Different departments or divisions have been given a variety of duties to complete. According to their areas of expertise, they are allocated.
Each department’s employees carry out their tasks so that everyone may work together to accomplish shared goals. It’s co-ordination, then.
The process of co-ordination guarantees the efficient interaction of managerial activities. Coordination helps accomplish common goals while minimising time, effort, and financial waste.
There are several departments in a contemporary business. The business has divisions including procurement, production, sales, finance, and accounting in the past.
However, the business is currently split into the following divisions: procurement, production, sales, finance, accounting, human resources, research and development, public relations, and so on. Currently, there are a lot of departments classified. As a result, coordination has become more important.
Definition
According to Lundy, coordination is creating a shared purpose and executing strategies in a coordinated manner to attain goals.
According to Henry Fayol, “To coordinate is to synchronise all of a concern’s actions in order to ease its operation and success. Each department or division of a well-coordinated firm cooperates with others and is completely aware of its function within the organisation. Different departments’ work schedules are regularly adjusted to the situation.”
James D. Mooney and Alan C. Reiley, Coordination is the systematic organisation of a group’s attempt to create cohesion in the pursuit of a single goal.
According to Orduray Tead, “Coordination is the attempt to guarantee that the functions and forces of all the components and elements of an organisation will interact smoothly in order that its objective can be realised with the least amount of friction and the greatest amount of cooperative effectiveness.”
“It appears more appropriate to see coordination as the essence of managership for the attainment of harmony of individual efforts toward the fulfilment of collective objectives as the aim of management,” write Koontz and O’Donnel. Each management task involves practising coordination.
Terry, G.R. “The job of combining efforts to guarantee the effective achievement of an aim is coordinated. Through planning, organising, acting, and controlling, it is done.
According to Newman, coordination is a component of each stage of administration and not a separate endeavour.
According to E.F.L. Brech, “Coordination involves balancing and maintaining the teams by guaranteeing an appropriate distribution of working duties to the different members and seeing to it that they are accomplished with due harmony among the members themselves.”
Features / Characteristics of Co-Ordination
Not a distinct management function: Coordination is required for all management functions. Therefore, coordination is not a unique management task.
Managerial responsibility: It is the duty of each department head to coordinate the activities of his staff. The management position and responsibilities come with it.
Promotes unity of action: To achieve shared goals, there must be unity of action. Therefore, it is believed that unity of action is the key to effective coordination.
Coordination is essential at all organisational levels: Coordination cannot be forced or left to chance. The senior executives should thus make conscious efforts to create coordination.
The value of group efforts: Bringing coordination requires group efforts rather than individual efforts. No one can do work without influencing how others perform. It highlights the teamwork.
Continous and dynamic process: Coordination is a continuous, dynamic process that begins with planning and concludes with controlling. There is a certain level of coordination present in every organisation. The management should make special efforts to create a high level of cooperation.
The idea of a system: An organisation is a network of collaborative activities. The organisational framework places an interdependence on each department’s various duties. Coordination makes the organisation work efficiently. Coordination is a system idea as a result.
Coordination is needed for management tasks to be performed effectively.
1)Unity in diversity: The foundation of excellent management is effective coordination. In a huge organisation, there are many workers, and everyone has unique ideas, viewpoints, activities, and backgrounds.
As a result, there are numerous operations in huge organisations that would be ineffective in the absence of coordination. So, the key component of unity in variety is coordination.
2) Term work or unity of direction: In order to accomplish the goals of the organisation, the efforts, talents, and abilities of many people should be combined. Without coordination, the group’s efforts may be dispersed and fall short of its goals.
Additionally, coordination prevents work from being done twice, which results in management that is economical and effective.
3) Differentiating functions: The organisational functions are broken down into departments, sections, or divisions. The tasks carried out by each department vary. They are essential to achieving the overall goals.
Objectives are definitely achieved when there is coordination. Each division makes an effort to carry out its duties independently of the others.
It could lead to an issue. As a result, coordination is required to combine the linked departments’ operations.
4) Specialization: The current industrial world exhibits a high degree of specialisation. Experts are well-versed in their respective disciplines. They are able to evaluate the size, character, and kind of job they do.
However, they are oblivious to other people’s tasks and the significance of their performances. The experts often disagree on this. Coordination may be used to resolve conflicts.
5) Goals alignment: Each department or division has its own objectives to fulfil within the allotted period. Regarding an organisation, there are broad objectives.
The people that work for the company have their own objectives as well. Individuals or workers prioritise their own interests above departmental and organisational objectives.
Members of the department prioritise their own departmental aims above organisational goals.
6) Major workforce: Large workforces are employed by large organisations. They each have various routines, behaviours, and strategies depending on the circumstance.
They sometimes behave irrationally. Their actions are neither always easy to comprehend nor entirely foreseeable.
Therefore, it is always possible for issues to arise in a complex organisation. All of this increases the need of coordination.
7) Congruency of flows: Also known as congruent flows, is the continuous transfer of comparable information from one direction to another.
In an organisation, information is made to flow about the use of resources, activities, the use of authority, and output. The smooth and continuous flow of information is ensured via coordination.
8) Empire building: The highest level of an organisation is referred to as the empire. Staff officers are always expected to cooperate with line officers.
However, the line officers are not yet prepared to offer staff officers their cooperation. Line officers and staff officers go at odds with one another as a result. In order to prevent disputes between line police and staff officers, coordination is required.
9) Differentiation and integration: Every organization’s whole activity is divided into two categories. They are uniform, specialised groups. The different organisational levels are given authority. For collective efforts to succeed, this is required. This procedure is facilitated by coordination.
Principles of Co-ordination or Essentials of Effective Co-ordination
1)Early start: Coordination should begin even with management’s planning role. The strategy should be created by the management after contacting the relevant authorities.
This will make it extremely simple for management to prepare plans and put them into action. There won’t be any opposition from the concerned authorities after that.
2) Employment contract: Two people get extremely close via spoken communication. There is a chance of face-to-face interaction.
Through human interaction, a consensus on approaches, activities, and goal-achievement may be reached.
Through human contact, ideas, thoughts, opinions, suggestions, sentiments, etc. are successfully communicated to the recipients. Personal interactions help to prevent conflict and misunderstanding.
Therefore, cooperation and mutual understanding, rather than force, order, or coercion, are the means by which coordination is established.
3)Continuity: As long as the organisation is in operation, coordination is a must. The foundational element of the organisational structure is coordination. Planning for coordination begins with controlling, so to speak.
4) Reciprocal relationship: According to this tenet, all elements of a situation are mutually dependent on one another. Each component has an impact on the other factors as well as being affected by them.
The integration of all efforts, actions, and interests is necessary since the acts of one employee affect the actions of other workers, and vice versa.
5) Dynamism: The business’s external environment has an impact on its internal operations. Additionally, internal choices and actions are modified in accordance with the situation.
As a result, coordination changes in response to internal activities and choices as well as the external environment. Coordination need to be dynamic.
6) Simplified organisation: Effective coordination is made possible by simplified organisation.
To improve cooperation between the departmental heads, management might structure the departments in certain ways.
Two divisions or departments are placed under one executive in charge if their respective tasks are most comparable.
This helps to achieve greater coordination. Someone suggested that if two sections or departments have different duties, these two departments should be assigned to a single executive.
Additionally, improved coordination between the two departments will result from this.
Even if certain operations are distinct from one another, management may group them under a single executive since they need tight coordination, claim Keith and Gabelin.
7) Self-coordination: In accordance with this concept, one department’s operation has an impact on other departments’ operations, which in turn have an impact on the operations of other departments.
The same department changes its operations in a way that could benefit other departments.
Coordination is done in this manner. To achieve self-coordination, excellent communication is required.
A department’s ability to evaluate the duties of another department is facilitated by effective communication.
8) Clearly defined goals: The department leaders should be aware of the organization’s goals. Therefore, the management must take the appropriate actions to inform the departmental heads of the goals.
This is particularly helpful in attaining the organization’s shared goals as a whole. Unanimity in action is a given when there are defined aims and a clear explanation of those objectives.
9) Clearly defined authority and responsibility: The management should clarify each person’s and each department’s authority and responsibilities. This will make organisational coordination more efficient.
Additionally, it will lessen interpersonal disputes. The department manager has sufficient power to discipline employees who have broken rules or engaged in other irregularities.
10) Effective communication: Proper cooperation requires effective communication. Coordination may be used to address issues at the individual and departmental levels.
Additionally, a staff member’s efforts are efficiently used to further the organization’s goals. Leadership
11) Good management: Good management also aids in good coordination. Subordinates’ morale is raised and their confidence is increased through effective leadership.
12) Effective supervision: Effective supervision is essential for ensuring that subordinates carry out their tasks as intended. The supervisors may be given this kind of task by the top executives.
When senior executives notice any irregularity, they may act quickly to make corrections with the assistance of supervisors.
Therefore, coordination between the top executives and the supervisors is necessary. As a result, supervisors are crucial to coordination.
Techniques of Co-ordination
Supervisors may recruit coordination through a variety of strategies. The following is a discussion of certain coordination techniques:
1)Clearly Defined Objectives: Every organisation has distinct goals in mind. These goals would be made very clear.
The organization’s personnel then need to have a solid understanding of its goals. To achieve appropriate coordination, there must be unity of goal.
2) A strong chain of command: In any organisation, the chain of command establishes who is accountable to whom.
The superior has adequate control over his subordinates if the line of power and duty is clearly established.
The superior or manager may then use his power to direct his subordinates’ efforts. If the chain of command is clearly established, the superior may be able to reduce disagreements and obtain coordination.
3) Coordination via group meetings: In group meetings, authorities address the shared set of issues facing the organisation.
These group gatherings aid with coordination. Convening the group meetings is simple. The rationale is that each group member has a responsibility to expand their coordination.
4) Harmonious policies and practises: Programs, processes, and rules all serve as a framework for making decisions in a consistent way. It guarantees consistency in behaviour at all levels of management.
5) Effective communication: In an organisation, effective communication fosters cooperation and understanding between the many authorities. As far as possible, the communication should be straightforward.
All misconceptions and misinterpretations are avoided by the straightforward communication alone.
Quick communication may help ensure that tasks are completed on schedule. The execution of additional tasks that need to be coordinated is thus a possibility.
6)A sound organisational structure: A sound organisational structure unifies the operations of various organisational units and sub-units.
Additionally, a strong organisational structure aids in the achievement of horizontal coordination.
7) Coordination via a liaison officer: A liaison officer is a person who serves as a bridge between two people.
Through him, external coordination is attained. To maintain good ties with the government and outsiders, many huge organisations rely on this person.
8) Cooperation: Better relationships inside the organisation lead to cooperation. A solid foundation for stronger interactions is provided by the policies and processes.
In order to guarantee coordination via cooperation, informal connections are also encouraged.
9) Self-coordination: Within an organisation, there are several interconnected functions.
Therefore, the duties of the several departments are set up such that each department benefits from the operation of the others. It is possible to develop self-coordination using this method.
10) Coordination via leadership: A manager utilises his abilities as a leader to get employees to cooperate voluntarily. A leader can recognise people’s interests and inspire their followers.
These help with coordination. With the aid of effective leadership, many disagreements and unpleasant circumstances may be avoided.
11) Incentive: The phrase “incentives” refers solely to financial rewards. They are increases in the pay scale, bonuses, profit sharing, and other things of the kind.
These incentive programmes encourage stronger teamwork, which in turn promotes greater coordination.
Types of Co-ordination
Typically, there are two categories of coordination. Here is an explanation of them: 1. Internal Coordination: In order to coordinate the actions of all managers, executives, divisions, sub-divisions, branches, and more, relationships must be established.
The following two categories further split internal coordination:
(i) Vertical co-ordination: This kind of coordination occurs when an upper-level official coordinates their work with that of their lower-level colleagues, and vice versa.
The activity of the sales manager is coordinated with that of the sales supervisor. Similar requirements apply to the sales supervisor, who must coordinate with and get along with his superiors.
(ii) Horizontal co-ordination: Establishing a connection between those who have the same status is referred to as horizontal co-ordination.
For instance, coordination between departmental leaders, managers, employees, etc.
2)External co-ordination: Establishing a connection between an organization’s workers and those outside the organisation is known as external co-ordination.
The purpose of establishing this connection is to benefit the organisation as a whole.
The following are the external parties that an organisation needs to build stronger relationships with:
(i) Market agencies
(ii)The general public
(iii)Competitors
(iv) Clients.
(v) The federal, state, municipal, and other governments, as well as other government organisations.
(vi) A variety of organisations offering support services.
(vii) Financial institutions
(viii) Different industrial organisations.
(ix) technological agencies
(x) Various business entities.
A person appointed as the public relations officer is in charge of establishing a connection between the organization’s workers and the general public.
Problems of Co-ordination
For the management to operate smoothly and effectively, coordination is required. But in actuality, the following issues with coordination exist.
Natural obstacles: There are a few natural obstacles that make coordination ineffective. Natural obstacles include things like floods, earthquakes, and fires. These have an impact on both the behaviour of the individual and the group. Ineffective coordination is the outcome.
Lack of administrative skill: The selection of ineffective candidates leads to a lack of administrative ability. They don’t fully comprehend the administrative process. As a consequence, coordination is ineffective.
