Unit ii FMIS

UNIT 2
FUNCTIONS OF
MANAGEMENT

PLANNING
• Planning means looking ahead and chalking out future courses of action to be
followed. It is a preparatory step. It is a systematic activity which determines when, how
and who is going to perform a specific job. Planning is a detailed programme
regarding future courses of action.
• According to Urwick, “Planning is a mental predisposition to do things in orderly way,
to think before acting and to act in the light of facts rather than guesses”.
• According to Koontz & O’Donell, “Planning is deciding in advance what to do, how to
do and who is to do it. Planning bridges the gap between where we are to, where we
want to go. It makes possible things to occur which would not otherwise occur”.

STEPS IN PLANNING FUNCTION
1.Establishment of objectives
a. Planning requires a systematic approach.
b. Planning starts with the setting of goals and objectives to be achieved.
c. Objectives provide a rationale for undertaking various activities as well as
indicate direction of efforts.
d. Moreover objectives focus the attention of managers on the end results to be
achieved.
e. As a matter of fact, objectives provide nucleus to the planning process.
Therefore, objectives should be stated in a clear, precise and unambiguous language.
Otherwise the activities undertaken are bound to be ineffective.
f. As far as possible, objectives should be stated in quantitative terms. For
example, Number of men working, wages given, units produced, etc. But such an
cannot be stated in quantitative terms like performance of quality control manager,
effectiveness of personnel manager.
g. Such goals should be specified in qualitative terms.
h. Hence objectives should be practical, acceptable, workable and achievable.

2.Establishment of Planning Premises
a. Planning premises are the assumptions about the lively shape of
in future.
b. They serve as a basis of planning.
c. Establishment of planning premises is concerned with determining
where one tends to deviate from the actual plans and causes of such
d. It is to find out what obstacles are there in the way of business during
the course of operations.
e. Establishment of planning premises is concerned to take such steps
avoids these obstacles to a great extent.
f. Planning premises may be internal or external. Internal includes capital
investment policy, management labour relations, philosophy of management,
etc. Whereas external includes socio- economic, political and economical
changes.

3.Choice of alternative course of action
a. When forecast are available and premises are established, a
of alternative course of actions have to be considered.
b. For this purpose, each and every alternative will be evaluated by
weighing its pros and cons in the light of resources available and
requirements of the organization.
c. The merits, demerits as well as the consequences of each
must be examined before the choice is being made.
d. After objective and scientific evaluation, the best alternative is
chosen.
e. The planners should take help of various quantitative techniques to
judge the stability of an alternative.

4.Formulation of derivative plans
a. Derivative plans are the sub plans or secondary plans which help in
the achievement of main plan.
b. Secondary plans will flow from the basic plan. These are meant to
support and expediate the achievement of basic plans.
c. These detail plans include policies, procedures, rules, programmes,
budgets, schedules, etc. For example, if profit maximization is the main aim
of the enterprise, derivative plans will include sales maximization,
production maximization, and cost minimization.
d. Derivative plans indicate time schedule and sequence of
accomplishing various tasks.

5.Securing Co-operation
a. After the plans have been determined, it is necessary rather
advisable to take subordinates or those who have to implement these
into confidence.
b. The purposes behind taking them into confidence are :-
i. Subordinates may feel motivated since they are involved in
decision making process.
ii. The organization may be able to get valuable suggestions
and improvement in formulation as well as
implementation of plans.
iii. Also the employees will be more interested in the
of these plans.

6.Follow up/Appraisal of plans
a. After choosing a particular course of action, it is put into action.
b. After the selected plan is implemented, it is important to appraise
its effectiveness.
c. This is done on the basis of feedback or information received from
departments or persons concerned.
d. This enables the management to correct deviations or modify the
plan.
e. This step establishes a link between planning and controlling
function.
f. The follow up must go side by side the implementation of plans so

CHARACTERISTICS OF PLANNING
1. Planning is goal-oriented.
a. Planning is made to achieve desired objective of business.
b. The goals established should general acceptance otherwise
Individual efforts & energies will go misguided and misdirected.
c. Planning identifies the action that would lead to desired goals
quickly & economically.
d. It provides sense of direction to various activities. E.g. Maruti
Udhyog is trying to capture once again Indian Car Market by
launching diesel models.

2. Planning is looking ahead.
a. Planning is done for future.
b. It requires peeping in future, analyzing it and predicting it.
c. Thus planning is based on forecasting.
d. A plan is a synthesis of forecast.
e. It is a mental predisposition for things to happen in future.

