NATURE OF ORGANIZATION & MANAGEMENT

UNIT 1

Lav Nigam

Lav NigamU

Nature Of Organization

What is an organization?

An organization is a collection of people who work together and coordinate their actions to achieve a wide variety of goals

Nature Of OrganizationFormal & Informal Organization:Formal organization characterized by intentional structure of

Roles & Responsibilities coordinated towards achievement of common goals.

Informal organization is characterized by group of people within the organization having common values, interests & desires. Eg the various clubs in organizations, employees meeting together during tea & lunch time.

Informal organization plays an important role in the formal structure.

Principles Of Organization: Division of Labor Unity Of Command Authority & Responsibility Span Of Control

Nature Of OrganizationDivision Of Labor:

Breaking down of jobs into simple & repetitive tasks. Individual specialize in part of job. Eg: Assembly line production.

Advantages:

1. Efficient use of diversity of skilled / unskilled labor

2. Repetition improves performance skill.

3. No time wasted in putting away tools & equipments while changing jobs.

4. Training for specialization is more efficient from organization’s perspective.

Disadvantages: Leads to boredom, fatigue, stress, low productivity, poor

quality, absenteeism & high turnover.

To overcome this, employees were given variety of activities. Techniques like Job Enlargement & Job Enrichment are practised.

Nature Of OrganizationUnity Of Command:

No member of organization should report to more than one superior. This is to ensure that conflicting demands & priorities are not received by the employee.

Modern organizations have employees reporting to more than one superior, eg in matrix organization structure.

Authority & Responsibility:

Authority is the right inherent in a manager to give orders & be obeyed. Required to coordinate activities in an organization. Can b e delegated to subordinates for proper functioning & efficient performance.

Responsibility comes with authority. Two types of responsibility:

1. Operating Responsibility – can be delegated to subordinate

2. Ultimate responsibility – cannot be delegated. Remains with the manager who is accountable for the actions & omissions of his subordinates.

Nature Of OrganizationSpan Of Control:

Refers to the number of people the manager controls. Difficult to determine the optimum number. Narrow span leads to many hierarchies and a tall organization structure. Wide span will result in few hierarchies and a wider structure.

Scalar principle: Authority & responsibility should flow in a clear unbroken line from top to bottom.

Departmentalization: Breaking down activities into specialized groups. Purpose is to specialize activities, simplify task of managers & maintain control. Massie suggegsts following criterion for departmentalization:

Group simple activities together based on likeness of persons, qualifications, or common purpose (medical etc)

Activity may be grouped with other activities with which it is used ( safety & production).

Functions to be assigned to executives most interested

Nature Of OrganizationDepartmentalization: (contd) Activities to be grouped to encourage competition among

departments or avoid friction amongst departments. When difficulty in making definite distinctions in two activities,

group them together. Functions requiring close coordination should be grouped

together.

Span Of Management:

No ideal number for the management span. Davis identified two spans: (1) Operative span of lower level managers & (2) Executive span of middle & top management. Suggested that operative span should be around 30 and executive span not more than 6.

Today, focus is on identifying factors that make span more effective.

Nature Of Organization

Forms Of Business Organizations:Private Enterprise: Sole / Proprietary / Trader Partnership Company – Private Co or Public Co.

Co-operative Sector Enterprise: Co-operative Society Co-operative Store

Public Sector Enterprise: Government departments Government Companies Statutory Corporation Statutory Board Or Commissions

SAMPLE ORGANIZATION STRUCTURE

Nature Of Management

Definition: “ Effective & Efficient integration & coordination of

resources to achieve the desired objectives” .

Thus, management is a process by which managers create a climate so that employee achieves both personal & organizational growth.

This implies: Process by which personal & organizational goals achieved Process implies planning, organizing, staffing, leading &

controlling – functions of management Management process influenced by environment – external &

internal Managers act as facilitators for achievement of goals.

Nature Of ManagementGoals Of Management:Ultimate aim of any business organization is to make profit.

Desirable aim is to create a surplus. Achieved by creating & maintaining an environment in which individuals can achieve common organizational goals by spending minimum amount of time, money, material & achieve maximum personal satisfaction.

Thus, goal is task related & maintenance related (maintaining personal satisfaction).

Another perspective of goal is to increase productivity.

Productivity = Output / Input

Productivity also implies effectiveness & efficiency.

Effectiveness gauged by attainment of objectives.

Efficiency gauged by attainment of objectives with minimum resources.

Management concerned with not only achieving objectives but achieving them efficiently.

Nature Of ManagementFunctions Of A Manager:An individual who plans, organizes, staffs, leads & controls

resources effectively & efficiently to attain organizational goals.

Planning: Futuristic perspective. Setting goals to meet the organization objectives.

Involves forecasting, identifying threats & opportunities in external environment, strengths & weakness in internal environment, setting objectives & taking decision on course of action to be taken to achieve the objectives. Determines where we are & where we would want to be. How to bridge the gap.

Manager plans to identify the most appropriate course of action to meet the future conditions.

Corporate Planning department formulates strategic plan of organization – long term objectives, strategy, product / services. Subsequently, operational plan, delegate authority & responsibility to various units.

Nature Of ManagementOrganizing: Grouping of activities, allocating authority among

members so that they can achieve the organization goals. Function creates organization structure, delegation of authority, creates hierarchy. Goals of organization determine type of structure. Ex: Start-up require simple structure, manufacturing organization require classical organization, government department require bureaucratic organization.

Staffing: Involves manning & keeping the different positions manned in the organization structure. Achieved by identifying the skills required, recruiting, selecting, appraising, training and developing organization personnel.

Leading: Most important function of the manager. Influence the subordinates to direct efforts towards achievement of organization goal – motivate and maintain an effective system of communication. Manager should understand the needs of subordinates & help them in satisfying them and coordinating them with organizational objectives.