A lack of coordination techniques: Management has little interest in learning new strategies for efficient coordination. The rationale is that it is adequate for an organization’s growth. Coordinating issues may be readily solved if management use a variety of coordination approaches.
Ideas and goals: Every management has its own goals and devises strategies (ideas) to reach them. However, the managers conflate these goals with concepts. It raises a coordination issue.
Misunderstanding: An organisation employs a large number of people. Mutual understanding should exist between them. But coordination issues often arise because of miscommunication among staff.
Steps for Effective Co-ordination
The management should take the following actions in order to resolve the aforementioned coordination issues and achieve effective coordination:
Authority and responsibility should be properly delegated at all levels of management.
Depending on the organization’s size, the complete or all of its functions should be separated into departments or sections.
Establishing and following strict guidelines, rules, laws, policies, etc.
Creation of a successful communication system.
The creation of a complaints cell for workers.
A suitable reporting mechanism has to be in place.
Skilled employees must get fair compensation.
The management should encourage the staff to actively participate in committee meetings, conferences, seminars, and similar events.
The management should promote cordial interactions among the staff.
Managers should have access to opportunities for leadership, coordination, planning, staffing, and related training.
Co-ordination vs Co-operation
Co-ordination
Co-operation
1. It is one of management’s duties.
It is not a managerial function.
2. Coordination is the systematic organisation of collective operations.
2.The ability to collaborate with others or provide a helping hand to others.
3. The level of coordination affects an organization’s early success.
3.Coordination is based on cooperation.
4. Official coordination is achieved.
4.Participation is an unpaid service.
5. There is a clear connection between coordination and the accomplishment of goals.
5.There isn’t really a direct link between collaboration and achieving goals.
The final task of management is control. If other management tasks are carried out well, the controlling role won’t be essential. Control will be required if there is any discrepancy between the planned performance and the actual performance. The regulating function corrects the deviations.
This feature guarantees the intended outcomes. Activities are identified by planning, and they are regulated by regulating. The outcome of controlling’s success or failure determines whether planning will be successful or unsuccessful.
DEFINITION
Control, according to Earnest Dale, “envisages a system that not only provides a historical record of what has occurred to the business as a whole but also pinpoints the reasons why it has occurred and provides data that enables the chief executive on the departmental head to take corrective steps if he finds he is on the wrong track.”
In order to guarantee appropriate progress and good performance, E.F.L. Brech advises “control verifying current performance against pre-determined standards included in the plans, as well as documenting the experience obtained from the functioning of these plans as a reference to prospective operations.”
Theodore E. Goetz, “Management control aims to force outcomes to match expectations.”
“Controlling is the measuring of achievement against the standards and the adjustment of deviations to ensure attainment of goals in accordance with plans,” writes Knootz and O’Donnel.“
Richard Fayol, “Control involves ensuring that everything happens in accordance with the accepted plans, the directions given, and the established principles. Its goal must be to identify flaws and mistakes so that they may be fixed and won’t happen again.”
Terry, George R. “Controlling is deciding what is completed, that is, reviewing the performance and, if required, using corrective measures so that the performance takes place in accordance with plans,” according to the definition of the word.
Ronald n. Antonio “The method by which managers ensure that resources are acquired and utilised effectively and efficiently in the attainment of an organization’s goals is known as management control.”
Elizabeth Cushing Niles, Planning sets the course to the desired courses or to a well altered one, while control is an element and projection of planning.
Massie and Haynes, “Any procedure that directs activity toward a certain objective is called control. Determining if the action is producing the expected outcomes is the key to the notion.”
According to J.K. Rosen, “Control is that system function that offers guidance in performing the plans.”
“The existence of the force that directs a corporation toward a predetermined goal through predetermined rules and actions, according to Dalton E. Mc Farland.”
Areas or Scope of Control
All business concern actions are referred to as being under control. The following are the primary regions under control:
Authority over the company’s policies.
Authority over the organisation.
Command over the people that work for an organisation.
Management of the money accessible to the business.
Command over capital investments.
Command over the creation.
Control over employee compensation, including wages and salaries.
Control highlights the plan’s deviations and offers corrective action to make future plans better. Due to human limits, some of the techniques need to be discovered to be flawed. Control is thus required, and it involves the following steps:
1)Setting standards: To get the desired outcomes, it is vital to establish standards. Setting standards is a really helpful thing to do. If it is not, effective control cannot be exercised. There are both quantitative and qualitative standards. The majority of standards are quantified when they are articulated.
Quantitative standards include, among other things, the number of units produced, the number of personnel, the number of hours worked, the total cost spent, the amount of income realised, the amount of investments, etc. Standards will be represented in qualitative words, such as goodwill, staff morale, motivation, etc., if it is not feasible to articulate them in numeric terms.
The standards need to have a few qualities to result in efficient performance. Time, money, effort, focus on results, use of quantitative language, accuracy, regular review, and other factors might be among the traits.
2) Assessing performance: The results should be evaluated in light of the set criteria. Therefore, the relevant data on the performance should be gathered. The relevant information, such as performance details, is provided through an efficient management information system. It is possible to gather quantitative data if standards are defined in numerical terms.
In other words, information that is qualitative may be gathered if criteria are described in qualitative terms. The management uses a variety of methods to gauge performance.
3) Comparison of actual with Standards: Actual performance is compared to standards, and the management is informed of any differences whenever this happens. The management may then determine the severity of deviations and pinpoint their causes.
When standards are presented in terms of amount, comparison is fairly simple. Personal observation will be employed to determine the degree of departure if the findings are qualitative or intangible.
There is no need for further action if the actual performances meet the requirements. This step marks the completion of the control procedure. However, the management must choose the kind of corrective action if the standards are not met.
It’s not necessary to notify every variance to management. Deviations that go beyond what is considered reasonable must be notified to upper management. Control by exception or management by exception are terms used to describe this. The causes of deviations are then examined.
The factors could be within your control or not. Only when the reasons are within management’s control must remedial action be taken. If the reasons are uncontrolled, the management will not be required to take remedial action.
4) Taking remedial action: Before taking corrective action, management must ascertain the reasons for the divergence. The reasons for deviations may be due to poor and insufficient communication, flawed salary payment systems, flawed employee selection processes, inadequate training, a lack of desire, poor supervision, and other factors. Depending on the nature of the reasons of the deviations, the management must take the required corrective action.
Essentials of an effective control system
Effective control systems must meet specific criteria. Below is a quick explanation of them:
Feedback: Adapting future actions based on knowledge of previous performance is known as feedback. The control procedure will be relatively simple if management practises feedback.
Objective: Controlling must be unbiased. It implies that there is a guarantee of control. For the control to be assured, the performance must be objectively evaluated.
Appropriateness: The control mechanism must be compatible with the type of deviations. If necessary, the control approach may be used.
Timely reporting: Any deviations from the norm should be immediately reported. Trying to exercise control will be useless if a delay is produced.
Forward Looking: A control system that is effective must concentrate on how future actions will conform to planned. To put it another way, the control system need to help with planning.
Highlighting anomalies: The control system highlights the deviations. However, not all deviations have an equal effect. The control system should pay close attention to deviations with a high impact. The management can then take corrective action at that point.
Flexible: The requirements or standards should occasionally be changed. The reason is that the standards should conform to the present requirements. Hence, the control system should be flexible in accordance with the changed standards or criteria.
Economy: The benefits derived from the control system should be more than the cost of exercising such a control system.
Intelligble: The control system should not be a complicated one. The control system should be easily understood by an ordinary layman of the organisation.
Suggest remedial action: The effective control system should disclose the places of failure, persons for failure and how they have been dealt with.
Motivation: A good control system should be employee centred. The control is designed to secure positive reactions from employees. If large deviations are found, the employees will be properly directed and guided instead of being punished. The very purpose of control is prevention and not punishing.
Techniques of Control
Various methods are used by the management for controlling the various deviations in the organisation. Let us study them briefly. The nature and use of managerial control techniques are discussed below.
1) Statistical control reports: These type of reports are prepared and used in large organisations. Reports are prepared in quantitative terms. Then, the variations from standards are easily measured. In this way, control is exercised by the management. A periodical report of sales volume is an example of statistical control reports.
2) Personal observation: Using this technique, the manager personally observes the operations in the work place. The manager corrects the operations whenever the need arises. This is the oldest method of control. Employees work cautiously to get better performance. The reason is that they are personally observed by their supervisor.
Personal observation is a time-consuming technique and the supervisor does not have enough time to afford personal observation. Personal observation technique is disliked by the honest and efficient employee. The observer may be biassed in performance evaluation.
3) Cost accounting and cost control: Profit of any business depends upon the cost incurred to run a business. Profit is maximised by reducing the cost of operation or production, so, the business concern gives much importance to the cost accounting and cost control.
Management uses a number of systems for determining the cost of products and services. The cost accounting procedures and methods differ from one industry to another according to the nature of industry. They are used for effective cost control and cost reduction.
4) Break-even analysis: It is otherwise called as ‘cost volume profit analysis.’ It analyses relationship among cost of production, volume of production, volume of sales and profits. Here, total costs are divided into two i.e., fixed cost and variable cost. Fixed cost will never change according to the changes in the volume of production. Variable cost varies according to the volume of production.
This analysis helps in determining the volume of production or sales and the total cost which is equal to the revenue. The excess of revenue over total cost is termed as profit. The point at which sales is equal to the total cost is known as ‘Break Even Point’ (BEP) (BEP). In other words, the break-even point is the point at which there is no profit or loss.The break-even point analysis helps in managerial control in several ways.
5. Special control reports: This report may or may not contain statistical data. Using this technique, a particular operation is investigated at a specified time for a particular purpose. This is done according to the requirements of management but not in regular basis.
The deviations from standards are paid additional attention and corrective action is taken. Handling complaints of damage is an example of this type of control technique.
6) Management audit: Management audit is an independent process. It aims at pointing out the inefficiency in the performance of management functions such as planning, organising, staffing, directing, controlling and suggesting possible improvements. It helps the management to handle the operations in an effective manner. Management audit is not a compulsory audit and not enforced by law.
7) Standard costing: Standard costing is used to control the cost. The following are the steps involved in standard costing:
A. Determination of cost standards for various components such as material, labour and overhead.
B. Measurement of actual performance.
C. Comparison of actual cost with standard cost to find variations.
D. Finding the causes of variations.
E. Taking measures to avoid the variations in future.
8) Return on investments: Return on investment is also known as return on the capital employed. Using this technique, the rate of profitability is identified by the management. The amount of profits earned by the company is different from the rate of profitability of the company.
The difference between the cost and revenue is profit. The rate of profitability is the earning capacity of the company. Return on investments is calculated by dividing the net profit with the total investment or capital employed in the business organisation.
9) Internal audit: Internal audit report is prepared at regular intervals, normally by months. It covers all the area of operations. This report is sent to the top management. The management takes steps to control the performance on the basis of the report. Internal audit report emphasises the degree of deviations from the expectations. It is really beneficial to reach the targets on timely basis.
10) Responsibility accounting: The degree to which different individuals have accomplished pre-established goals is used to evaluate their performance. The goals are laid out in terms of sections, departments, and divisions, and they are all evaluated identically.
Instead of allocating costs based on products, it does so by departments. Each division, segment, or department is designated as a centre of responsibility. An person in a certain sector, department, or division is accountable for his or her operational area.
11) Managing statistics: A manager may identify the reasons for changes by comparing previous and present outcomes using managerial statistics. These are incredibly helpful to management when formulating future plans and decisions.
Managerial statistics “deal with data and procedures which are valuable to management executives in planning and managing of organisation operations,” according to Kenit O. Hauson.
Performance evaluation and review technique (PERT): This method is used to address issues that only arise sometimes. It is useless for dealing with issues that keep cropping up.
The three companies Booz, Allen, and Hamiltan created the PERT. This method was used in the Polaris Submarine Project, which was supported by the US Navy. The PERT method is particularly helpful for building projects, book publishing, etc.
13) Critical path method (CPM): This approach likewise adheres to the PERT tenets. Technique focuses more on price than on time. According to CPM, y activity’s duration is constant. Each action is given a time estimate. A group of DU de Nemours employees invented the CPM technique.
14) Gantt milestone chart: This method was formerly popular but is no longer used. The explanation is because this method simply emphasises production schedule and ignores duct quality. Henry I. Gantt proposed using this method.
15) Production control: A smooth organization’s operation depends on the production control approach. Production planning, determining the amount of raw materials and finished items in stock, choosing a production method, choosing production equipment, etc. are all included in production control.
“Production control is the process of planning in advance of operations, establishing the exact route of each individual item, part assembly, setting, starting and finishing dates for each important item, assembly, and the Finished product, and releasing the necessary orders as well as launching the required follow-up to effectuate the smooth operation of the enterprise,” claims Spreigel.”
16) Management information system: All those who must make choices are given access to pertinent information that has been gathered. The development of a communication system allows all levels of people to be updated on the organization’s development. The responsible person always takes corrective or control action when a deviation is discovered.
The management information system emphasizes the need of having enough information at hand in order to make the optimal choice. By providing the appropriate information at the appropriate time and in the appropriate format, management information systems assist management in making managerial decisions.