3.Planning is an intellectual process.
a. Planning is a mental exercise involving creative thinking, sound
judgement and imagination.
b. It is not a mere guesswork but a rotational thinking.
c. A manager can prepare sound plans only if he has sound
judgement, foresight and imagination.
d. Planning is always based on goals, facts and considered
estimates.

4. Planning involves choice & decision making.
a. Planning essentially involves choice among various
b. Therefore, if there is only one possible course of action, there
no need planning because there is no choice.
c. Thus, decision making is an integral part of planning.
d. A manager is surrounded by no. of alternatives. He has to pick
the best depending upon requirements & resources of the
enterprises.

5.Planning is the primary function of management / Primacy of Planning.
a. Planning lays foundation for other functions of management.
b. It serves as a guide for organizing, staffing, directing and
controlling.
c. All the functions of management are performed within the
framework of plans laid out.
d. Therefore planning is the basic or fundamental function of
management.

6.Planning is a Continuous Process.
a. Planning is a never ending function due to the dynamic
business environment.
b. Plans are also prepared for specific period f time and at the
of that period, plans are subjected to revaluation and review in
the light of new requirements and changing conditions.
c. Planning never comes into end till the enterprise exists issues,
problems may keep cropping up and they have to be tackled
by planning effectively.

7.Planning is all Pervasive.
a. It is required at all levels of management and in all
departments of enterprise.
b. Of course, the scope of planning may differ from one level to
another.
c. The top level may be more concerned about planning the
organization as a whole whereas the middle level may
be more specific in departmental plans and the lower level
implementation of the same.

8.Planning is designed for efficiency.
a. Planning leads to accomplishment of objectives at the
minimum possible cost.
b. It avoids wastage of resources and ensures adequate and
optimum utilization of resources.
c. A plan is worthless or useless if it does not value the cost
incurred on it.
d. Therefore planning must lead to saving of time, effort and
money.
e. Planning leads to proper utilization of men, money, materials,
methods and machines.

9.Planning is Flexible.
a. Planning is done for the future.
b. Since future is unpredictable, planning must provide enough
room to cope with the changes in customer’s demand,
competition, govt. policies etc.
c. Under changed circumstances, the original plan of action
be revised and updated to make it more practical.

TYPES OF PLANS
• Operational plans
• Tactical plans
• Strategic plan
• Contingency plans
Strategic
Tactical
Operational

OPERATIONAL PLANS
• The specific results expected from departments, work groups, and individuals are the
operational goals. These goals are precise and measurable. “Process 150 sales
applications each week” or “Publish 20 books this quarter” are examples of operational
goals.
• An operational plan is one that a manager uses to accomplish his or her job
responsibilities. Supervisors, team leaders, and facilitators develop operational plans to
support tactical plans. Operational plans can be a single‐use plan or an ongoing plan.

OPERATIONAL PLANS
• Single‐use plans apply to activities that do not recur or repeat. A one‐time occurrence,
such as a special sales program, is a single‐use plan because it deals with the who,
what, where, how, and how much of an activity. A budget is also a single‐use plan
because it predicts sources and amounts of income and how much they are used for a
specific project.
• Continuing or ongoing plans are usually made once and retain their value over a
period of years while undergoing periodic revisions and updates. The following are
examples of ongoing plans:

OPERATIONAL PLANS
• A policy provides a broad guideline for managers to follow when dealing with important areas
of decision making. Policies are general statements that explain how a manager should attempt
handle routine management responsibilities. Typical human resources policies, for example,
address such matters as employee hiring, terminations, performance appraisals, pay increases,
and discipline.
• A procedure is a set of step‐by‐step directions that explains how activities or tasks are to be
carried out. Most organizations have procedures for purchasing supplies and equipment, for
example. This procedure usually begins with a supervisor completing a purchasing requisition.
The requisition is then sent to the next level of management for approval. The approved
requisition is forwarded to the purchasing department. Depending on the amount of the
the purchasing department may place an order, or they may need to secure quotations and/or
bids for several vendors before placing the order. By defining the steps to be taken and the
in which they are to be done, procedures provide a standardized way of responding to a
repetitive problem.
• A rule is an explicit statement that tells an employee what he or she can and cannot do. Rules
are “do” and “don't” statements put into place to promote the safety of employees and the
uniform treatment and behaviour of employees. For example, rules about tardiness and
absenteeism permit supervisors to make discipline decisions rapidly and with a high degree of

TACTICAL PLANS
• A tactical plan is concerned with what the lower level units within each
division must do, how they must do it, and who is in charge at each level.
Tactics are the means needed to activate a strategy and make it work.
• Tactical plans are concerned with shorter time frames and narrower scopes
than are strategic plans. These plans usually span one year or less because they
are considered short‐term goals. Long‐term goals, on the other hand, can take
several years or more to accomplish. Normally, it is the middle manager's
responsibility to take the broad strategic plan and identify specific tactical
actions.

