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National Institute of Business Management Chennai - 020 FIRST SEMESTER EMBA/ MBA Subject : Principles and Practices of Management Attend any 4 questions. Each question carries 25 marks (Each answer should be of minimum 2 pages / of 300 words)

1.

Management, always important in all spheres of economic activity, has never been of such critical significance as today, as it plays a significant role in all sphere of economic activity.Explain.

2.

Explain the various functions of the management.

3.

Planning as a fundamental function of management is essential but there are practical limitations to its use. Explain the reasons and difficulties.

4.

What is Organizational Dynamics?Explain.

5.

Discuss the classical principles of good Management.

6.

What is grouping explain its significance?

25 x 4=100 marks

2. Explain the various functions of the management. Management: The organization and coordination of the activities of a business in order to achieve defined objectives. Management is often included as a factor of production along with? machines, materials, and money. According to the management guru Peter Drucker (1909-2005), the basic task of management includes both marketing and innovation. Practice of modern management originates from the 16th century study of low-efficiency and failures of certain enterprises, conducted by the English statesman Sir Thomas More (1478-1535). Management consists of the interlocking functions of creating corporate policy and organizing, planning, controlling, and directing an organization's resources in order to achieve the objectives of that policy.

Functions of the management: Management has been described as a social process involving responsibility for economical and effective planning & regulation of operation of an enterprise in the fulfillment of given purposes. It is a dynamic process consisting of various elements and activities. These activities are different from operative functions like marketing, finance, purchase etc. Rather these activities are common to each and every manger irrespective of his level or status.

Planning: It is the basic function of management. It deals with chalking out a future course of action & deciding in advance the most appropriate course of actions for achievement of pre-determined goals. According to KOONTZ, “Planning is deciding in advance - what to do, when to do & how to do. It bridges the gap from where we are & where we want to be”. A plan is a future course of actions. It is an exercise in problem solving & decision making. Planning is determination of courses of action to achieve desired goals. Thus, planning is a systematic thinking about ways & means for accomplishment of pre-determined goals. Planning is necessary to ensure proper utilization of human & non-human resources. It is all pervasive, it is an intellectual activity and it also helps in avoiding confusion, uncertainties, risks, wastages.

Organizing: It is the process of bringing together physical, financial and human resources and developing productive relationship amongst them for achievement of organizational goals. According to Henry Fayol, “To organize a business is to provide it with everything useful or its functioning i.e. raw material, tools, capital and personnel’s”. To organize a business involves determining & providing human and non-human resources to the organizational structure. Organizing as a process involves:  Identification of activities.  Classification of grouping of activities.  Assignment of duties.  Delegation of authority and creation of responsibility.  Coordinating authority and responsibility relationships.

Staffing: It is the function of manning the organization structure and keeping it manned. Staffing has assumed greater importance in the recent years due to advancement of technology, increase in size of business, complexity of human behavior etc. The main purpose o staffing is to put right man on right job i.e. square pegs in square holes and round pegs in round holes. According to Kootz & O’Donell, “Managerial function of staffing involves manning the organization structure through proper and effective selection, appraisal & development of personnel to fill the roles designed un the structure”. Staffing involves:  Manpower Planning (estimating man power in terms of searching, choose the person and giving the right place).  Recruitment, Selection & Placement.  Training & Development.  Remuneration.  Performance Appraisal.  Promotions & Transfer.

Directing: It is that part of managerial function which actuates the organizational methods to work efficiently for achievement of organizational purposes. It is considered life-spark of the enterprise which sets it in motion the action of people because planning, organizing and staffing are the mere preparations for doing the work. Direction is that inert-personnel aspect of management which deals directly with influencing, guiding, supervising, motivating sub-ordinate for the achievement of organizational goals. Direction has following elements:  Supervision  Motivation  Leadership  Communication Supervision- implies overseeing the work of subordinates by their superiors. It is the act of watching & directing work & workers. Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive, negative, monetary, non-monetary incentives may be used for this purpose. Leadership- may be defined as a process by which manager guides and influences the work of subordinates in desired direction. Communications- is the process of passing information, experience, opinion etc from one person to another. It is a bridge of understanding.

Controlling: It implies measurement of accomplishment against the standards and correction of deviation if any to ensure achievement of organizational goals. The purpose of controlling is to ensure that everything occurs in conformities with the standards. An efficient system of control helps to predict deviations before they actually occur. According to Theo Haimann, “Controlling is the process of checking whether or not proper progress is being made towards the objectives and goals and acting if necessary, to correct any deviation”. According to Koontz & O’Donell “Controlling is the measurement & correction of performance activities of subordinates in order to make sure that the enterprise objectives and plans desired to obtain them as being accomplished”. Therefore controlling has following steps: 

Establishment of standard performance.