17) External audit control: All joint stock firms subject to statutory supervision are required to conduct an external audit. Therefore, it is often referred to as statutory audit control. The interests of the company’s creditors and shareholders are safeguarded by this kind of audit.
The external auditor attests that all books of accounts are maintained in accordance with legal standards, provides all information required for the audit, and ensures that the balance sheet depicts a truthful and fair picture. The trained auditor carries out the external audit. The Central Government sets the requirements for this sort of auditor.
18) Zerobase budgeting: Zerobase budgeting is a novel strategy that has quickly gained popularity. It is a novel method of budgeting. Zerobase budgets are created without taking into account data from the prior year.
To determine which organisational tasks should be deleted, scaled down, or raised using this method, all activities must be recalculated. The money is projected to cover existing needs, in other words. It entails determining how much money is required to finish a current project.
19) Standing orders: A standing order is a set of rules and guidelines that govern behaviour, process, and other things. The needs of administration are taken into account while drafting rules and regulations. For instance, no employee should leave the workplace before office hours without first obtaining written consent.
20) Budgetary control: One of the management’s control strategies is the creation of a budget. The next pages in this chapter include a comprehensive explanation of this method.
PERT/CPM
Program Evaluation and Review Technique (PERT), Project Evaluation and Review Technique (PERT), or Performance Evaluation Review Technique are all abbreviations for PERT. the Critical Path Method, or CPM. PERT was created by Booz, Allen and Hamilton Inc from the Gantt Chart. in response to the U.S. Navy’s request in 1957–1958 on the Polaris Weapons System. Engineers of the Du Pont Company in the USA created CPM.
Though they both use the same premise, PERT and CPM have several fundamental differences. The main distinction is that PERT focuses on time alone whereas CPM concentrates on cost and time. PERT and CPM are both used as control tools to keep track of how long it takes to complete a project.
PERT is used as a controlling and planning tool. PERT is used as a planning tool to determine how long it will take to finish a project in its entirety and to identify bottleneck activities that may cause a delay in the project’s completion date.
As a management tool, PERT assists in carefully monitoring the overall performance of a project to identify any deviations, if any. PERT/CPM represents all events and actions as well as how they relate to one another. The overall time needed to finish a project may be calculated by determining the optimal time for each event and activity.
Suitability of PERT/CPM
PERT/CPM is a crucial project management control approach. The projects listed below are the ones for which this method works best.
A powerful arsenal
Ship construction.
Building or constructing an Olympic venue.
Strengthening weakdam
Making plans for and starting a new project.
Building housing airport facilities.
Computer system installation.
Introducing fresh items.
Construction of road infrastructure
Development of a model community or hamlet.
Construction of a picnic area.
Establishing a colony.
Benefits / Advantages of PERT/CPM
The following benefits result from the use of PERT/CPM Control methods. 1)Ensures Planning: PERT guarantees real planning, which is number one. Under PERT, a manager is required to create a plan. He is asked to research all significant actions and occurrences.
The manager should also note the order of events and activities as well as their connections. Managers should choose the most probable time by taking into account all potential outcomes, uncertainties, and dangers.
2) Finding advantageous factors: Estimating the most probable time prevents unforeseen events and waste. This aids management in early identification of the favourable conditions necessary for the project’s successful conclusion.
3) Cost and time savings: CPM concentrates on the events that need the most attention. It results in time and money savings.
4) Implementing preventative or corrective measures: PERT/CPM made the bottlenecks and probable problem locations known well in advance. It is sufficient to take some preventative or remedial steps.
5) Focus on critical tasks: Important attention can be given to crucial tasks, and these tasks can be accelerated.
6) Everything at Right: This emphasises taking the proper action at the appropriate time to complete a job.
7) Raising awareness of obligations: It makes every management completely conscious of his obligations. By comprehending how one work relates to other works, it is feasible.
8) Ensuring Cooperation: Based on input, the PERT/CPM is continuously evaluated and modified. The management benefits from having the cooperation of all departments.
9) Makes decision-making easier: Instead of carrying out pricey activities, management may analyse the consequences of several alternative options. It enables better decision-making.
10) Improved Communication: Better communication thanks to the visual representation of each critical route and its sub-critical pathways. The visual representation allows each employee (designers, contractors, project manager, etc.) to understand their specific position in the proposed project. It leads to better communication.
11) Simultaneous performance of works: It guarantees that various components of the work are performed simultaneously. The whole project is broken down into several distinct work components. Different people do each task independently.
12) Forward-thinking control action: PERT/CPM reveals how a delay in one activity impacts all subsequent actions. The management benefits when a control measure is taken far in advance.
13) Timely project completion: The management might choose to focus on any crucial activity to ensure that the whole project is finished on schedule.
Limitations of PERT/CPM
The PERT/CPM has certain limitations also. They are given below.
1. Error in estimation of time and cost: Future is uncertainty. Three times are estimated i.e. optimistic pessimistic and normal. Eventhough, it is very difficult to estimate accurate time required to complete a project. So, PERT is an unreliable as a control aid.
2. Application: PERT has to be applied only to one-time non-repetitive projects. It does not help the management to exercise control on continuous performing work.
3. Time consuming and expensive: A lot of data have been collected to prepare PERT net work. It requires a lot of time and consume some amount of expenses also before implementation of a project.
Distinction between PERT and CPM
The basic principles and steps involved in both PERT and CPM are one and the same. Eventhough, there are some differences between PERT and CPM. They are briefly discussed below.
1. Three time estimates are made for each activity.
The duration of each activity is constant. So, only one time estimate is made for each activity.
2. PERT gives importance on time.
CPM gives importance on cost.
3. PERT is suitable where activity timings are not known.
CPM is suitable where times are well known.
4. PERT is event oriented
CPM is activity oriented.
Thus, PERT/CPM is used as a best control technique applied by the management over a period of time. Events and activities are the basic building blocks of a PERT network. Each event is numbered and connected by activities.
The connection of activity with an event disclose the fact of preceding and succeeding events very clearly. A typical PERT network may help the management a lot to exercise control over the project implementation.
CHARACTERISTICS OR FEATURES OF CONTROL
The main characteristics or the features of control are briefly discussed:
1. Controlling process: Controlling is also a continuous process just like other functions of management. The superior has continuous watch over the entire operations. Besides, he ensures that all the efforts are made to achieve the desired objectives and if not, necessary control action will be taken to correct them.
According to Koontz and O’Donnell, “just as the navigator continually takes reading to ascertain whether he is relative to a planned course, so should the business manager continually take reading to assure that his enterprise or department is on course”.
2. Universal: Control is applied at all levels of management and irrespective of the organisation. The manager of business and non-business concern uses control to regulate the on-going activities to obtain desired goals. The nature, scope and limit of control exercised by the manager vary according to the levels of management.
3. Forward looking: Control has links with future. How? Past cannot be controlled. But, the future activities may be controlled on the basis of past experience. The presence of control reduces the wastages, losses and deviation from standards.
4. Dynamic process: The control technique is changed according to the nature of deviations. The same technique is not followed throughout the year or a particular period. Besides, the control results in changes in the performance of other functions of management.
5. Control involves management: Control recommends the future course of action on the basis of evaluation and measurement. Evaluation and measurement are the eyes of the control process.
6. Influencing factor: The behaviour of a responsible person is influenced by the control process for the effective performance of activities. Control avoids the undesirable happenings and shapes the future plan. Control influences the people to conform to the norms and standards in performance.
7. An essence of action: The corrective action should be taken by the management on the basis of information available. If it does not do so, the purpose of control will not be achieved. The corrective action will be taken if there is any deviation from the standards.
NEED OF CONTROL
Control is necessary as other functions of management. The control is necessary on account of the following reasons:
1. Judging the accuracy of standards: The actual performance should be compared with the fully accurate standards. But, it is very difficult for a large and complex organisation to establish the fully accurate standards because of the lack of timely information. In such a case, the control is necessary to judge the accuracy of standards.
2. Minimise dishonest behaviour: A honest person may tempt to misbehave in the absence of control. Only an efficient control minimises the dishonest behaviours or maintains honest behaviour on the part of employees.
3. Better performance: Employees will become lazy in the absence of control. Control facilitates to get better performance and regulate the efforts of the employees.
Advantages of Control
A good control system gives the following benefits to the management:
1. Adjustments in operation: Every organisation has certain objectives. These objectives are achieved only when the plans are properly implemented. If it is not done so, objectives cannot be achieved.
Control provides a clue to find whether the plans are properly implemented to achieve the objectives. The deviations from standards are corrected immediately. Thus control makes necessary adjustments in operation.
2. Verification of policy: The management frames the policies and plans to help the organisation function smoothly. The organisational performance is reviewed in the light of these policies. The organisational performance might deviate from the plans (standard) on account of many internal and external factors.
These factors may force the organisation to deviate from the original plans. Constant review of plans helps to revise and update them. Thus, the management can verify the policy through the control process.
3. Managerial accountability: Managerial personnel are assigned responsibilities from top to bottom. A superior may delegate his authority to his subordinates. But the superior is responsible (or accountable) for the performance of his subordinates even after the delegation. It is quite natural that the superior has control over his subordinates.
Besides, it is specified that the superiors should not misuse their authority. Control flows throughout the organisation from top to bottom as the existence of relationship between the superior and subordinates. Everyone, whether superior or subordinate, has responsibility for the work assigned to him.
4. Psychological pressure: Better performance is obtained by the management through the control process. It is achieved psychologically. The reason is that each person’s performance is evaluated and linked with rewards. So, the employees will work hard to achieve the standard set for them.
5. Maintaining morality: Control creates an atmosphere of discipline in the organisation. Everybody is responsible for the work assigned to him. The workers are expected to make best efforts to complete the work and to the satisfaction of the management. These are not possible in the absence of control.
6. Co-ordination: Control gives unity of direction. Proper performance of all managerial functions is necessary to achieve co-ordination. A manager has to co-ordinate the activities of his subordinates with the help of control. Control helps to maintain an equilibrium between means and ends.
7. Efficiency: As responsibility is fixed for each individual, effective performance is possible. Control indirectly induces the employees to perform the work efficiently. They are well aware that defective performance is linked with punishment.
Limitations of Control
Control process has some limitations. They are briefly explained below:
1. Absence of perfect standards: Standards cannot be fixed in all the cases. In some areas, quantitative standards cannot be expressed. In the absence of quantitative standards, the performance cannot be measured accurately. This indicates the ineffectiveness of control process.
2. Uncontrollable factors: Some of the factors cannot be controlled by the management or organisation. Changes of government policy, strategy of competitors, introduction of new substitute products in the market, technology changes, consumer preference changes could not be controlled by the organisation or management. These are external factors of organisation.
3. Difficulty in fixing responsibility: Normally, control reduces the freedom of employees. So, the employees resist the exercise of control. Then the control loses its effectiveness. Thus, the management has to face the difficulty of fixing responsibility.
4. Expensive process: The control process has several stages. They are (i) collecting information for fixing standards; (ii) actual fixation of standards; (iii) measuring the actual performance; (iv) finding deviations; and (v) taking corrective or control actions. These processes involve much paper work and are time consuming. A small organisation cannot afford these expenses.
Types of Managerial Control
1. Standardising control: Controls are used to standardise performance for increasing efficiency. Costs may be reduced by time and motion studies, inspections and work schedules.
2. Preserving control: Company assets are protected or preserved through the allocation of responsibilities. Proper accounts are maintained for assets and usage of assets are controlled and put under strict supervision.
3. Delegation of authority control: Control puts some limits to the usage or delegation of authority. The approval of the top management is necessary to use the delegation of authority. Policy manual, procedure manual and internal audits are some of the techniques included in this control.
4. Measurement control: Controls are used to measure the job performance. Performance is measured through special reports, budgets, standard cost and production per hour or per employee.
5. Motivating control: Controls are designed to motivate the employees of organisation. Motivation includes promotions, rewards for best opinions and operation, profit sharing and the like.
BUDGET
The term, Budget’ is derived from the French word ‘Budgette’ which means small leather bag. Budget is not only looking forward as planning but also expresses what should be the future course of action in quantitative terms. Budget is prepared with the help of past experience.
The past is the parent of the present as the present is the parent of future. This principle is followed in budget preparation. In simple words, budget is a control tool used by the management in planning its future activities. Thus, a budget may be said to be an instrument of planning, laying down the results desired to be achieved within a given period.
Definition of Budget
Institute of Costs and Works Accountant of England said that, “Budget is a financial and/or quantitative statement, prepared prior to a defined period of time, of the policy to be pursued during that period for the purpose of attaining a given objective.”
Hary L. Wlise, “Budgets are finished products – they are formal programmes of future operations and expected results. Budgets result from forward thinking and planning.”
G.R. Terry, “A budget is a plan for income or outgo or both, of money, personnel, purchased items, sales items, or any other entity about which the manager believes that determining the future course of action will assist in the managerial efforts.”
Professor Landers, “The essence of a budget is a detailed plan of operations for some specified future period followed by a system of records which will serve as a check upon the plan.”
Brown and Howard, “A budget is a pre-determined statement of management policy during a given period which provides a standard for comparison with the results annually achieved.”