STRATEGIC PLAN
• A strategic plan is an outline of steps designed with the goals of the entire
organization as a whole in mind, rather than with the goals of specific divisions or
departments. Strategic planning begins with an organization's mission.
• Strategic plans look ahead over the next two, three, five, or even more years to move
the organization from where it currently is to where it wants to be. Requiring multilevel
involvement, these plans demand harmony among all levels of management within the
organization. Top‐level management develops the directional objectives for the entire
organization, while lower levels of management develop compatible objectives and
plans to achieve them. Top management's strategic plan for the entire organization
becomes the framework and sets dimensions for the lower level planning.

CONTINGENCY PLANS
• Intelligent and successful management depends upon a constant pursuit of
adaptation, flexibility, and mastery of changing conditions. Strong
management requires a “keeping all options open” approach at all times —
that's where contingency planning comes in.
• Contingency planning involves identifying alternative courses of action that
can be implemented if and when the original plan proves inadequate because
of changing circumstances.
• Keep in mind that events beyond a manager's control may cause even the
most carefully prepared alternative future scenarios to go awry. Unexpected
problems and events frequently occur. When they do, managers may need to
change their plans. Anticipating change during the planning process is best in
case things don't go as expected. Management can then develop alternatives
to the existing plan and ready them for use when and if circumstances make
these alternatives appropriate.

OBJECTIVES
• Companies, large or small, can identify problems and establish overall goals for their
business, but they need specific plans to make progress. The planning stage includes
courses of action and identifies the results that the company wants to see. These
results translate into objectives at the different levels of the organization. A
department manager may have the objective to increase sales by 10 percent. This
becomes an objective of selling 15 more systems this month for one of his employees.
To maintain planning clarity, the type of objective must remain the same throughout
this translation down the organization.

OBJECTIVES
Time-Related
• One type of objective includes a time factor. These objectives are short-term,
term or long-term, ranging from one month to several years. Planning that includes
short-term objectives specifies what immediate results are expected from actions
currently in progress. These objectives focus on day-to-day activities. Medium-term
objectives are results that influence the annual budgets, reports and strategies. They
deal with monthly action plans. Long-term objectives look at results the company
needs to meet its overall goals. They focus on results from yearly reviews. Planning
specifies time-related objectives as an overall framework for plan implementation.

OBJECTIVES
Routine
• Some objectives don't have a specific time frame but deal with expected results from
routine, continuous activities. Normal production levels translate into routine
objectives. Monitoring safety to prevent the accident rate from rising involves routine
objectives. Such objectives typically remain at a constant rate. Management monitors
routine objectives for deviations from the norm and to institute corrective action if
necessary. Planning specifies routine objectives and assumes the company will meet
them as it has in the past.

OBJECTIVES
Development
While time-related objectives deal with normal activities within a time frame and
objectives deal with regular activities, development objectives result from new
External change imposed on a business or internal changes motivated by new goals
result in planning for new development. Such plans specify new activities and estimate
the results. These desired results translate into objectives at the various organizational
levels. Since the activities are new, the objectives may not be realistic and managers
to be ready to make adjustments to this type of objective.

Q&A
• 1. Name the function of management which involves setting objectives and developing
appropriate courses of action to achieve these objectives.
(a) Directing
(b) Organising
(c) Planning
(d) Staffing
• 2. Which of the following is not a benefit of planning?
(a) Planning reduces overlapping and wasteful activities.
(b) Planning is a mental exercise.
(c) Planning provides directions.
(d) Planning reduces the risks of uncertainty.

Q&A
• 3. Which of the following is a benefit of planning?
(a) Helps in avoiding confusion and misunderstanding.
(b) Ensures clarity in thought and action.
(c) Useless and redundant activities are minimised or eliminated.
(d) All of the above
• 4. Which of the following statements is not true with reference to planning?
(a) Planning is a pre-requisite for controlling.
(b) Planning does not lead to rigidity.
(c) Planning enables a manager to look ahead and anticipate changes.
(d) Planning facilitates co-ordination among departments and individuals in the
organisation.

Q&A
• 5. What is known as the primary function of management?
(a) Controlling
(b) Organising
(c) Planning
(d) Staffing
• 6. Which of the following is not a feature of planning?
(a) Planning is futuristic.
(b) Planning is pervasive.
(c) Planning establishes standards for controlling.
(d) Planning focuses on achieving objectives.