Nature Of ManagementControlling: Ensure that the actions of the subordinates are as

per plan & lead towards the organization goal. Involves setting of standards of performance at strategic point, leading, motivating, supervising employees , measuring actual performance (monitoring & reviewing activities of supervisor) & taking corrective action where ever required.

Managerial function performed at all levels – CEO to supervisor in all organizations – small, large organization, hospital, manufacturing, service, NGO etc.

Top level managers spend more time in planning & organizing.

First level manager (supervisor) spend more time in leading.

Top level manager function at the macro-level (organization), lower level manager operate at micro-level (individual & work group).

Nature Of ManagementTime Distribution Of Manager

Top-Level Managers Leading

Middle-Level Managers Planning

Lower Level Managers Planning Organizing Controlling

Time Distribution Of Managerial Function

Activ

ity

Planning Organizing Controlling

Organizing Leading Controlling

Leading

Nature Of ManagementTypes Of Manager:Hierarchy:

1. First Level Manager: Lowest level of managerial hierarchy. Supervisor, foreman, junior manager. Supervise & direct non-managerial employees.

2. Middle Manager: Can be of more than one level. Manage & direct first level managers & other operating employees. Major activity involve implementing policies of organization.

3. Top Manager: Responsible for overall management of organization. Set long term goals for organization by studying & forecasting the external environment.

Functional: Like Production, Marketing, Sales, HR etc. responsible for one functional area.

General Manager responsible for all the activities of the organization.

Nature Of ManagementManagement Skills: Katz identified 3 basic skills: technical, human

& conceptual.

Technical Skill: Ability to use tools, procedures, techniques & knowledge of specialized skills. Ex: Accountants, engineers & doctors.

Human Skill: Ability to work with, understand and motivate other employees as individual & groups.

Conceptual Skill: Ability to see the organization as a whole, to recognize significant elements in a situation, and to understand the relationship among the elements. Cognitive ability to coordinate & integrate all the activities of the organization.

All skills are required at any level. Technical skills at lower levels, conceptual skills at higher level and Human skill are important at all levels.

Nature Of Management

Top-Level Managers

Middle-Level Managers

Lower Level Managers Conceptual

Management Skills

Technical Human

Technical Human

Technical Human

Conceptual

Conceptual

Nature Of ManagementRoles Of Manager:

Position that is acted by an individual in an organization. Manager plays several formal & informal roles. Informal role not prescribed by organization. Same person may have one role in one situation & another role in another situation.

Mintzberg proposed three types of roles:

1. Interpersonal Role

2. Informational Role

3. Decisional Role

Nature Of Management

Interpersonal Roles

Informational Roles

Decisional Roles

Mintzberg's Managerial Role

Spokesperson

EntrepreneurDisturbance

Resource AllocatorNegotiator

Formal Authority

FigureHeadLeaderLiaison

MonitorDisseminator

Nature Of ManagementInterpersonal Role: Arises directly from Formal authority. Figurehead: Ceremonial role. President / Marketing manager

greets visitors / clients. Sales manager goes for lunch with clients.

Leader: Encourage subordinates to achieve organization objectives. Achieved by hiring, training, motivating employees & coordinating individual needs with that of organization.

Liaison: Interacting with outside organization like suppliers, government officials, business associates etc.

Informational Role: Giving & Receiving Information. Monitor: Scan environment for information. Disseminator: Give some information directly to subordinates. Spokesperson: Send information to people outside the

organization.

Nature Of ManagementDecision Maker: Entrepreneur: Initiates development of project & arrange for the

resources. Disturbance Handler: Acts as crisis manager reacting to

problems & pressures of the situation. Resource Allocator: Decides who gets what in his department. Negotiator: Negotiates with his subordinates.

Another study by Luthans (Real Managers Study – 1988), managerial activities noticed by trained observers.

Four management activities observed:

1. Communication – Exchanging information, handling paperwork, mails (29%).

2. Traditional Management – Planning, decision making, controlling (32%)

Nature Of Management Networking – Interacting with outsiders, socializing /

politicking (19%). Human Resource Management – Motivating / Reinforcing,

Disciplining / punishing, Managing conflict, Staffing, Training / Development (20%).

Research also indicated that networking was an important activity for manager’s success. But it did not contribute to the manager’s effectiveness. Human Resources management had a strong relationship to effectiveness.

Nature Of ManagementManagement Challenges:Modern business functions in a complex & intricate environment

due to:

1. Liberalization of Indian economy opening entry of global market. Resulted in new opportunities for growth & expansion , increased threat of competition. Survival in the highly competitive industry a real challenge.

Globalization: Phenomenon by which markets and production in different country are becoming increasingly interdependent due to dynamics of trade in goods & services & flow of capital & technology. Entry of MNC’s in India (Honda, Ford, McDonald etc). Indian companies went global (Infosys, Aditya Birla etc). Indian companies linked to global market. Had to follow regulations imposed by WTO, ISO, EU norms. Challenge for organizations to re-invent themselves to meet global competition.

1.

Nature Of ManagementKnowledge Management: Process of discovering & harnessing

an organization’s intellectual resources. Process of creating, capturing, sharing & using knowledge. Knowledge managers identify these human assets & help them generate new ideas, harness these ideas into successful innovations. Organization that fails to develop a framework for utilization will not have a long term competitive advantage. Biggest challenge is managing intellectual capital.

Internet: Management influenced by growth of communication facilities. Virtual teams breaking geographical boundaries, management must happen via the web. Internet helps managers keep in touch with partners, suppliers & customers. Provides a challenge for identifying opportunities & exploilting them quickly & more effectively than the competitor.

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