Wneldon, “A budget is thus a standard with which to measure the actual achievements of people, departments, etc.”
Knootz and O’Donnel, “Budgeting is the foundation of plans for a given future period in numerical terms. As such, budgets are statements of anticipated results, in financial terms as in budgets – as in revenue and expenses and capital budgets or in non-financial terms of direct labour hours, materials, physical sales volume, or units of production.”
Bartizal, “A budget is a forecast in detail, of the results of an officially recognised programme of operations based on the highest reasonable expectation of operating efficiency.”
Prof. Saunders, “The essence of budget is a detailed plan of operations for some specific future period, followed by a system of records which will serve as a check upon plan.”
Clearance L.Von Sickle, “The budget is an estimate prepared in advance of the period to which it applies.”
Budgetary Control
Budgetary control is a tool used by the management to obtain the objectives expressed as in the form of budget. The actual results are compared with the budgeted figures. If there cause of are any deviation, they can be remedied by either adjusting or correcting difference.
Budget is concerned with policy making whereas budgetary control results from the implementation of such a policy. Budgetary control is a continuous process but budget is an end process. The preparation of budget is finished within a stipulated time. Budgetary control starts only after preparing the budget.
Definition of Budgetary
G.R. Terry, “Budgetary controlling is a process of finding out what is being done and comparing these results with the corresponding budget data in order to approve accomplishment or to remedy differences by either adjusting the budget estimates or correcting the cause of the difference.”
J. Betty, “Budgetary control is a system which uses budgets as a means of planning and controlling all aspects of producing and/ or selling commodities or services.”
R.C. Davis, “Budgetary control is an important means of establishing accountability for a satisfactory discharge of this responsibility for expenses. Budgetary control depends on budgetary planning.”
Institute of Cost and Management Accountant, London, “Budgetary control is the establishment of budget relating to the responsibilities of executives to the requirements of a policy and the continuous comparison of actual with budgeted results, either to secure by individual action the objective of that policy or to provide a basis for its revision.”
Gien A. Welsch, “Budgetary control involves the use of budgets and budgetary reports throughout the period to co-ordinate, evaluate and control day-to-day operations in accordance with the goals specified by the budget.”
Brown and Howard, “Budgetary control is a system of controlling costs which includes the preparation of budgets co-ordinating the departments and establishing responsibility, comparing actual performance with budgeted and acting upon results to achieve maximum profitability.”
Marry Cushing Niles, “Budgetary control is an important tool of management. It is, in fact, a tool in the hands of planning which reaches through co-ordination into control and ties the three aspects firmly together. It stimulates thinking in advance by requiring specific planning and the anticipation of operating problems.”
Walter W. Bigg, “The term budgetary control is applied to a system of management and accounting control by which all operations and output are forecast as far ahead as possible and the actual results when known are compared with the budget estimates.”
Objectives of Budgetary Control
Budgetary control is a tool of management. It’s very purpose is the estimation of the development of organisation activities and watching whether the present performance confirms to the budgeted figures. If there are any deviations, the causes will be identified and corrective action recommended.
The corrective actions are taken not only to rectify the present deviations but also to avoid the occurrence of such deviations in future. The main objectives are discussed below:
1. Fixation of the income and expenditure department-wise.
2. Defining the goals or objectives of the organisation for a stipulated period.
3. Helping the decentralisation work. Sometimes, budgets are prepared departmentwise.
4. It establishes a measure of performance for each division or section of the organisation.
5. Co-ordination of the work of various departments or sections of the organisation.
6. Assisting in terms of data, the top management for policy determination.
7. Forecasting the financial position of the company.
8. Eliminate departmental accumulation of cost and performance data for control purposes.
9. Increasing the efficiency of the employees and minimising the expenses at every level of the organisation.
10. Determining the capital expenditure of the company.
11. Helping the preparation of fund flow and cash flow statements.
12. Indicating the area where action is necessary to take corrective action.
13. Checking the over-capitalisation or under-capitalisation of the company departmentwise or section-wise.
14. Centralising the management control. Budgets are prepared department-wise but control vests with the top manage-ment.
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Characteristics of Budgetary Control
The various characteristics of Budgetary control are explained below:
1. The activities of the organisation are presented department-wise or section-wise.
2. Budgets give the extent of expenditure through which cost control is achieved. 3. The co-ordination of various departmental activities helps to prepare the master budget.
4. The future is planned on the basis of past experience.
5. Recording the present performance for comparing purposes with the predetermined standards.
6. Clear-cut and specific requirements of the organisation are expressed in quantitative terms.
7. Determines the deviations by comparisons and identifies the causes of such deviations.
8. Recommends and implements the corrective actions whenever necessary.
Advantages of Budgetary Control
The activities of the organisation are pre-planned in monetary terms as the preparation of budget. The actual achievements are compared with pre-planning. Budgetary control helps the management to achieve the pre-plan. Some of the advantages of Budgetary control are discussed below:
1. Tool for planning the activities: Budgets are prepared department-wise or section-wise, following which the department managers will know their activities. Thus, each a plan of its future course of action.
2. Thinking in advance: A budget is prepared, normally, for a year in advance. The top management people could develop forward looking strategies and thinking with the help of budgets. They, think in advance as to how to market the product, how to solve production difficulties and the like.
3. Co-ordination of efforts: Policies and objectives provide a basis for the preparation of a budget. Each department personnel are well aware of the link of the policy with the budget. Then, the top management may easily co-ordinate the efforts of various departments.
4. Control of expenditure: The expenditure of various departments are clearly fixed in the budget. So unnecessary expenditures are avoided.
5. Solving financial difficulties: The budget forecasts the probable cash receipts and expenses. Temporary financial accommodation is arranged with the financial institutions or with banks. In this way, financial difficulties of the enterprises are solved.
6. Delegation of authority and responsibility: There is an automatic sanction of work whenever the budget is prepared. There is no need of getting permission from the top management for the second time. Delegation of authority and responsibilities become easier.
7. Better utilisation of resources: The term resources includes money and raw materials. Adequate amount is allocated to buy the raw materials, make salary payment, purchase fixed assets and the like. Economic order quantity principle is followed in buying the raw materials. Proper control is exercised over the usage of raw materials in the production place.
8. Promotion of efficiency: Production per hour, production per day and production per man are fixed with the Budgetary control technique. It encourages the employees to increase their efficiency.
According to Mr. Blocker, “Budgetary control is planned to assist management in the allocation of responsibility and authority, to aid in making estimates and plans for the future, to assist in the analysis of the variations between estimated and actual results and to develop bases of measurement of standards with which to evaluate the efficiency of operations.”
9. Achievement of goals: Under budgetary control system, each person can know what he is expected to do. This offers an opportunity to the management to achieve the goals or objectives.
10. Criteria of self-examination: Budgetary control system points out the deviations and causes of such deviations. These are very well known to the employees. In this way, Budgetary control acts as a criteria of self-examination.
11. Promoters balanced activities: A department activity is correlated with another department activity. One department’s results are the basis of other department’s functioning. Balanced activities of different departments are possible under the budgetary control system.
For example, production department’s activities are based on those of sales department. Likewise, the purchase department’s activities are based on those of production department.
12. Budgetary control system discovers the areas of operation where improvements can be suggested.
13. Ensures proper communication: Management’s policy and the objectives of preparing the budgets are communicated to all the managers. Again, the managers are requested to send the report of actual performance against budget. The managers are informed of the type action to be taken to correct deviations. Thus, budgetary control ensures proper communication.
14. Fixation of responsibility: Responsibility of deviations can be fixed easily. Sales budget fixes the responsibility of sales department. Likewise, the production budget fixes the responsibility of the production department.
15. Encourages exchange of information: Functional budgets are prepared by the enterprise normally. It requires the free flow of information from one department to another department. Purchase budget cannot be prepared unless production figures are available.
DISADVANTAGES, LIMITATIONS OR PROBLEMS OF BUDGETARY CONTROL
Budgetary control facilitates planning, controlling and co-ordination. Yet it has some limitations, and they are given below:
1. Inaccuracy: Budget figures are expressed in monetary terms. So, a budget is based on the price level at a particular point of time, and inflation or deflation leads to inaccuracy of budget. Besides, future is uncertain. The standards are fixed on the basis of past experience. So, the budget may go wrong.
2. Personal bias: The preparation of budget is subject to imperfection in human judgement and shortcomings.
3. Non-availability of co-operation: Inefficient employees hesitate to extend their co-operation to implement budgetary control. The reason is that the deviations occur on account of inefficient employees.
4. Rigidity: An enterprise is running on certain conditions and circumstances. These conditions and circumstances are static at a certain time and flexible at another time. Under such situations, budgetary control cannot be implemented effectively. It means that, it is very difficult to attain flexibility in budget preparation.
5. Results are not attainable: Adequate information is necessary to prepare and implement the budget. At the same time, the available data should be properly interpreted and evaluated. The budgeted results may not be attainable because of defective analysis of data.
6. Consistency: The budgets are not prepared afresh every year. The new budgets are prepared by adjusting figures in the previous budget. It may happen that an important event of the past would not be considered important for future budget.
7. Time consuming process: Initially, management constitutes a budget committee and prepares the budget manual. The budget committee receives the data from all the employees of the organisation and consults all the departmental heads. Then the committee prepares the budget. It requires much time.
8. Ineffective budgetary control: Proper arrangements should be made for adequate supervision and administration. These are not possible at all times. In such circumstances, budgetary control will be an ineffective one.
9. Discourage the initiative: The departmental heads are discouraged from doing extra activities for which a provision has not been made in the budget. It automatically minimises the initiative of the employees of the organisation.
10. More paperwork: The implementation of budgetary control involves more paperwork. The paperwork includes receiving information from the employees, preparation of budget manual, setting up of standards, the actual preparation of budget, recording of actual performance and taking corrective actions, if any. So, maximum managerial work suffers because of much paperwork.
Inspite of the above mentioned limitations and problems, budgetary control is the best tool of management for planning and controlling and so, the management should take necessary steps to make the budgetary control system more effective.
Essentials of Effective Budgeting System
A sound budgetary control system is necessary for effective managerial control. The essentials of effective budgeting system are discussed below:
1. Efficient organisation: The effective organisation depends upon the proper fixation of responsibility and clearly defined authority. An efficient organisation alone can adopt effective budgeting systems.
2. Preparing master budget: Normally, the budgets are prepared department-wise or section-wise. These budgets should be assembled and integrated in the form of master budgets.
3. Quick reporting: The actual performance reports should be prepared by the subordinates and sent to the top management without any delay. It will help the top management executives to analyse the report and take necessary action immediately.
4. Flexible: The budgets should be flexible as far as possible. The reason is that future is uncertain and the budgets regulate the future course of action. Sometimes, the management may prepare a flexible budget which has flexibility to some extent.
5. Support of top management: The adoption of budgetary control system should be supported by the top management. If it does not do so, there will be no seriousness on the part of subordinates. It will weaken managerial control.
6. Based on reasonable assumptions: Budgets forecast the sales, production, purchase, profit, expenditure and the like. On the basis of some of the assumptions, these are forecast. So, the assumptions should be reasonable and reliable ones.
7. Reward and punishment: The employees whose performances are according to the budget plans are rewarded. At the same time, the situation can be totally different.
8. Appropriate authority: Appropriate authority should be given to those employees who are responsible to implement the budgetary control system. These employees will not be able to fulfil their responsibilities if there is a lack of appropriate authority and they will not be in a position to take strong decisions.
Types of Budget
Budgets may be classified on the basis of the purpose for which they are prepared. Some of the budgets which are classified on the basis of purpose are described below:
1. Master budget: Master budget has detailed planning of the entire business in one budget. Most of the business organisations involve themselves in the preparation of the master budget. Master budget shows how each department budget promotes the business as a whole. Other budgets are subsidiary budgets of master budget.
2. Sales budget: Sales budget is the first of the subsidiary budgets. Without preparing the sales budget, no budget can be prepared by the business organisation. Sales budget is prepared on the basis of data available from market research. Population trends, consumer’s taste, consumers’ purchasing power, competitors trend and production capacity are considered while preparing the sales budget.
Sales budget may be prepared area-wise or product-wise. If the company sells more than one product, the sales budget will be prepared product-wise and area-wise. If it is not so, sales budget will be prepared only area-wise.
3. Cash budget: Cash budget discloses the probable cash receipts and cash payments for a specific period. Cash budget helps the management to arrange the finance accomodation from financial institutions and/or commerical banks if need arises. In this way, it avoids the lack of finance.
In other words, the amount is received from the concerned party at the appropriate time. It minimises the bad debts. It is otherwise called financial budget and revenue and expenses budget.
4. Production budget: Production budget is prepared on the basis of sales budget. In addition to that, the company considers the production capacity, number of skilled employees available, availability of power and space and warehouse facility while preparing the production budget. A great degree of co-ordination is required in the sales programmes and production budget.
Production budget helps to produce the goods of a desired quality at minimum cost. Production budget shows the production in quantitative terms. In simple words, the production budget aims at maximising the utilisation of available resources.
5. Physical property budget: The term physical property includes building, machinery, furniture and fitting, plant and inventories and equipments. These have permanent investment. This budget indicates the amount required to replace the existing physical property and to make additions during the budget period.