Q&A
• 7. All other managerial functions are performed within the framework of the plans drawn. Identify the
related feature of planning.
(a) Planning focuses on achieving objectives.
(b) Planning is pervasive.
(c) Planning is futuristic.
(d) Planning is primary function of management
• 8. Planning requires logical and systematic thinking rather than guess work or wishful thinking. Identify
the related feature of planning.
(a) Planning is futuristic.
(b) Planning is a mental exercise.
(c) Planning establishes standards for controlling.
(d) Planning focuses on achieving objectives.

Q&A
• 9. Planning cannot foresee everything, and thus, there may be obstacles to effective planning. Identify
the related limitation of planning.
(a) Planning leads to rigidity.
(b) Planning may not work in a dynamic environment.
(c) Planning does not guarantee success.
(d) Planning reduces creativity.
• 10. It is not always true that just because a plan has worked before it will work again.
Identify the related limitation of planning.
(a) Planning leads to rigidity.
(b) Planning reduces creativity.
(c) Planning may not work in a dynamic environment.
(d) Planning does not guarantee success.

Q&A
11. Identify the correct sequence of steps involved in the planning process.
(a) Evaluating alternative courses, Identifying alternative course of actions, Setting
objectives, Developing premises
(b) Setting objectives, Identifying alternative course of actions, Evaluating alternative
courses, Developing premises
(c) Setting objectives, Developing premises, Identifying alternative course of actions,
Evaluating alternative courses
(d) Setting objectives, Developing premises, Identifying alternative course of actions,
Evaluating alternative courses

Q&A
12. They represent the end point of planning.
(a) Rules
(b) Methods
(c) Objectives
(d) Policies

ORGANISING
• Allen defines Organising as “ the process of identifying and grouping of the work to be
performed, defining and delegating responsibility and authority and establishing
relationships for the purpose of enabling people to work most effectively together in
accomplishing their objectives.”

PROCESS OF ORGANIZING
• The manager differentiates and integrates the activities of his Organisation
• Differentiation
• The process of departmentalization or segmentation of activities on the basis of some similarity-
Integration
• Process of achieving unity of effort among the various departments
 Establishing Enterprise Objectives
 Formulating Supporting objectives, policies and Plans
 Identifying and classifying the necessary to accomplish
 Grouping the activities in the light of human and material resources available
 Delegating to the head of each group the activity necessary to perform
 Tying the groups together horizontally and vertically through authority, relationship and information flows

CONCEPT OR NATURE OF ORGANIZING
• • Organization as a Process
• • Organization as a Structure of Relationship
• • Organization is related to its Objectives

FORMAL AND INFORMAL
ORGANIZATION
• Formal Organisation:
• When the managers are carrying on organising process then as a result of organising
process an organisational structure is created to achieve systematic working and
efficient utilization of resources. This type of structure is known as formal
organisational structure.

FEATURES OF FORMAL ORGANISATION:
• (1) The formal organisational structure is created intentionally by the process of
organising.
• (2) The purpose of formal organisation structure is achievement of organisational goal.
• (3) In formal organisational structure each individual is assigned a specific job.
• (4) In formal organisation every individual is assigned a fixed authority or decision-
making power.
• (5) Formal organisational structure results in creation of superior-subordinate relations.
• (6) Formal organisational structure creates a scalar chain of communication in the
organisation.

ADVANTAGES OF FORMAL ORGANIZATION
1. Systematic Working
2. Achievement of Organisational Objectives
3. No Overlapping of Work
4. Co-ordination
5. Creation of Chain of Command
6. More Emphasis on Work

DISADVANTAGES OF FORMAL
ORGANISATION
1. Delay in Action
2. Ignores Social Needs of Employees
3. Emphasis on Work Only

INFORMAL ORGANISATION
• In the formal organisational structure individuals are assigned various job positions.
While working at those job positions, the individuals interact with each other and
develop some social and friendly groups in the organisation. This network of social and
friendly groups forms another structure in the organisation which is called informal
organisational structure.

FEATURES OF INFORMAL
ORGANISATION
(1) Informal organisational structure gets created automatically without any intended
efforts of managers.
(2) Informal organisational structure is formed by the employees to get psychological
satisfaction.
(3) Informal organisational structure does not follow any fixed path of flow of authority
or communication.
(4) Source of information cannot be known under informal structure as any person can
communicate with anyone in the organisation.
(5) The existence of informal organisational structure depends on the formal
organisation structure.