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Measurement of actual performance.

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Comparison of actual performance with the standards and finding out deviation if any.

4.

What is Organizational Dynamics? Explain.

Organizational dynamics Organizational dynamics refers to the patterns of movement over time in the interactions between the people who are the organization, the community of practice . Such patters could be described, for example, as regular patterns of dependence and conformity, or as irregular patterns of aggression and noncompliance. Organizational dynamics is defined as the process of continuously strengthening resources and enhancing employee performances. It can also be described as how an organization manages and promotes organizational learning, better business practices and strategic management.

The Essential Elements There are four fundamental business activities that contribute to an organization’s dynamics. 

First, planning requires management to structurally define departments and divisions. Managers set measurable goals that will define future actions and decisions. Organizational planning may involve inventory control, production scheduling, revenue forecasts and expense management. Managers use these plans as the actionable foundation for all their regular duties.

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Second, goal execution involves implementing, evaluating and following up with expected deliverables. In order to accomplish this, managers must allocate resources and responsibilities to employees based on skills and schedules.

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Third, leadership involves hands-on, exemplary oversight that drives innovation, knowledge and performance.

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Fourth, resource control refers to how executives and management establish systems that gather data which is used to determine if goals are met.

Business Function Specializations Every company will have managers who are responsible to monitor and control certain business functions. At the heart of an organization’s dynamics lies human resources management, which is concerned about optimizing employee performances. HR managers are trained to improve individual and organizational effectiveness through applying relevant behavioral sciences and HR management principles. Project managers drastically impact a company’s dynamics and overall performance. Successful project managers will ensure quality through careful planning that addresses risk,

communications and progress management. They also create open forums that empower vendors, employees and shareholders to share information. Project managers directly impact the financial health through financial monitoring and integrated cost controls.

An Industry Case Study Within the procurement industry and supply chain organizations, employee and communication dynamics must be continually streamlined in order to avoid problems and increase program effectiveness. Procurement managers seek to create united cultures that share logistical goals and technology objectives. Every day, supply chain managers must engage in efficient source selection, inventory management and vendor monitoring. Alternatively, transportation managers must clearly understand regulatory requirements and shipper limitations in order to maintain adequate resources and product volumes. Every more challenging, international supply chain managers must successfully deal with cross-cultural and supplier issues within the global logistics environment. For instance, they may be required to manage the organizational dynamics of global hazardous materials shipments.

5. Discuss the classical principles of good Management. Henri Fayol was born in Istanbul in 1841. When he was 19, he began working as an engineer at a large mining company in France. He eventually became the director, at a time when the mining company employed more than 1,000 people. Through the years, Fayol began to develop what he considered to be the 14 most important principles of management. Essentially, these explained how managers should organize and interact with staff. In 1916, two years before he stepped down as director, he published his "14 Principles of Management" in the book "Administration Industrielle et Générale." Fayol also created a list of the six primary functions of management, which go hand in hand with the Principles. Fayol's "14 Principles" was one of the earliest theories of management to be created, and remains one of the most comprehensive. He's considered to be among the most influential contributors to the modern concept of management, even though people don't refer to "The 14 Principles" often today. The theory falls under the Administrative Management school of thought Fayol's 14 Principles of Management Fayol's principles are listed below: Division of Work: When employees are specialized, output can increase because they become increasingly skilled and efficient. Authority: Managers must have the authority to give orders, but they must also keep in mind that with authority comes responsibility. Discipline: Discipline must be upheld in organizations, but methods for doing so can vary. Unity of Command: Employees should have only one direct supervisor.

Unity of Direction: Teams with the same objective should be working under the direction of one manager, using one plan. This will ensure that action is properly coordinated. Subordination of Individual Interests to the General Interest The interests of one employee should not be allowed to become more important than those of the group. This includes managers. Remuneration: Employee satisfaction depends on fair remuneration for everyone. This includes financial and non-financial compensation. Centralization: This principle refers to how close employees are to the decision-making process. It is important to aim for an appropriate balance. Scalar Chain: Employees should be aware of where they stand in the organization's hierarchy, or chain of command. Order The workplace facilities must be clean, tidy and safe for employees. Everything should have its place. Equity Managers should be fair to staff at all times, both maintaining discipline as necessary and acting with kindness where appropriate. Stability of Tenure of Personnel Managers should strive to minimize employee turnover. Personnel planning should be a priority. Initiative Employees should be given the necessary level of freedom to create and carry out plans. Esprit de Corps Organizations should strive to promote team spirit and unity.