Sometimes, this additional amount is raised without paying any dividends as ploughing back or sale of additional stock or bonds. These budgets are usually tied with long-range planning. It is otherwise called capital expenditure budget.
6. Time and material budget: Most of the budgets are expressed in monetary terms and few in quantitative or physical terms. In the next stage, the physical terms are converted into monetary terms. Here, the budget figures are expressed as direct labour hours, machine hours or units or material required to produce a product.
7. Selling and distribution cost budget: This budget includes the selling and distribution cost such as packaging expenses, storage, insurance, transportation, advertisement expenses, sales commission, marketing research expenses and the like. Selling and distribution cost budget is prepared by the sales department manager. It helps the management to control the costs of selling and distribution.
8. Balance sheet budget: Balance sheet budget is prepared to utilise the working capital. Working capital is nothing but the excess of current assets over current liabilities. This budget indicates how the current assets can be utilised to pay-off the current liabilities.
9. Supplies budget: The term ‘supplies’ does not represent the raw materials. Raw materials are formed as part of the finished product. But, the supplies do not form a part of the finished product but are consumed in manufacturing operations. These are of small value, but these are necessary in production process. So, the management should prepare a separate budget for supplies and ensure continuous supplies.
10. Production cost budget: Production budget provides a basis for preparing the production cost budget. Production cost budget indicates the expenses to be incurred in the production process during budget period. Production cost budget may be sub-divided into raw materials budget, production overhead budget, etc.
11. Production overhead budget: Production overhead budget lays down all the production overheads to be incurred in production during the budget period. The overheads may be sub-divided into fixed overheads, variable overheads and semi-fixed or semi-variable overheads.
12. Research and development budget: This type of budget is prepared by the large organisations. Research is carried on to invent new products or to improve the existing products. It is necessary to survive in the market. Marketing risk may be reduced to some extent with the help of research. Research and development expenditure is in the nature of insurance.
Budgets may be classified on the basis of nature also. They are discussed below:
1. Fixed budget: The budget figures remain unchanged irrespective of the level of activity. The level of activity is unknown obviously. The actual performance is more deviated from the standard.
2. Flexible budgets: A budget is prepared at various levels of activity in columnar form. The expenses are divided into three categories such as fixed, variables, or semi-fixed or semi-variable. This type of budget very useful to the management in taking corrective actions if there are any deviations.
PREPARATION OF A BUDGET
There are some steps involved in the preparation of budget. These steps are outlined below:
1. Sound forecasting: Every budget is prepared on the basis of forecast. Top executives of management must judge the future market and take decisions regarding financial requirement, purchase of machinery and inventories, advertising expenses and selling expenses in the light of their analysis. Then, they may use the statistical data with their assumptions. However, sound forecasting is necessary for a reliable budget.
2. Developed accounting system: Costing information is necessary for effective budget preparation. These costs are properly recorded in the well-developed accounting system. Only developed accounting system alone supplies the adequate and desired information to the top management executives. They can convert this information into reality as a budget.
3. Fixation of responsibility centres: The attainment of budget objectives lies with the departmental heads. So, there is no need for raising questions regarding the man who is responsible to fix the amount of expenditure and produce definite results. Adequate authority should be assigned to those who are responsible to complete the task assigned.
4. Formation of budget committee: The preparation of a budget is a group effort. An accountant will be enough to prepare the budgets in a small organisation, if he has close contact with the general manager and departmental heads. This is not possible in bigger organisations.
A budget committee is formed in bigger organisations. The budget committee consists of all the departmental heads and is headed by an experienced officer who may be designated as Budget Officer.
The budget committee will receive all the information from the various departments whose services are used in the preparation of the budgets. The budget committee has full responsibility to prepare all the departmental budgets. Periodical reports are collected by the budget committee.
The budget committee has to compare the actual performance with budgeted figures. If there is any deviation, the budget officer may consider revisions of budget to meet the changed business conditions.
5. Clear definition of business policies: The top management must clearly define the business policies and communicate them to the departmental heads. If it does not do so, the hard work of departmental heads will be a waste and the budget figures cannot be achieved. So, it is the duty of the top management to circulate the business policies to the heads before preparing the budgets.
6. Statistical information: Necessary information regarding each department must be available in the form of figures. Production budget is prepared with the help of sales budget. Purchase budget is prepared with the help of production budget. These budgeted figures are recorded in the accounting records with more details for sales and profit control.
7. Support of top management: The preparation of budgets require the support of the top management. There should be cordial relationship between the top management and various departmental heads.
8. Budget period: The period to be covered in the budget depends upon the type of business. Normally, the budget is prepared for one year. But, anyhow, the length of the budget period covers the seasonal fluctuations of business, production operations and financial implications. One year budget may be broken down into half-yearly, quarterly and monthly. These facilitate control. The budget must be prepared before the commencement of the year.
Budgets are prepared by all the business units. The objectives of business organisation are presented in quantitative terms as a budget. Then, the objectives are easily achieved. Besides, budget facilitates the control process.
Business ethics is concerned with how a businessman conducts himself when doing business. Businessmen and company units are having issues as a result of unethical conduct. The ethics a businessman practises determines the longevity and expansion of a company unit.
Business ethics are formed through time and by tradition. From one kind of company to another, a custom varies. A tradition will turn into an ethic if it is followed and embraced by businesspeople and the general public.
Company ethics are not only relevant to one form of business, but to all types of businesses. Business ethics must be followed in order for businesses to fulfil their societal responsibilities. While assuming social duty, a businessperson should not disregard business ethics.
Meaning of Ethics
The term “ethics” comes from the Greek word “ethos,” which means “character.” Ethics in literature refers to a system of values or morals. A work’s performance develops an ethic as a consequence of adopting morals.
Definition of Ethics
According to P.W. Wright, “Ethics is that area of philosophy which is the systematic study of reflective decision, of the moral principles by which it is to be judged, and of the ends it may eventually be directed.”
Ethics is “the discipline dealing with that which is good and wrong as well as with moral responsibility and obligation,” according to Webster.
Hurley clarifies,”as a set of moral rules known as ethics.”
Meaning of Business Ethics
Business ethics refers to a businessperson’s behaviour while running a firm and upholding morals throughout.
Businessmen’s actions have a greater influence within the company than they do outside. Therefore, even if he may feel that the laws are unfair or immoral, he should nonetheless observe them. Instead of breaking the law, a businessman who believes that the laws’ provisions are unfair might take action to amend the laws.
A businessman should uphold moral principles both in his professional and personal life. In order to avoid punishment, such morality is not essential to be observed. He should follow moral principles motivated by his personal concern for his company and society at large.
The separation between a businessman and his company does not exist. There is no distinct corporate ethics, in Drucker’s view, and everyone in society should adhere to certain moral principles.
No one has a unified definition of what business ethics are? Distinguished writers each describe business ethics differently. The following list includes some key definitions of business ethics:
According to Wheeler, “business ethics is an art and science for sustaining, harmonious interaction with society, its many groups, and institutions as well as reorganising the moral responsibility for the rightness or wrongness of company activity.””
Company ethics, according to T.M. Garret, “is principally concerned with the link of business aims and practises to particularly human purposes.” A collection of moral guidelines and principles that serve to safeguard the interests of clients, staff members, society, individual company units, and the sector as a whole may be referred to as business ethics.
Need for Business Ethics
A businessman’s lifestyle is impacted by the growth of his company. A businessman’s lifestyle and behaviour are closely related. Consequently, adhering to corporate ethics is essential for the following reasons:
1) The ability of the business unit to survive: Businessmen should take this into account. The termination of a company unit will result from unethical business activities. The loss of a business unit not only affects the corporation, but also the workers and society at large. Typically, poor behaviour is penalised and good behaviour is rewarded.
A company seeks to maximise profits since it is an economic entity. Businessmen do not prioritise profit maximisation above maintaining a company unit. Some elements, like as leadership abilities, honesty, expertise, skills, influence, and the use of power, have an impact on how a businessman behaves. Businessmen are obliged to take every precaution to preserve their assets.
2) Business unit development: Ensuring business growth is the second benefit of adhering to business ethics. The specific company unit will undoubtedly flourish when a businessman upholds ethics severely. A company could not be operated in a way that is harmful to society’s or the business’s own interests. Therefore, it is said that business ethics are necessary for a company to flourish.
3) Building goodwill: Profit is always the main goal of every firm. However, no company is permitted to make a profit without upholding ethical standards. A company unit naturally gains a positive reputation in the eyes of the public if business ethics are correctly maintained by that firm.
4) Increasing confidence: In order to increase the confidence of clients, staff members, and others, business ethics are required. The name or good customer services of the specific business unit will become more well-known if trust is instilled in them (customers and staff). For instance, by praising its virtues and criticising its shortcomings.
5) Maintaining Inter-Relationship: Upholding No firm operates alone or independently; instead, everything is interrelated. Despite the fact that the other business’s nature and size are different, each one has tight ties to the other. The saying “No tree can be regarded as a forest, as the saying goes. Each business unit should get along well with the others, it is anticipated. Adopting corporate ethics preserves the interdependence of business.
6) Resolving social issues: If a businessperson conducts himself ethically, the public will not have any trouble getting what they want. Between the merchant and the general public, there is no haggling. He treats his staff with fairness. Social issues like strikes, lockouts, etc. will be avoided as a result.
Principles of Business Ethics
Some of the fundamental rules of business ethics are listed here. Here is a quick explanation of them:
Despite the fact that the primary goal of every organisation is to make money, the service motivation should come first.
No group of individuals, such as the wealthy, the poor, the high and the low, the caste, the religion, etc., is discriminated against.
Customers should be able to fully satisfy their needs.
Environmental protection is taken into account.
When providing service, human sentiments are appropriately taken into account.
No resources, which are precious and limited, are wasted or misused.
A business must be effective and dynamic.
Companies should provide high-quality goods at fair prices.
The level of life must be maintained or elevated through business.
Healthy competition is necessary.
Employees don’t worry about their job security. In other words, workers should have a secure employment.
Businessmen should be honest while paying appropriate compensation.
The environment or working circumstances should be improved.
Effective workers get the necessary motivation and praise.
Employee involvement in management is encouraged.
Employees must be allowed to choose between monetary and non-monetary incentives.
Businessmen are required to pay taxes on time and fulfil other duties on time.
Business units must refrain from unethical marketing techniques such as hoarding.
No cartel agreements should be created to restrict production, prices, etc.
Businessmen must provide all pertinent information to those in need.
Businessmen are obligated to create authentic books of accounts and deliver them to all authorised parties when requested to do so.
He shall defend their members’ interests during mergers, acquisitions, and other similar events.
He should be prepared to provide assistance and cooperation to others.
Business need to participate in the growth of the country.
He need to adhere to appropriate communication protocols at all levels.
He shouldn’t make unfulfillable promises.
Neither the business’s owner nor any of its workers should use company property for private purposes.
Free expression is permitted in the workplace.
Business units should adhere to suitable personnel policies on transfers, promotions, and other matters.
Businessmen should avoid becoming involved in politics.
Regulations of Business Ethics
A businessman adheres to business ethics because of the repercussions of their noncompliance. A few of the rules are briefly mentioned here:
1)Legal requirements: Enforcing legal requirements is one technique to force businesspeople to uphold ethical standards. Enforcing the laws serves to safeguard the public’s interests, including those of corporations and businesspeople. Among the legislative measures are the Company’s Act, Consumer Protection Act, M.R.T.P. Act, and others.
2) Business unit’s reputation: In general, businesspeople must put in a lot of effort to establish a reputation for upholding ethical standards. To retain the gained goodwill, the same procedure is then used.
3) A businessman’s social standing: A businessman believes that he is recognised by the community where he does business. It is always moral for a businessperson to maintain their social standing. He therefore wants to maintain his social position while abstaining from unfair or unethical commercial practises.
4) Trade unions: India is home to several active unions. There are two types of trade unions: registered and unregistered. If business ethics are not properly upheld in this case, the trade union will be penalised. A trade union serves as a watchdog to guarantee that company ethics are upheld.
5) Business association: An outside organisation like the business association advises businesses on how to uphold business ethics and explains why they should. If a company unit violates ethics, the business association may exclude the offending business unit.
6) Consumer movement: To preserve consumer interests, the consumer movement has greatly evolved in recent years. In actuality, business ethics is concerned with morality in the workplace. However, consumer movements actively contribute to the acceptance of corporate ethics.
For instance, the consumer movement demands the business unit maintain the quality as described by it if a product bought does not meet the standards as provided and files a claim for damages or takes action to replace the goods for the customer.
Factors affecting Business Ethics
Business ethics demonstrate its accountability, power, and dignity. As a result, the business organisation seeks to conduct its operations in a way that protects both the interests of society and the firm itself. It does this by taking ownership, exerting power, and upholding its dignity. However, there are various elements that influence the observance or application of corporate ethics. Below is a quick explanation of them:
Unhealthy competition: To gain an advantage over other businesses, businesspeople engage in unethical business tactics. Long-term, this will harm company. Gentlemen businessmen do not like unhealthy rivalry.
Unusual profit motive: Making money is the main driver behind launching a firm. In the beginning of a company, just a little quantity of profit is made. The businessman, though, hopes to increase revenues by cutting down on operating costs.