ADVANTAGES OF INFORMAL
ORGANISATION
• Fast Communication
• Fulfils Social Needs
• Correct Feedback

DISADVANTAGES OF INFORMAL
ORGANISATION
• Spread Rumours
• No Systematic Working
• May Bring Negative Results
• More Emphasis to Individual Interest

FACTORS AFFECTING STAFFING
• Staffing is basically a dynamic process and it is affected by various external and internal
factors.
• Staffing is the process of hiring eligible candidates in the organization or company for
specific positions. In management, the meaning of staffing is an operation of recruiting
the employees by evaluating their skills, knowledge and then offering them specific job
roles accordingly.
• External Factors
– Nature of competition for Human Resources
– Legal factors
– Socio-culture Factors
– External influences

• Nature of competition for Human Resources: - In India there is a cut throat competition
among organization for hiring managerial talents both fresh and experienced, computer
professionals etc. Companies are making campus recruitments and students from reputed
institutes like IIMs are being placed on very high packages. Companies are amending
changes to retain their good employees and offering a good working environment and
salaries.
• Legal factors: - There are various legal provisions which affect the staffing policies of an
organization. Various acts which provide restrictions to free recruitment are Child Labour
Act 1986, Employment Exchange (compulsory notification of vacancies) Act 1959and Mines
Act 1952. Also some provisions regarding compulsory employment of certain categories
like OBC, SC/ST affects the staffing policies of an organization.

• Socio-culture Factors: - Various socio-culture factors affect the staffing process due
to which certain jobs are to be given to certain categories of people like our culture
prevent the women to be employed on in manufacturing operations involving physical
exertion.
• External influences:- There are various other elements which exert pressure on
organization like political pressure to employ local people or pressure from business
contacts.

• Internal Factors
– Size of Organization
– Organizational Business Plan
– Organizational Image

• Size of Organization: - Small organization cannot have same staffing practices which
a large organization may have; it may not be able to attract highly talented staff. Even
if it tries to do so it may increase the staffing cost.
• Organizational Business Plan: - Organizational business plan directly affect the
staffing function because it determines the type of personal that may be required in
future. On the basis of business plan growing organization may need more staff in the
future and declining organization will have to shunt out its staff and stagnating
organization will work for retaining its staff. Staffing strategies may be different for
these organizations.
• Organizational Image: - organization image also affects the staffing practices.
Organizational image depends upon facilities to staff for training and development
promotional policies, working conditions and compensation incentives etc. if all these
factors are positive then organization will attract more candidates.

DIRECTING
• DIRECTING is said to be a process in which the managers instruct, guide and oversee
the performance of the workers to achieve predetermined goals. Directing is said to be
the heart of management process. Planning, organizing, staffing have got no
importance if direction function does not take place.

DIRECTION HAS GOT FOLLOWING
CHARACTERISTICS
1.Pervasive Function - Directing is required at all levels of organization. Every manager
provides guidance and inspiration to his subordinates.
2.Continuous Activity - Direction is a continuous activity as it continuous throughout
the life of organization.
3.Human Factor - Directing function is related to subordinates and therefore it is related
to human factor. Since human factor is complex and behaviour is unpredictable,
direction function becomes important.

DIRECTION HAS GOT FOLLOWING
CHARACTERISTICS
4.Creative Activity - Direction function helps in converting plans into performance.
Without this function, people become inactive and physical resources are meaningless.
5.Executive Function - Direction function is carried out by all managers and executives
at all levels throughout the working of an enterprise, a subordinate receives instructions
from his superior only.
6.Delegate Function - Direction is supposed to be a function dealing with human
beings. Human behaviour is unpredictable by nature and conditioning the people’s
behaviour towards the goals of the enterprise is what the executive does in this
Therefore, it is termed as having delicacy in it to tackle human behaviour.

PRINCIPLES OF DIRECTION
1. Principle of harmony of objectives: every organization set the objectives and these
objectives are to be fulfilled with the help of people working in the organization. Therefore
managers must try to bring harmony between individual and organizational goals
2. Unity of command: The individual who works in the organization get direction from
his/her superior. The subordinates must get direction from only one superior to reduce
conflict and confusion which is called unity of command.
3. Direct supervision: When superior direct the subordinates with face to face
communication it is known as direct supervision. It helps to increase the morale of
and it helps to develop quick feedback and necessary information

4. Appropriate leadership style: proper leadership means the skill of leading that depends
upon the characteristics of leader, features of subordinates and the situation. It is the
of influencing human behavior in achieving organizational goals without dissatisfaction of
employees
5. Maximum individual contribution: The employees’ capacity should be used fully with
effective direction by encouragement not irritation with proper design direction style.
6. Effective communication: without effective communication, direction is not possible.
Mainly, communication may be downward or upward in an organization. Downward
communication carries the order, ideas, instruction to the subordinates and upward
communication carries the order, ideas, and instruction from the subordinates.