6. What is grouping explain its significance? Groups are a characteristic of all social situations and almost everyone in an organization will be a member of one or more groups. The working of groups and the influence they exert over their membership is an essential feature of human behavior and of organizational performance. The manager must use groups in order to achieve a high standard of work and improve organizational effectiveness. There are many possible ways of defining what a group means. The essential feature of a group is that its members regard themselves as belonging to the group. A group consists of a number of people who have: • A common objective or task • An awareness of group identity and ‘boundary’ • A minimum set of agreed values and norms which regulates their relatively exclusive mutual interaction. Another useful definition defines the group in psychological terms as: any number of people who 1) Interact with one another 2) Are psychologically aware of one another 3) Perceive themselves to be a group.

Essential feature of work Organisation Group are an essential feature of the work pattern of any Organisation. Members of a group must co-operate in order for work to be carried out, and managers themselves will work within these groups. People in groups influence each other in many ways and groups may develop their own hierarchies and leaders. Group pressures can have a major influence over the behaviour of individual members and their work performance. The activities of the group are associated with the process of leadership. The style of leadership adopted by the manager has an important influence on the behaviour of members of the group. The classical approach to organisation and management tended to ignore the importance of group and the social factors at work. The ideas of people such as F.W. Taylor popularized the concept of the rabble hypothesis and the assumption that people carried out their work, and could be motivated, as solitary individuals unaffected by others. The human relations approach, however, gave recognition to the work organisation as a social organisation and to the importance of the group, and group value and norms, in influencing behaviour are work. The power of group membership over individual behaviour and work performance was illustrated clearly in the famous Hawthorne experiments at the ‘Western Electric Company in America’.

Group value and norms One experiment involved the observation of as group of 14 men working in the bank wiring room. It may be remembered that the men formed their own sub-groups or cliques, with natural leasers emerging with the consent of the members. Despite a financial incentive schemes where workers could receive more money for the more work they did, the group decided on 6000 units a day as a fair level of output. This was well below the level they were capable of producing. Group pressures on individual workers were stronger than financial incentives offered by management. The group developed its own pattern of informal social relations and codes and practices (‘norms’) of what constituted proper group behaviour. • Not to be a ‘rate buster’ – not to produce at too high a rate of output compared with other members or to exceed the production restriction of the group. • Not to be a ‘chiseller’ – not to shirk production or to produce at too low rate of output compared with other members of the group. • Not to be a ‘squealer’ – not to say anything to the supervisor or management which might be harmful to other members of the group. • Not be ‘officious’ – people with authority over members of the group, for example inspectors, should not take advantage of their seniority or maintain a social distance from the group. The group had their own system of sanctions including sarcasm, damaging completed work, hiding tools, playing tricks on the inspectors, and ostracizing those members who did not conform with the group norms. Threats of physical violence were also made, and the group developed a system of punishing offenders by ‘binging’ which involved striking someone a fairly hard blow on the upper part of the arm. This process of binging also become a recognised method of controlling conflict within the group. Another finding of the bank wiring room experiment was that the group did not follow company policy on the reporting of production figures. It was company policy that each man’s output should be reported daily by the supervisor. However, the workers preferred to do their own reporting, and in order to remain in favour with the group the supervisor acquiesced to this procedure. On some days the men would actually produce more than they reported to ‘build up’ extra units for those days when they produced less than reported. Although actual production varied the group reported a relatively standard amount of output contrary to management instructions.

Socio – technical system The system approach to organisation and management also gave recognition to the importance of groups in influencing behaviour at work. The concept of the organisation as socio – technical system is concerned with the interactions between the psychological and social factors, as well as structural and technical requirements. Again, it may be remembered that technological change in the coal-mining industry had brought about changes in the social grouping of the miners. New methods of working disrupted the integration of small self-selecting groups of miners who worked together as independent teams. The change had undesirable social effects and as a result the new method did not prove as economically beneficial as it should have done with the new technology. The result was a ‘composite’ method of working with more responsibility taken by the team as a whole. The composite method proved to be not only more rewarding socially to the miners but also more efficient economically than the pervious new method of working.

Formal groups Formal groups are created to achieve specific organisational objectives and are concerned with the co-ordination of work activities. People are brought together on the basis of defined roles within the structure of the organisation. The nature of the tasks to be undertaken is a predominant feature of the formal groups. Goals are identified by management, and certain rules, relationships and norms of behaviour established. Formal groups tend to be relatively permanent although there may be changes in actual membership. However, temporary formal groups may also be created by management for example, the use of project teams in a matrix organisation. Formal work groups can be differentiated into team groups task groups and technological groups. • Team groups – these are fairly autonomous groups with broad terms of reference and limited supervisions. The team designate the positions to be filled and the allocation of members, and instigate changes as necessary. • Task groups – jobs are defined clearly and individuals assigned to specific positions. The groups has some flexibility over methods of work and the pace of work, but otherwise limited discretion. Examples could include many administrative or clerical workers. • Technological groups – members have very limited autonomy to determiner change the operational activities. The pace of work is also likely to be controlled. Content and method of work are specified and individuals assigned to specific jobs. There is little scope for individual discretion, and often limited opportunities for interaction among members. A typical example is people working on assembly line operations.