Political meddling: Political organisations contact businesspeople to solicit donations. Currently, the businessman is not prepared to reject it since doing so would interfere with operations. From a corporate perspective, the gift made to a political party is seen as an unnecessary cost. This will have an impact on revenue and efficient operations.
Political unpredictability: Government policies have an impact on corporate ethics to some degree. There is a good possibility that the government’s policies will shift if many governments hold power for brief periods. Only a stable government cannot change a company’s ethical standards.
Unfair legislation: Only after much debate is a law enacted. However, the participant in the debate has no prior business experience and is unaware of the realities of everyday life. Thus, an action that is morally correct may not be legally correct.
Corruption: The government regulates business via its representatives. The government agencies employ honest and competent employees. The businesspeople, however, do not enjoy certain government officials’ methods or behaviours.
A lack of an ethical mindset: A businessman seeks to differentiate himself from other businesspeople. Despite his thorough understanding of corporate ethics, he nonetheless prefers not to put them into effect.
Lack of education: In this context, education refers to the mastery of moral principles. A businessman wishes to adhere to business ethics scrupulously, but he is unsure of the business ethics that apply to his industry.
Lack of cooperation on the part of employees: Employees don’t care about business ethics. They just want to do their task as soon as they can in exchange for payment. Non-adoption of business ethics has an impact on the company, not the workers or employees.
Red tape: Red tape influences corporate ethics in addition to being present. Government approval is required in advance for every action a business unit takes at every level of growth. Red tape is observed to be most prevalent in the taxation policy and the issuance of permits.
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Benefits of Business Ethics
A firm may operate in accordance with certain accepted business ethics. If, then the impacted groups may profit from the following advantages. The advantages of business ethics are grouped as follows:
Clients / Customers
Get high-quality products.
Make a fair purchase.
Getting products is not tough.
No preference based on pricing.
No change in pricing.
Personnel / Employees
Just pay.
Improved working conditions and surroundings.
Spotting human emotions.
Reward effectiveness.
Job stability
Involvement in management.
Adequate personnel policies.
Business / Industry
Healthy rivalry.
Improved coordination and cooperation.
Consistent growth.
Industry
Adequate Profit.
Rapid expansion
Quick business diversification
Lower employee turnover.
5. Society
More efficient use of resources.
Raising living standards.
No issue with pollution.
6. Government
Timely tax collection.
development of the country.
Simple application of laws.
Business Ethics in India
The majority of businesspeople in India adhere to high ethical standards. They are aware of their obligations to different societal groups. However, they have trouble putting corporate ethics into practise. The business environment changes constantly, which is the cause. At whatever cost, businessmen are prepared to adapt to changing business principles by offering
Many businesses want to use shortcuts to generate big profits. Focus costs are included into the books of accounts in order to reflect less profit and avoid paying taxes. In order to reduce taxes, products are then invoiced at a reduced rate.
Only after raising the actual selling price is a reduction in price proclaimed. Different categories of individuals, such as recognised and unknown, educated and illiterate, wealthy and poor, men and women, and the like, are subject to price discrimination.
Entrepreneurs are unwilling to pay even the minimal wage. Businessmen do not take their workers’ health into account and are unwilling to cover necessary medical costs. In certain circumstances, businessmen’s medical costs are taken out of their pay.
Businessmen get employee acknowledgment for a bigger sum than they have really paid. Without the enthusiastic support of businesspeople, no one will be able to regulate this kind of activity. Only businesspeople are capable of observing business ethics.
The current problem in the decision-making process is solved using the operational research (OR) approach. In this circumstance, which is also known as a management system decision-making situation, all variables are quantified with the intention of the phrase “quantification of variables” refers to the conversion of the given data into units such as dollars, kilogrammes, litres, hours, days, and months.
When doing operation research (OR), the firm, organisation, or management as a whole is taken into account rather than a single person, department, auction, division, or branch. Often was created in the early stages of World War II. OR attempts to identify and address an issue in order to find the optimum solution by analysing the potential effects of several solutions.
Meaning
Operation research is a strategy that is used to handle a variety of economic, management, industrial, and military challenges with the best possible resource utilisation. This makes disagreements unnecessary. All parties are unquestioningly accepting Olt’s solution. Before choosing a solution, the management’s overall interests are taken into account.
Definition
Operations research, according to the American Encyclopedia of Management, is “the quantitative study of an organisation in motion carried out to uncover ways in which its functions might be enhanced.”
Activities research is a scientific approach for giving executive departments a quantitative foundation for choices relating to the operations under supervision, according to Morse and Kiball.
“Operations research is the application of specialised methodologies, tools and techniques to operations of system with optimal solution to the issues,” claim C.W. Churchman, R.L. Acroff, and E.L. Amoff.
According to definitions of operation research, the problem’s nature is defined numerically, and the relationships between its components are examined in order to make decisions based on the results of the study. When an ideal solution is needed, operation research is used.
In order to maximise profit, it was basically designed to identify methods to allocate limited resources—men, money, and material—to different production processes and to the activities inside each operation in an efficient manner.
Characteristics of Operational Research
The following is a discussion of the fundamental elements of operation research:
Quantitative presentation of the issue.
Recognition of the problem’s components
Determining the existing connections between the different aspects of the issue.
Models are valued in operation research. Model is the depiction of a problem’s events, processes, or systems.
The model is used to determine the solution.
The identification of obstacles to the suggested solution.
Evaluating the suggested remedy to ascertain its degree of success in accomplishing objectives.
Techniques from operation research are used to everyday, strategically oriented tasks. Routine issues are those that repeat themselves. Production issues, inventory issues, machine repairs, labour issues, and other issues like amenities are some of them.
Operation research was first created to simplify difficult decision-making. Growing firm size, competition, legislation, consumerism, etc. all add to the complexity of business decisions. How to optimise company operations for the best outcomes is the fundamental issue that the majority of managements face in a complicated circumstance.
Today’s quickly evolving internet environment presents company managers with the challenge of maximising profit with limited resources. In this case, operation research aids the company management in streamlining operations.
The full operation research approach may be used to plan production and address issues with labour, materials control, finances, distribution channels, marketing, and other issues.
The strategies allow for the optimal allocation of resources. A large size business unit has significant challenges with resource allocation since each division tends to operate independently and may need more resources.
Market opportunities at the national and worldwide level may be quickly decided upon with the use of operational research methodologies.
A manager may use approaches from operation research to measure various factors.
Different fields, including arithmetic, statistics, computers, economics, engineering, management, and others are covered by operation research methodologies. This kind of combination makes it easier to analyse the issue more thoroughly and choose an accurate solution.
In order to succeed, the best or optimal answer is required in every area of life. Due to the competitive climate, concrete and the finest answer are very crucial in the corporate world.
Operational Research Techniques
Finding the best answer requires the development of operation research techniques. The following describes a few of the methods.
WAITING LINE THEORY OR QUEUEING THEORY
This idea may be used to solve the problem of waiting lines. Thus, the waiting line hypothesis is the term given to it. People encounter waiting lines at bus stops, train stations, banks, parks, beaches, movie theatres, hospitals, grocery stores, and other locations daily in our fast-paced world. Customers leave these centres when services are delayed.
The queing models aid managers in making informed decisions. Here, the extra expense associated with cutting down on or doing away with waiting time is considered. Before making a choice, two variables are taken into account. The first and second factors are the cost of extra costs and the cost of idle capacity, respectively. When a facility is built at significant expense to minimise or eliminate waiting, idle capacity is revealed. A facility built on a tight budget makes users pay a hefty price for waiting.
A facility built at a high cost also has a high idle capacity cost. Types of costs must be at their lowest possible level. The following factors are taken into account while building a facility:
The frequency of consumer arrivals.
The likelihood of having to wait
Duty time.
The price of losing a client.
The quantity of amenities offered.
The First Come, First Served principle of service.
Emergency cases are given priority at the hospital.
The quewing hypothesis aids management in making decisions on the supply of the best facilities.
LINEAR PROGRAMMING
To maximise profit or reduce loss, linear programming is utilised. When a number of factors impact how well an organisation achieves its goals, this strategy is used. The challenge here is determining the ideal set of values for these variables.
The goals and each of the variables are interconnected in some way. Relationships are by their very nature linear. It implies that a little adjustment in any one of the variables might affect how goals are attained.
An organization’s limited resources may be used efficiently by using the linear programming method. Money, materials, machine hours, and other resources of this kind may be limited. The resource is discovered in the greatest amount possible at any given moment.
Any resource’s amount cannot be grown to its maximum right away, although it could be feasible in the long term. According to linear programming, the management must make a choice on how those few resources should be wisely distributed and used.
“Linear Programming is a strategy for describing how to utilise restricted resources or capabilities of a corporation to attain given target, such as least time when such resources have alternative uses,” claim Ferguson and Sargent.
Thus, under certain constraints, linear programming is the maximisation of profits or minimization of losses. In addition, linear programming provides management with a wealth of data to aid in decision-making on the resources it is in charge of.
Characteristics / Features of Linear Programming
There are certain traits or aspects of linear programming. These are briefly spoken about.
below.
Objective function: Linear programming may be used to help an organisation accomplish its goals. Therefore, it qualifies as an objective function.
Quantifiable: Resources are described by their numerical value. For instance, the number of labour hours used to describe human resources and the number of units used to measure production capacity are two examples. The goals of an organisation may also be stated numerically, as profit expressed in rupees.
Restrictions: The decision-making process is subject to a variety of limitations. There may be limitations on the supply of labour, raw materials, and other resources.
Consistency: All choices have a consistent result.
Positivity: Linear programming can identify an organization’s positive attributes. There is no chance of anything bad happening. The accomplishment of an organization’s goals is the result of favourable variables.
Optimal resource use: Limited resources are allocated and used effectively. There won’t be any waste.
Direct connection, often known as a linear relationship: The connection between two or more variables is linear. In other words, the product will be produced in the same proportion with a specific amount of new inputs.
Choosing the best path of action: Instead of just choosing one course of action, the decision-maker has a choice of realistic courses of action. The decision maker must choose the best course of action from among various options.
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Suitability of Linear Programming
The following fields have shown success using linear programming approaches.
Appropriate use of available limited resources: By appropriately allocating resources, it is possible to enhance overall production while making a profit. It entails choosing how to distribute scarce resources. The use of linear programming aids management in making wise choices.
Best combination selection: The finest combination may be chosen to get the best outcomes for the least amount of money. Combination may occur in the areas of labour force (skilled, unskilled, or semi-skilled), sales or manufacturing, etc.
Product distribution: A certain product may be sold everywhere in the globe. Long distance markets have significant transportation costs, which reduces profit. When compared to distant markets, local markets are more profitable. The issue with the product distribution may be resolved at this point.
Make or buy decisions: This is a dilemma that large organisations often face, namely whether to manufacture a product internally or to purchase it outside. Here, linear programming methods may be used to choose which goods should be manufactured, which ones should be bought, and so on.
Limitations of Linear Programming
Despite its drawbacks, linear programming is a very effective method for handling unusual issues. The restrictions are listed below.
The premise of linear programming is that two variables are directly related to one another. However, in reality, there is no such connection, particularly when it comes to commercial and industrial issues.
The effects of time and uncertainty are not taken into account by linear programming. Most commercial or industrial issues are not ongoing. The outcomes or effects of any solution, however, are not certain.
The only goal of linear programming is to increase production or profit. In actuality, the industrial or corporate challenge has several goals. It indicates that management takes into account factors such as labour force, manufacturing capacity, and others in addition to only profit growth. Multi-objective issues cannot be handled by the linear programming approach. So, in the modern, rapidly evolving internet environment, linear programming is not applicable.
Game Theory
Game Theory was created by Oskar Morgenstern and John Van Neumann. Game theory aims to predict logically how individuals will act in conflictual circumstances. The behaviour of others is influenced by an individual’s conduct. An entrepreneur in business seeks to gauge the responses of rivals by providing a special discount or gift for large purchases, promoting the current product with a fresh look, and other similar tactics.
The same businessperson also wants to know how customers will respond when a new product, advertisement, or similar change is made. Game theory aids management in creating new winning methods in this circumstance.
In competitive scenarios, success requires a logical plan of action. In addition, the overall result of each action depends on both the individual action and the acts of others. The other members are dealing with a similar issue.
A disagreement between two or more people is referred to as a “game.” A set of rules frames a game. The set of rules precisely outlined what each participant should do and should not do in a variety of situations. Each player has a number of options about how their other players will move. Finally, one player must triumph, while the other players must lose.
Finding the best winning strategy for a certain competitive circumstance is the basis of every game. Each player has to understand that his opponent, or fellow player, has comparable goals. The explanation is that winning is everyone’s only goal in the game.
Features / Characteristics of Game Theory
If a competitive scenario has some of the following elements or characteristics, it may be referred to as a game.
Reasonable behaviour is required of every participant.
The participants’ interests are in conflict. In this case, the conflict of interest is the outcome, or winning.
Each participant acts rationally.
There is a single victor.
In a competitive setting, every action is made to maximise profits and minimise losses.
A player’s strategy influences the tactics used by other players.
There are several ways for each player to win.