7. Effective control: without effective control organization can’t be operated. Effective
control helps to coordinate and supervise the activities and other mechanism.
8. Effective motivation: Motivation is the act of inspiring and encouraging the people to
do work. Employees must be motivated to achieve the goals. Without motivation ,
direction cannot be complete
9. Flow of information: information is most important asset in any organization. When
information is blocked, then there can be failure. On the other hand, information is
useful to issue the order, ideas, and instruction.
10. Follow- up: direction is a continuous managerial process. It involves constant and
continuous supervision, counseling, advice, instructions etc in the employees’ activities.
Merely issuing orders is not sufficient but management should find out whether the
subordinate is working or not.

MOTIVATION
• Motivation is the word derived from the word ’motive’ which means needs, desires,
wants or drives within the individuals. It is the process of stimulating people to actions
to accomplish the goals. In the work goal context the psychological factors stimulating
the people’s behaviour can be -
• desire for money
• success
• recognition
• job-satisfaction
• team work, etc

MOTIVATION
• The process of motivation consists of three stages:-
1. A felt need or drive
2. A stimulus in which needs have to be aroused
3. When needs are satisfied, the satisfaction or accomplishment of goals.

BENEFITS OF MOTIVATION
• 1. Puts human resources into action
• 2. Improves level of efficiency of employees
• 3. Leads to achievement of organizational goals
• 4. Builds friendly relationship
• 5. Leads to stability of work force

MOTIVATION IS IMPORTANT TO AN
INDIVIDUAL AS:
• 1. Motivation will help him achieve his personal goals.
• 2. If an individual is motivated, he will have job satisfaction.
• 3. Motivation will help in self-development of individual.
• 4. An individual would always gain by working with a dynamic team.

MOTIVATION IS IMPORTANT TO A
BUSINESS AS:
• 1. The more motivated the employees are, the more empowered the team is.
• 2. The more is the team work and individual employee contribution, more
profitable and successful is the business.
• 3. During period of amendments, there will be more adaptability and creativity.
• 4. Motivation will lead to an optimistic and challenging attitude at work place.

MOTIVATION TYPES: INTRINSIC
MOTIVATION
• Intrinsic motivation means that the individual's motivational stimuli are coming from within. The
individual has the desire to perform a specific task, because its results are in accordance with his
belief system or fulfills a desire and therefore importance is attached to it.
• Our deep-rooted desires have the highest motivational power. Below are some examples:
• Acceptance: We all need to feel that we, as well as our decisions, are accepted by our co-
workers.
• Curiosity: We all have the desire to be in the know.
• Honor: We all need to respect the rules and to be ethical.
• Independence: We all need to feel we are unique.
• Order: We all need to be organized.
• Power: We all have the desire to be able to have influence.
• Social contact: We all need to have some social interactions.
• Social Status: We all have the desire to feel important.

MOTIVATION TYPES: EXTRINSIC
MOTIVATION
• Extrinsic motivation means that the individual's motivational stimuli are coming from
outside. In other words, our desires to perform a task are controlled by an outside source.
Note that even though the stimuli are coming from outside, the result of performing the
task will still be rewarding for the individual performing the task.
• Extrinsic motivation is external in nature. The most well-known and the most debated
motivation is money. Below are some other examples:
• Employee of the month award
• Benefit package
• Bonuses
• Organized activities

DIFFERENT TYPES OF LEADERSHIP
STYLES
Different types of leadership styles exist in work environments. Advantages and
disadvantages exist within each leadership style.
– Laissez-Faire
– A laissez-faire leader lacks direct supervision of employees and fails to provide regular
feedback to those under his supervision. Highly experienced and trained employees
requiring little supervision fall under the laissez-faire leadership style. However, not all
employees possess those characteristics. This leadership style hinders the production of
employees needing supervision. The laissez-faire style produces no leadership or supervision
supervision efforts from managers, which can lead to poor production, lack of control and
increasing costs.

STYLES
Autocratic
The autocratic leadership style allows managers to make decisions alone without the
input of others. Managers possess total authority and impose their will on employees.
No one challenges the decisions of autocratic leaders. Countries such as Cuba and North
Korea operate under the autocratic leadership style. This leadership style benefits
employees who require close supervision. Creative employees who thrive in group
functions detest this leadership style.

STYLES
Participative
Often called the democratic leadership style, participative leadership values the input of
team members and peers, but the responsibility of making the final decision rests with
the participative leader. Participative leadership boosts employee morale because
employees make contributions to the decision-making process. It causes them to feel as
if their opinions matter. When a company needs to make changes within the
organization, the participative leadership style helps employees accept changes easily
because they play a role in the process. This style meets challenges when companies
need to make a decision in a short period.