Informal Groups Within the formal structure of the organisation there will always be an informal structure. The formal structure of the organisation and system of role relationship, rule and procedures, will be augmented by interpretation and development at the informal level. Informal groups are based more on personal relationships and agreement of groups members than on defined role relationships. They serve to satisfy psychological and social needs not related necessarily to the tasks to be undertaken. Groups may devise ways of attempting to satisfy members affiliations and other social motivations which are lacing in the work situation, especially in industrial organisations. The membership of informal groups can cut across the formal structure. They may comprise individuals form different parts of the organisations and/or from different levels of the organisation both vertically and diagonally as well as same horizontal level. An informal group could also be the same as the formal group, or it might comprise part only of the formal group. The member of informal group may appoint their own leader who exercises authority by the consent of the members themselves. The informal leader may be chosen as the person who reflects the attitudes and values of the members helps to resolve conflict leads the groups in satisfying its goals or liaises with management or other people outside the groups. The informal leader may often change according to the particular situation facing the groups. Although not usually the case, it is possible for the informal leader to be the same person as the formal leader appointed officially by management. Groups, there fore, help shape the work pattern of organisations and the attitudes and behaviour of members of their jobs. The formation and operation of work groups, and the behaviour of their members has an important significance for the manager. Likert, for example, has developed a theory of organisation based on work groups. In his discussion of group processes and organisational performance he concludes that: ‘Group forces are important not only in influencing the behaviour of individual work groups with regard to productivity, waste, absence and the like, they also affect the behaviour of entire organisations.’ Overlapping group membership Likert suggests that organisations function best when members act not as individuals but as members of highly effective work groups. He proposes a structure based on overlapping group membership with a ‘Linking-pin’ process by which the superior of one group is a subordinate member of the next group. The superior is therefore the linking-pin between a group of subordinates and the next authority level group. A structure of vertical overlapping groups helps to develop a committed team approach and would improve the flow the communication, co-ordination and decision-making.

Horizontal linking-pin Likert also recognises the position of subordinates serving as horizontal linking-pins between different groups, such as functional or line work groups and product based work groups. Likert recognises that sooner or latter the subordinate is likely to be caught in a conflict between membership of both groups and the provision of information for decision making. He suggests that both groups would need to be involved in group decision-making to resolve differences and that this is more likely to occur with system for management.

Organisation structure Groups are formed as a consequence of the pattern of organisation structure and arrangements for the division of work, for example the grouping together of common activities into sections. Groups may result form the nature of technology employed and the way in which work is carried out, for example, the bringing together of a number of people to carry out a sequence of operations on an assembly line. Groups may also develop when a number of people of the same level or status within the organisation see themselves as a group, for exp, departmental heads of an industrial organisation, or chief officers of a local authority. Groups are deliberately planned and created by management as part of the formal organisation structure. But groups will also arise form social processes and the informal organisation. The informal organisation arises form the interaction of people working within the organisation and the development of groups with their own relationships and norms of behaviours, irrespective of those defined within the formal structure. This leads to a major distinction between groups – formal and informal. REASONS FOR FORMATION OF GROUPS Individuals will form into groups, both formal and informal, for number of different reasons relating to both work performance and social processes. • Certain tasks can be performed only through the combined efforts of number of individuals working together. The variety of experience and expertise among members of the group provide a synergetic effect which can be applied to the increasingly complex problems of modern organisations. • Groups may encourage collusion between members in order to modify formal working arrangements more to their liking, for example by sharing or rotating unpopular tasks. Group membership therefore, provides the individual with opportunities for initiative and creativity. • Groups provide companionship and a source of mutual understanding and support form colleagues. This can help in solving work problems, and also to mitigate against stressful or demanding working conditions.

• Membership of the group provides the individual with a sense of belonging. The groups provides a feeling of identity and the chance to acquire role recognition and status within the group. • The group provides guidelines on generally acceptable behaviour. It helps to clarify ambiguous situations such as for example, the extent to which official rules and regulations are expected to be adhered to in practice, the rules of the game, and what is seen as the correct actual behaviour. the informal organisation may put pressure on group members to resist demands from management on such matters as, for example, higher output or changes in working methods. Groups allegiance can serve as a means of control over individual behaviour. The group may discipline individuals who contravene the norms of the group; for example, the process of ‘binging’ in the bank wiring room, mentioned above. • The group may provide protection for its membership. Group members collaborate to protect their interests from outside pressures or threats.