A game’s regulations provide restrictions on the tactics that each participant may use.
Before choosing his own line of action, no player is aware of the tactics of the other players.
The participants are unable to communicate directly with one another.
Each participant is aware of the level of competition.
The main goal of game theory is to provide a foundation for making decisions in light of the competitive environment and competitors’ behaviours. Elections, the military, conflict, marketing plans, and other situations may all benefit from the game theory.
The dynamic and ever-changing nature of competitive circumstances and interpersonal connections makes implementation more challenging. The cause is that one person’s action causes a chain of reactions in others. Additionally, other individuals are also altering their behaviour. Game theory, however, aids management in reasonably accurately forecasting future occurrences.
Stimulation Method
Simulation is a model, not a process. The simulation reflects reality. Instead of looking for the best answer, a problem must be defined in simulation. The management can make a wise judgement thanks to the situation’s description. “Simulation is the use of digital computers to aid in completing experiments on a model of a real system,” write Chase, Richard B., and Nicholas J. Aquilano.
When numerous factors influence outcomes and those same factors are unclear in and of themselves, this approach might be used. There is no distinct tool for simulation. However, if the issue is very difficult, it may be utilised in conjunction with a mathematical tool. With success, simulation models have been used to locate plants, choose locations for branches, plan space missions, and other tasks.
Advantages of Simulation
Below is a discussion of a few benefits of the simulation approach.
The cost of the simulation model is quite little.
Any issue may be addressed by a simulation model.
There is relatively little risk in using a simulation model. The method for framing a model is a trial-and-error one, which is why.
A full analysis of the issue is possible. It aids in the management’s creation of the ideal model.
A simulation model may be used to validate conclusions drawn from analysis. Even with the aforementioned benefits, there is no way to find the ideal model for each given issue. The drawback of the simulation model is this. A simulation model cannot be used to research or analyse issues other than the one that is defined.
Advantages of Operation Research
The following list includes a few of operation research’s benefits.
The management is capable of making wise choices.
Management leaders must pay particular attention to a number of elements that are influencing the judgments by analysing operation research models.
Operational research does not constitute judgement. However, it aids management in making decisions.
When making a choice, a methodical strategy is used rather than avoiding rules of thumb.
To make it easier to diagnose and find a workable solution, a difficult issue should be divided into multiple manageable components.
Before implementing any remedy, an experiment is conducted. The optimum solution is produced by this method.
Limitations of Operation Research
Additionally, operation research has several drawbacks. While making an important choice, a management or decision-maker should be fully aware of these limits.
Operation research is expensive since it takes time to get to a single conclusion or choice.
Operation research seeks to provide the optimum answer by taking into account all the relevant factors. In the commercial world today, this is not feasible. Finding the total number of factors influencing a situation is quite challenging.
Many cases when a problem is caused by human traits and interpersonal relationships cannot be addressed by operation study.
A gap exists between the decision-maker and an analyst of operation research. A decision-maker is not in a position to be knowledgeable about the methods of operation research. The operation research analyst could also be unaware of the nature of issues. This kind of gap degrades the decision’s quality.
The accuracy of statistical data is the foundation of operation research. The judgement made with the aid of operation study may be flawed if the statistical data is not accurate.
The optimal answer can be found using the operation research approach, notwithstanding the restrictions. Operation research techniques can also be used by individuals to solve problems pertaining to their personal affairs.
To handle any issue and exert effective control by making a timely decision. By carefully gathering, managing, and giving the appropriate information to the appropriate person at the appropriate time, the most accurate and trustworthy information is obtained through Management Information System (MIS).
Management Information System By Pearson
A good management information system works as an efficient controlling approach in addition to lowering the risk of making bad judgments. Every level of manager needs critical information delivered quickly, succinctly, and economically to do their duties.
The management information system (MIS) is becoming increasingly significant as a result of the complexity of company and industrial activities. Government rules will also increase the need for timely, precise information that is more dependable. This demonstrates unequivocally that management leaders are moving into the “Information Age.”
Definition & Meaning
A management information system is a planned, organized, and systematic gathering of pertinent, precise, accurate, and timely information that is efficiently processed and delivered to the appropriate parties to attain organizational goals.
Management Information Systems are a formal method of collecting timely information in a presentable form in order to facilitate effective decisionmaking and implementation in order to carry out organisational operations for the purpose of achieving the organisational goals.
Walter J. Kennevan
Management Information System By Pearson
“A formal method of making available to management accurate and timely information necessary to facilitate the decision-making process and enable the organization’s planning, control, and operational functions to be carried out effectively,” according to James A.F. Stoner, is how management information systems are defined.
“A management information system is a system intended to give Selected decision-oriented information required by management to plan and assess the operations of the organisation,” according to the Management Information System Committee of the Financial Executive Institute.
Management Information System by Mc Graw Hill
It is built on a foundation that emphasis profit planning, performance planning, and control at all levels. It considers the ultimate integration of the company’s necessary business information sub-systems, both financial and non-financial.
Information and Data
Data and information are not the same. Facts that are not presently being utilized for decision-making are referred to as data. Data may serve as a foundation for decision-making. Information, on the other hand, refers to processed data that is used directly throughout the decision-making process.
Simply said, information may be created from data. Similar to how data may be created from information. But neither data nor information can be used in place of the other.
Management Information System by Mc Graw Hill
The word “data” refers to information like the number of people employed, production and sales statistics, a variety of debtors and creditors, bonus information, and the like. This information may be processed, organised, and displayed so that choices about the organization’s planning and operational management can be made using it.
A suitable shape must be created from the provided data. Six functions are involved in data transformation. They are gathering data, handling it, analysing it, storing it, evaluating it, and providing it to those in need.
Since people will use the information to make choices, it may be managed carefully without losing any of its beneficial components. The reason is that with corporate expansion, a big volume of information may be handled everyday.
Daily computer printouts provide thousands of details about production schedules, current inventory positions of raw materials, goods in process, and finished products, output levels by plants, shifts, and departments; cost and sales analysis by territory, product, customer, sales division, and order size, etc.
Louis E. Boone
Management Information System by Pearson
Key Components of MIS:
Data Collection: Gathering data from internal and external sources.
Data Processing: Converting raw data into useful information through analysis and interpretation.
Information Storage: Keeping data and information accessible and secure for future use.
Information Distribution: Delivering the right information to the right people at the right time to support decision-making.
Objectives of Management Information System
A successful management information system may accomplish the mentioned goals.
Management Information System By Cengage
Aids in decision-making: Management leaders at all levels make many choices based on the best available information at the time. Decisions are made much easier when information is accurate, trustworthy, clear, and timely.
Eliminate duplication of effort: A large number of organisational functions are computerised, and the processes are made simpler. This kind of technology eliminates the performance of duplicate job and lowers unneeded effort.
Time savings: Time-saving techniques are used to carry out given tasks, and workers of an organisation have access to the right guidance. Each work’s standard time is established independently. There is a chance of time savings in this approach.
Establish consistent processes: Although the nature of the job varies from department to department and from section to section, standard and uniform procedures are followed when a task is performed. The appropriate flow of data from the respective department or unit is ensured by uniform processes.
Fixing responsibility: Data must be provided right once when work is completed. As a result, the responsible executive must supply the information. MIS establishes each executive’s responsibilities in this manner.
Improving services: Before establishing a management information system, executives must get the necessary training. As a result, executives in an organisation provide better service.
In order to accomplish the above mentioned goals, the management information system should be adaptable enough to integrate changes and include other sub-systems.
Three terms make up the phrase management information system. They are System, Information, and Management. One may fully comprehend the idea of a management information system if they are aware of the nature and meaning of these three terms.
Management
Planning, organising, and regulating both people and physical resources in order to accomplish an organization’s goals is the process of management. Managers may create a plan by deciding on the best course of action to accomplish the goals. He is able to recognise tasks that are organised into homogenous groupings that arise as a result of an organization’s operations.
By establishing performance criteria and preventing departures from those standards, the job completion process will be managed. In this setting, management enables the executives to make a variety of important choices on the planning, organising, and supervision of the execution of tasks and company processes.
Information
Information is a term used to describe concrete or intangible data used to lessen or eliminate ambiguity about events that will happen in the future. Every management needs information to successfully plan and manage the company operations.
From the facts that are already accessible, information is produced and utilised to aid in decision-making. The conversion of data into information must be done correctly. the act of presenting information in a manner that makes it relevant, useful, and simple to comprehend.
System
A system is a group of connected components that work together to accomplish the overall goals of an organisation.In an organisation, there may be several subsystems, and each of these subsystems is a component of larger systems. In a commercial organisation, it is necessary to use system principles.
If so, there is a chance that the sub-systems might be integrated via effective information exchange. By linking the working sub-systems via the interchange of information, the MIS system idea seeks to maximise the output of the organisation.
The management information system is divided into three categories. They are control, planning, and decision-making. Below is a basic explanation of these regions.
Decision-making
MIS is intended to create and enable the free flow of data gathered from internal and external sources for good corporate decision-making across all functional areas. For quick and efficient decision-making, management should have a well-organized system for gathering information and maintaining current information.
At all management levels, MIS plays a significant role in the decision-making process.The basic goal of management information systems (MIS) is to assist managers in making timely decisions in their areas of accountability.
Planning
Information is needed by top management for planning purposes. The main duty of management is planning. Under a well-designed management information system, the managers effectively carry out the core role.
The MIS may sometimes be connected to other corporate planning frameworks. Through careful preparation, the ambiguity may be changed into a certainty. Only with the aid of a management information system is this feasible.
Control
The MIS provides information to the decision-maker about how the work is being performed in accordance with the standards that have been established. It is simpler for a manager to exert effective control if the information is better, more comprehensive, more trustworthy, and timely. To achieve adequate control, a system of controls must also be designed.
Importance of Management Information System
Due to the following factors, a management information system that is effective is crucial.
Complexity of company operations: The environment’s dynamics will make business operations more difficult. In these circumstances, the MIS enables the managers to easily see the company processes.
Business unit size: The majority of business units have expanded in size. As a consequence, management is taken away from the operational area. MIS is now essential to solving operational issues.
Modifications to the economic structure: A business unit’s ability to operate effectively is impacted by changes in interest rates, the GNP, the rate of unemployment, and other factors. As a result, gathering this kind of data will aid managers in making wise choices.
Technological changes: These include adjustments to how a business unit operates. Every time technology evolves, management encounters a challenge. Effective MIS may assist in solving this kind of issue with ease.
Social changes: These include greater levels of education, shifting consumer preferences, home computer use, preferred occupations, etc. This kind of information is kept current. If so, managing a company division is quite simple.
Determining the training requirements: Because operations in large-scale enterprises are decentralised, greater knowledge of unit operations is required. All units’ performance should be constantly monitored, and if there is poor performance, action must be done. It implies that training requirements may be determined in order to enhance unit performance. Here, MIS may be utilised efficiently to assess performance, determine the level of training required for improved performance, and realise organisational objectives and plans.
Widespread usage of computers: Because they operate more cheaply and can store and provide more data, computers are extensively utilised. Handling information has become simpler as a result.
Factors Affecting the Management Information System
Within an organisation, information must freely flow from one location to another. If this is the case, then each employee tries to alter his behaviour by being aware of what is going on in the company. Despite the fact that certain variables limit the free flow of information Below is a list of them.
Availability: Information that is readily available is usually more accurate and pertinent. All choices are based on the facts at hand. The outcomes are very unpredictable if judgments are made based on insufficient, incorrect, and irrelevant information. However, there is no criteria accessible to determine if the information is correct or not, relevant or not, and sufficient or not. As a result, the managers are compelled to make judgments based on the facts at hand.
Quality: The precision and compactness of information are described by its quality. Sound judgments can only be made based on reliable information. As a result, the data must be accurate and very trustworthy.
Quantity: It is difficult to get reliable information and too much information makes it difficult for management to digest it quickly and efficiently. On the other side, insufficient information may leave out relevant, trustworthy, and accurate information that is required to make wise judgments.
Timeliness: Data must be accessible when required. Due to the lack of timely access to required information, certain significant choices may sometimes be postponed, leading to lost opportunities. In addition, as little time as feasible should elapse between the gathering of data and the presenting of the suggested information. In addition, information should be sent to the decision-maker just when necessary rather than on a regular and cyclical basis.
Types of information
Operational details: These cover the numerous ways the unit operates. Operation information includes information on production and sales, the number of people employed, overtime work in terms of production and man hours, wastages in terms of unit of measurement, etc.
State information: At a certain moment, the status of a particular project is provided. Examples of status information include work in progress in terms of unit of measurement, main project stage, stage of building work, etc.
Resource data: It comprises an organization’s resources. Examples of resource information include own capital, borrowed capital, skilled human resources, semi-skilled human resources, unskilled human resources, materials, power, etc.
Resource allocation information: This includes the distribution of available resources within an organisation, such as the employment of personnel according to department, the use of own capital for the purchase of fixed assets and current assets, the use of borrowed capital for the purchase of fixed assets and current assets, or the clearing of old debts.
Planning and control information: Top management may plan and control for each activity. Examples of planning and control information include production and sales budgets, cash budget production schedules, capital budgeting, zero base budgeting, etc.
