leadership is important for directing group behaviour and this is one of the most important aspects of managerial functions. In accordance with this approach, a superior is more acceptable as a leader.
(v) Supervision: Supervision is an important aspect in determining efficiency and output. Friendly to the workers, attentive, genuinely concerned supervision affects the productivity favourably.
(vi) Communication: A better understanding and communication is essential between management and workers. It can be developed by identifying their attitudes, opinions and methods of working and suitable actions on these.
20. What is System Approach to Management? Write its features.
Ans: In the 1960, an approach to management appeared which try to unify the prior schools of thought. This approach is commonly known as *Systems Approach'. Its early contributors include Ludwing Von Bertalanfty, Lawrence J. Henderson, W.G. Scott, Deniel Katz, Robert L. Kahn, W. Buckley and J.D. Thompson.
They viewed organisation as an organic and open system, which is composed of interacting and interdependent parts, called subsystems. The system approach is top took upon management as a system or as "an organised whole" made up of sub- systems integrated into a unity or orderly totality.
Systems approach is based on the generalization that everything is inter related and inter-dependent. A system is composed of related and dependent element which when in interaction, forms a unitary whole. A system is simply an assemblage or combination of things or parts forming a complex whole.
One its most important characteristic is that it is composed of hierarchy of sub-systems. That is the parts forming the major system and so on. For example, the world can be considered-to be a system in which various national economies are sub-systems.
In turn, each national economy is composed of its various industries, each industry is composed of firms' and of course a firm can be considered a system composed of sub-systems as production, marketing, finance, accounting and so on.
Features of Systems Approach:
(i) A system consists of interacting elements. It is set of inter-related and inter-dependent parts arranged in a manner that produces a unified whole.
(ii) The various sub-systems should be studied in their inter-relationships rather, than in isolation from each other.
(iii) An organisational system has a boundary that determines which parts are internal and which are external.
(iv) A system does not exist in a vacuum. It receives information, material and energy from other systems as inputs. These inputs undergo a transformation process within a system and leave the system as output to other systems.
(v) An organisation is a dynamic system as it is responsive to its environment. It is vulnerable to change in its environment.
(vi) In the systems approach, attention is paid towards the overall effectiveness of the system rather than the effectiveness of the sub systems.
(vii) Systems theory is useful to management because it aims at achieving the objectives and it views organisation as an open system.. Chester Barnard was the first person to utilize the systems approach in the field of management.
21. Write the Steps In Management By Objectives.
Ans: Steps In Management By Objectives are :
(i) 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).
(ii)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.
(iii) 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.
(iv) 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.
(v) 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.:
(vi) 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).
(vii) 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.
(viii) 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.
(ix) 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.
(x) 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.
Management Principle and Application Unit 1: Introduction Notes For B.com 3rd Semester
22. Explain the Advantages of Management By Objectives MBO.
Ans: Advantages of Management By Objectives MBO :
(i) 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.
(ii) 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 MBO.
(iii) Facilitates objective appraisal: MBO 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.
(iv) 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.
(v) 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.
(vi) 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.
(vii) 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.
(viii) 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.
23. Explain the Limitations of Management By Objectives MBO
Ans: Limitations of Management By Objectives MBO :
(i) 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.
(ii) 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.
(iii) 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 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.
(iv) 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 this, the programme is used as a 'whip' to control employee performance.
(v) 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.
(vi) 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.
(vii) 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.
(viii) 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.
(ix) 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 MBO.
24. Give some Suggestions for Improving the Effectiveness of MBO
Ans :Inspite of having the above problems, the MBO may be improved subject to maintaining the following suggestions.
(i) Top Management Support: It important to secure top management support and commitment. Without this commitment, MBO can never really be a success. The top managers and their subordinates should all consider themselves as players of the same team. This means that the superiors must be willing to relinquish and share the necessary authority with subordinates.
(ii) Objectives should be Clearly Formulated: The objectives should be clearly formulated should be realistic and achievable. For example, it is not realistic for the R & D department of an organisation to set a goal of, say 10 inventions per year. These goals should be set with the participation of the subordinates. They must be properly communicated, clearly understood and accepted by all MBO works best when goals are accepted.
(iii) Should be an Overall Philosophy of Management: MBO should be an overall philosophy of management and the entire organisation, rather than simply a divisional process or a performance appraisal technique, MBO is a major undertaking and should replace old systems rather than just being added to it. Felix M. Lopex has observed, "when an organisation is managed be objectives, it becomes performance oriented. It grows and it develops and it becomes socially useful."
(iv) Continuously Reviewed: The goals must be continuously reviewed and modified as the changed conditions require. The review technique should be such that any deviations are caught early and corrected.
(v) Formal Training: All personnel involved should be given formal training in understanding the basis as well as the contents of the program such education should include as to how to set goals, the methods to achieve these goals, methods of reviews and evaluation of performance and provisions to include any feedback that may be given.
(vi) Organisational and Psychological Principles: MBO system is a major undertaking based upon sound organisational and psychological principles. Hence it should be totally accepted as a style of managing and should be totally synthesized with the organisational climate. All personnel involved must e a clear understanding of their role authority and their expectations. The system should be absorbed totally be all members of the organisation.
25. Explain Business Process Reengineering (BPR) by Michael Hammer & James Champy.
Ans: Continuous improvement had been around for a long time. And that simply built on generations of work to improve the way businesses do things, going back to the Gilbreths and Taylor. But in 1990, a Harvard
Business Review article exploded the idea of incremental change, with its provocative title: Reengineering Work: Don't Automate, Obliterate. It was written by an MIT engineer called Michael Hammer. And three years later, the revolution was well underway, with a book he wrote with top management consultant, James Champy. Reengineering the Corporation: A Manifesto for Business Revolution was as much a rallying cry for the consulting industry as anything else. But in the few years that followed, hundreds of companies employed thousands of consultants to reengineer their processes and, in so-doing, remove tens of thousands from their workforces.A company can get competitive advantage if it can improve its customer service or reduce its operating costs. Continuous improvement methodologies like time and motion studies, and the Japanese Kaizen, had done this for years. But reengineering is a methodology for rebuilding the way a company does things - its business processes - from scratch.
In particular, it emphasizes removing whole processes that do not deliver value. The result of this radicalism was obvious in hindsight, though not what Hammer and Champy intended. Companies not only reduced the scope of processes and found significant shortcuts; they removed whole cadres of staff who had previously carried out the tasks that were no longer needed.
The two principle effects of the 1990s' obsession with reengineering were substantial layoffs and redundancies (described by the now-infamous euphemism 'downsizing') and a bean-feast of highly paid work for armies of recently graduated consulting analysts at all of the big consultancies.
By the end of the 1990s, the reengineering bubble had burst, to be replaced by a second wave of technology enhanced cost-saving under the guise of another three letter acronym (TLA): Enterprise Resource Planning, or ERP.
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