STYLES
Transactional
Managers using the transactional leadership style receive certain tasks to perform and
provide rewards or punishments to team members based on performance results.
Managers and team members set predetermined goals together, and employees agree
to follow the direction and leadership of the manager to accomplish those goals. The
manager possesses power to review results and train or correct employees when team
members fail to meet goals. Employees receive rewards, such as bonuses, when they
accomplish goals.

STYLES
Transformational
The transformational leadership style depends on high levels of communication from
management to meet goals. Leaders motivate employees and enhance productivity
efficiency through communication and high visibility. This style of leadership requires
involvement of management to meet goals. Leaders focus on the big picture within an
organization and delegate smaller tasks to the team to accomplish goals.

LEADERSHIP THEORIES: THE GREAT
MAN THEORY (1840S)
• The Great Man theory evolved around the mid 19th century. Even though no one
was able to identify with any scientific certainty, which human characteristic or
combination of, were responsible for identifying great leaders. Everyone recognized
that just as the name suggests; only a man could have the characteristic (s) of a great
leader.
• The Great Man theory assumes that the traits of leadership are intrinsic. That simply
means that great leaders are born... they are not made. This theory sees great
as those who are destined by birth to become a leader. Furthermore, the belief was
that great leaders will rise when confronted with the appropriate situation. The theory
was popularized by Thomas Carlyle, a writer and teacher. Just like him, the Great Man
theory was inspired by the study of influential heroes. In his book "On Heroes, Hero-
Worship, and the Heroic in History", he compared a wide array of heroes.

LEADERSHIP THEORIES: TRAIT THEORY
(1930'S - 1940'S)
• The trait leadership theory believes that people are either born or are made with
certain qualities that will make them excel in leadership roles. That is, certain qualities
such as intelligence, sense of responsibility, creativity and other values puts anyone in
the shoes of a good leader.
• The trait theory of leadership focused on analyzing mental, physical and social
characteristic in order to gain more understanding of what is the characteristic or the
combination of characteristics that are common among leaders.

LEADERSHIP THEORIES: BEHAVIOURAL
THEORIES (1940'S - 1950'S)
• In reaction to the trait leadership theory, the behavioural theories are offering a new
perspective, one that focuses on the behaviours of the leaders as opposed to their
mental, physical or social characteristics. Thus, with the evolutions in psychometrics,
notably the factor analysis, researchers were able to measure the cause an effects
relationship of specific human behaviours from leaders. From this point forward
anyone with the right conditioning could have access to the once before elite club of
naturally gifted leaders. In other words, leaders are made not born.

LEADERSHIP THEORIES: CONTINGENCY
LEADERSHIP THEORY
• The Contingency Leadership theory argues that there is no single way of leading and
that every leadership style should be based on certain situations, which signifies that
there are certain people who perform at the maximum level in certain places; but at
minimal performance when taken out of their element.
•

LEADERSHIP THEORIES: TRANSACTIONAL
LEADERSHIP THEORIES (1970'S)
• Transactional theories, also known as exchange theories of leadership, are
characterized by a transaction made between the leader and the followers. In fact, the
theory values a positive and mutually beneficial relationship.
• For the transactional theories to be effective and as a result have motivational value,
the leader must find a means to align to adequately reward (or punish) his follower, for
performing leader-assigned task. In other words, transactional leaders are most
efficient when they develop a mutual reinforcing environment, for which the individual
and the organizational goals are in sync.

CONTROLLING
• “Controlling is determining what is being accomplished that is evaluating the
performance and, if necessary, applying corrected measures so that the performance
takes place according to plans.” - George R. Terry
• “In an undertaking control consists in verifying whether everything occurs in
conformity with the plan adopted, the instructions issued and principles established.”
-Henry Fayol

CHARACTERISTICS OF CONTROLLING
• 1. Basis for Future Action
• 2. Facilitates Decision-making
• 3. Facilitates Decentralization
• 4. Facilitates Co-ordination
• 5. Helps in Improving Efficiency
• 6. Psychological Pressure

1. Basis for Future Action:
• Control provides basis for future action. The continuous flow of information about
projects keeps the long range planning on the right track. It helps in taking corrective
action in future if the performance is not up to the mark. It also enables management
to avoid repetition of past mistakes.
2. Facilitates Decision-making:
• Whenever there is deviation between standard and actual performance the controls
will help in deciding the future course of action. A decision about follow up action is
also facilitated.

3. Facilitates Decentralization:
Decentralization of authority is necessary in big enterprise. The management cannot
authority without ensuring proper controls. The targets or goals of various departments are
used as a control technique. If the work is going on satisfactorily then top management
should not worry. The ‘management by exception’ enables top management to concentrate
on policy formulation. Various control techniques like budgeting, cost control, pre action
approvals allow decentralization without losing control over activities.
4. Facilitates Co-ordination:
Control helps in co-ordination of activities through unity of action. Every manager will try to
co-ordinate the activities of his subordinates in order to achieve departmental goals.
chief executive will co-ordinate the functioning of various departments. The controls will act
as checks on the performance and proper results will be achieved only when activities are
coordinated.

5. Helps in Improving Efficiency:
The control system helps in improving organizational efficiency. Various control devices
act as motivators to managers. The performance of every person is regularly
and any deficiency is corrected at the earliest.
6. Psychological Pressure:
Controls put psychological pressure on persons in the organization. Everybody knows
that his performance is regularly evaluated and he will try to improve upon his previous
work. The rewards and punishments are also linked with performance. The employees
will always be under pressure to improve upon their work. Since performance
measurement is one of the important tools of control it ensures that every person tries
to maximize his contribution.

PROCESS OF CONTROL
1. Establish the Standards
2. Measure Actual Performance
3. Compare Performance with the Standards
4. Take Corrective Action and Reinforcement of Successes:

PROCESS OF CONTROL
1. Establish the Standards
• Standards, against which actual performance will be compared, may be derived from
past experience, statistical methods and benchmarking (based upon best industry
practices). As far as possible, the standards are developed bilaterally rather than top
management deciding unilaterally, keeping in view the organization’s goals.
• Standards may be tangible (clear, concrete, specific, and generally measurable) –
numerical standards, monetary, physical, and time standards; and intangible (relating
to human characteristics) – desirable attitudes, high morale, ethics, and cooperation.

PROCESS OF CONTROL
2. Measure Actual Performance:
Most organizations prepare formal reports of performance measurements both
quantitative and qualitative (where quantification is not possible) that the managers
review regularly. These measurements should be related to the standards set in the first
step of the control process.
3. Compare Performance with the Standards:
This step compares actual activities to performance standards. When managers read
computer reports or walk through their plants, they identify whether actual
meets, exceeds, or falls short of standards.

PROCESS OF CONTROL
4. Take Corrective Action and Reinforcement of Successes:
When performance deviates from standards, managers must determine what changes,
any, are necessary and how to apply them. In the productivity and quality-centered
environment, workers and managers are often empowered to evaluate their own work.
After the evaluator determines the cause or causes of deviation, he or she can take the
fourth step— corrective action.

TECHNIQUES OF CONTROLLING
1. Direct Supervision and Observation
• 'Direct Supervision and Observation' is the oldest technique of controlling. The
supervisor himself observes the employees and their work. This brings him in direct
contact with the workers. So, many problems are solved during supervision. The
supervisor gets first hand information, and he has better understanding with the
workers. This technique is most suitable for a small-sized business.

2. Financial Statements
All business organisations prepare Profit and Loss Account. It gives a summary of the
income and expenses for a specified period. They also prepare Balance Sheet, which
shows the financial position of the organisation at the end of the specified period.
Financial statements are used to control the organisation. The figures of the current
can be compared with the previous year's figures. They can also be compared with the
figures of other similar organisations.

3. Budgetary Control:
A budget is a planning and controlling device. Budgetary control is a technique of
managerial control through budgets. It is the essence of financial control. Budgetary
control is done for all aspects of a business such as income, expenditure, production,
capital and revenue. Budgetary control is done by the budget committee.

4. Break Even Analysis
Break Even Analysis or Break Even Point is the point of no profit, no loss. For e.g. When
an organisation sells 50K cars it will break even. It means that, any sale below this point
will cause losses and any sale above this point will earn profits. The Break-even analysis
acts as a control device. It helps to find out the company's performance. So the
can take collective action to improve its performance in the future. Break-even analysis
a simple control tool.

5. Return on Investment (ROI)
Investment consists of fixed assets and working capital used in business. Profit on the
investment is a reward for risk taking. If the ROI is high then the financial performance
a business is good and vice-versa.
ROI is a tool to improve financial performance. It helps the business to compare its
present performance with that of previous years' performance. It helps to conduct
firm comparisons. It also shows the areas where corrective actions are needed.

6 .Management Information System (MIS):
• In order to control the organisation properly the management needs accurate
information. They need information about the internal working of the organisation
also about the external environment. Information is collected continuously to identify
problems and find out solutions. MIS collects data, processes it and provides it to the
managers. MIS may be manual or computerised. With MIS, managers can delegate
authority to subordinates without losing control

Unit ii FMIS

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