Information on the government, including its budgetary policies: Every year, the government presents a budget that has an impact on business. Information on the magnitude and types of effects must be gathered and reported to the government.
Social data: This includes demographic information. Social information includes data on the population in terms of urban and rural areas, sex, industrial workers, religion, and community.
Economic data: It provides data about a country’s economic state. Economic data include the cost of living index, inflation rate, interest rate, per capita income, gross national product (GNP), and others.
Information on technology: Each activity’s technology selection by the organisation is stored in a separate file. The information on technology also includes the newest technology available, the technology used by comparable units, and the gap between those two and the technology used by the organisation.
Information about competition: Information about competition includes information on sales, labour, and suppliers of raw materials. In order to make wise judgments, the list of rivals and their strengths and shortcomings are also gathered.
Per-Requisites for Designing Management Information System
An efficient management information system is required. Therefore, the management executives took the necessary caution while designing the management information system. For creating an efficient management information system, the following conditions must be met.
The categories of information required by the decision-maker should be determined, defined, and described by top management.
The structure of the information is also chosen in advance to ensure prompt information delivery.
Management is able to recognise the issues related to internal information flow. To eliminate the limitations associated with the delivery of poor information, these issues should be resolved.
The individuals responsible for gathering the information should be informed of and given a clear definition of the information’s sources.
Management information systems provide alternatives to long-term strategies by taking environmental factors into account.
The management may choose the ideal MIS design. When choosing the optimum MIS pattern, management should take cost, feasibility, adaptability, and implementability into account.
Having a high level of creativity and foresight is crucial for designing an efficient management information system. Therefore, while creating MIS, management should use these kind of individuals.
The MIS should be able to accommodate the organization’s demands, objectives, and environment.
Designing the Management Information System
A series of processes is systematically followed in a management information system to gather relevant data, process the data, and display the data as information in the appropriate manner. when the management is capable of making wise judgments and taking the required steps to operate the firm. The following design principles should be used while developing a system.
Provides comprehensive, accurate, and timely data: Having access to complete, accurate, and timely data enables effective planning and decision-making. The difficulties associated with inconsistent, lacking, and erroneous data would be resolved by the MIS.
Identify and quantify interconnected processes: Although production and sales are separate variables, they are closely tied to one another. Production is influenced by product demand, or sales volume. In this way, sales and production information become related. Future trends may be predicted with this.
Evaluate and manage performance: Production information may be expressed in monetary terms. If so, it will be possible to assess manufacturing costs and govern the performance, which may be carefully observed.
Determine the demands of a decentralised organisation: In large-scale businesses, departmentalization and power are decentralised. To prevent duplication and effort waste, the requirements of such decentralised divisions and departments may be adequately stated. It implies that a pool is established to gather the information from these divisions and units.
Information that has been condensed: Information that has been provided such that decisions may be made without additional interpretation or analysis. It cuts down on the amount of time, work, and information required. The senior management at this place adheres to the management by exception approach.
Flexibility: In order to be modified or amended as needed, the management information system should be as versatile as feasible.
Process of Management Information System
There are six steps involved in the conversion of data into information. Below is a quick explanation of these six steps.
Assembling: This refers to gathering information and recording it in a number of files. The collecting of data is made easier by the clearly specified sources of information.
Processing: This refers to the summarization, editing, and processing of the gathered data. The records have been edited to remove the erroneous and irrelevant information.
Analyzing: This refers to the process of using data analysis to create or compute percentages, ratios, etc. The decision-maker may learn helpful information from percentages and ratios.
Information storage and retrieval: Information storage includes indexing, coding, filing, and placement. When required, swift relocation and retrieval of this information is possible thanks to the provisions that have been implemented.
Evaluation: This is the assessment of the correctness, precision, and relevancy of information in determining its usefulness. The level of precision, accuracy, and relevance depends on the decision-requirements. maker’s
Dissemination: This refers to giving the decision-maker the necessary data in the appropriate format at the appropriate time.
Advantages of Management Information System
The following are some ways that an efficient management information system benefits management:
1) Aids in planning: Planning needs accurate, timely, and trustworthy information. Under an efficient management information system, they are achievable. The MIS keeps executives informed of developments in the business environment. The planning task performed by the executives is therefore made easier by MIS.
2) Lessen information overload: Managers are not obliged to have access to all of the data that an organisation collects. The data has been separated into relevant and irrelevant categories under effective MIS. Managers may get perplexed by the irrelevant facts. As a result, the unnecessary data has been eliminated thanks to efficient MIS and less information overload.
3) Simplifies Control: Control is made simpler by MIS, which serves as a link between planning and control. It enables managers to make wise decisions, which streamlines the control process.
4) Aids in coordination: MIS is an integrated planning and control methodology. By keeping each department/section informed of the issue, status, significance, and requirements of other departments/sections, MIS enhances coordination. It connects each organization’s decision-making centres.
5) Enhances efficient MIS: Work related to monitoring is also done under control, allowing management to give responsibility without compromising decentralisation.
Causes for Poor Management Information System
A management information system uses computer technology to create an efficient system. Even yet, there can be several reasons why the management information system is inadequate. Here are several examples:
More information is better: Only with more knowledge can decisions be made that are effective or sound. This is untrue. However, the truth is that for making an informed choice, only information that is pertinent, accurate, and exact is required. More data often overwhelms the decision-maker and possibly causes misunderstanding. The decision-maker could end up somewhere they didn’t intend to go. Furthermore, he won’t be able to take in all the information. Thus, just having correct and relevant information is sufficient.
Lack of managerial support: Top management support is necessary for effective MIS. Additionally, the decision-maker has to be motivated for MIS to be used effectively. If not, it is useless to continue with MIS.
Poor communication: Current, relevant information must be sent to the management. The managers should then get training to understand the fundamental functions and nature of computers. A system that allows for greater communication among all decision-makers must be created by a computer professional. However, in reality, computers are employed to create data, which leads to poor communication.
Computers are limited in what they can accomplish: They can analyse data and present information in a certain way. However, it does not make up for management discretion. Additionally, a computer might be a tool, not a decision-making process.
Human acceptability: The acceptance and participation of the personnel of the concerned organisation are essential to the MIS’s success. Employee opposition to MIS is common since the system may increase workload or diminish the value of people.
Guidelines for Improving Management Information System
The following recommendations may be used to enhance the management information system.
Top management must be involved in the MIS design process. Employees of an organisation are more accepting as a result of this participation.
The MIS designer and user must have a tight working connection. This is produced by encouraging staff members to develop the MIS themselves. Employees are aware of how a company really operates. Employees may thus successfully develop the MIS.
A master plan might be created. The master plan takes into account both the organization’s present and future demands. The uncertainties associated with MIS development are avoided by the master plan.
On the basis of a cost-benefit analysis, both designees and users are held accountable for the effectiveness of the MIS. It is not possible to alter responsibility such that benefits outweigh drawbacks.
Management should make every effort to instil trust in workers’ abilities to see it as a help rather than a substitute.
FREQUENTLY ASKED QUESTIONS
What is a Management Information System (MIS)?
An MIS refers to systems and processes that collect, manage, and distribute information to support decision-making, coordination, and control in an organization. It includes software tools that help organizations gather, process, store, and report data for management purposes, aiding in areas such as customer service, sales, and operations.
Why is MIS important in business?
MIS is critical for improving decision-making, increasing operational efficiency, and helping businesses become more data-driven. By providing managers with accurate, up-to-date information, MIS helps companies improve strategic planning, optimize workflows, and gain competitive advantages​.
How does MIS support decision-making?
MIS supports decision-making by providing managers with timely and relevant information through data collection, analysis, and reporting. It uses tools like dashboards, analytics, and simulation models to help forecast trends and make informed decisions.
What are the key components of an MIS?
The key components of an MIS include technology (hardware and software), people (users such as managers and employees), data (the raw information), and processes (procedures to collect, analyze, and distribute data).
What careers are related to MIS?
Careers in MIS include roles such as systems analysts, IT managers, network administrators, business analysts, and information systems managers. These professionals are responsible for developing and managing information systems to ensure efficient business operations.
What are the challenges of implementing an MIS?
Common challenges include aligning the MIS with business needs, ensuring data quality, managing the cost of implementation, and training employees on how to effectively use the system​.
Success of a business concern is dependent upon the ability of leadership to exist in any type of organisation. Whenever and in whatever situation if someone tries to influence the behaviour of another individual or a group, there in leadership.
In an organisation, wherever an individual has subordinates, he may act as a leader. The efforts of subordinates (followers) are to be channelised in the right direction. As lenders, they are not only the responsible for directing their followers but also responsible for the attainment of goals of the organisation. It is believed that leaders are born and not made. At the same time, a few people also believe that leaders are not born but made. But generally, leaders are born and also made.
Definition
Koontz and O’Donnell said, “Leadership is generally defined as influence, the art of process of influencing people so that they will strive willingly towards the achievement of group goals.”
Allen, “Leader is one who guides and directs other people. He must give effective direction and purpose.”
According to the Encyclopedia of Social Sciences, “Leadership refers to the relation between an individual and a group around some common interest and behaving in a manner directed or determined by him (the leader).”
George R. Terry says, “Leadership is the activity of influencing people to strive willingly for mutual objectives.”
In the words of Peter F. Drucker, “Leadership is the lifting of man’s visions to higher rights, the raising of man’s performance to higher standards, the building of man’s personality beyond its normal limitations.”
Robert C. Appleby defines, “Leadership is a means of direction, is the ability of the management to induce subordinate to work towards group ideals with confidence and keenness.”
Alford and Beatty Opines, “Leadership is the ability to secure desirable actions from a group or followers voluntarily without the use of coercion.”
Ordway Tead asserts, Leadership is that combination of qualities by the possession of which one is able to get something done by others, chiefly because through his influence, they become willing to do so.”
Haimann Theo fact that, “Leadership can be defined as the process by which an executive imaginately directs, guides and influences the work of others in choosing and attaining specific goals by mediating between the individual and the organisations in such a manner that both will obtain maximum satisfaction.”
Chester I. Barnard holds, “It (leadership) refers to the quality of the behaviour of the individual whereby they guide people on their activities in organised efforts.” R.T. Livingston believes, “Leadership is the ability to awaken in others the desire to follow a common objective.”
Need & Importance of Leadership
1. Perfect organisation structure: An organisation structure cannot provide for all kinds of relationships. That is why, informal relationships are made to exist within the ог framework or formal organisation structure. But the organisation structure is complete perfect with the help of effective leadership.
2. Directing group activities: The personal conduct and behaviour of a leader can direct others to achieve organisational goals. The main responsibility of a leader is to get the work done effectively by the followers. The followers cannot work hard and effectively without leadership. A leader alone can consolidate the efforts and direct them towards the goal.
3. Technological, economic and social changes: There is frequent change in technology, economic and social structure in the present computer world. So, the organisation should change its operation and style. This is possible only with the help of effective leadership. If the changes do not take place, the organisation cannot survive.
4. Better utilisation of manpower: A leader treats with equal importance, plans, policies and programmes of an organisation. The plans, policies and programmes do not work themselves. There is a need for a leader. The leader implements the plans, policies an programmes to utilise the available manpower effectively and get highest production with minimum human cost.
5. Avoiding imbalances: An organisation grows in size and complexity with the imbalances. Complexity arises due to the introduction of new functions. The reason is that the introduction of new functions resulted in increased levels of management. So, there is a problem of command, co-ordination and control. A leader can tackle these problems and maintain balances.
6. Source of motivation: Simply, the existence of leadership does not motivate the workers. The leadership style should be utilised to motivate the workers according to the situations prevailing. The achievement of goals is doubtful in the absence of leadership.
7. Reconciliation of goals: An organisation has its own goals. The employees of the organisation have their own goals. They are working mainly for achieving their goals instead of achieving organisational goals. An effective leadership can reconcile the goals of organisations and employees. It is necessary for the success of an organisation.
8. Developing good human relations: Human relations represent the relations between the leader and the followers (subordinates). An efficient leader can develop the skill of the followers and promote self-confidence apart from motivation.
Next, the leader creates opportunity to show their abilities and induces the followers to work towards the accomplishment of goals. In this way, the leader promotes the co-operative attitude of workers and maintains better relations with them.
9. Promoting the spirit of co-ordination: A dynamic leader can co-ordinate the activities of the subordinate. In an organisation, workers are working in groups, so there is a need for co-ordination among the group members. A leader promotes the spirit of coordination among the workers.
10. Fulfiling social responsibilities: Social responsibilities refer to the high standard. of living to workers, higher productivity and income to the organisation, more revenue to the government, reasonable price to consumers and fair return on investment to the investors. These could be achieved with the help of effective leadership. Only an efficient leader can get work done to fulfil social responsibilities.
Approaches or Theories of Leadership
The various approaches or theories of leadership are discussed below:
1. Traitist’s approach or theory: Trait means quality. According to this theory, leadership behaviour is influenced by certain qualities of a person (leader). In simple words, leadership behaviour is sum total of traits. Studies were conducted to identify the qualities of past and present leaders in terms of their education, experience, character, family background, etc. Another way of finding leadership quality is to enquire how the leader considers himself different from others in a particular situation.
Researchers have found out a number of qualities of leadership from their study. A successful leader has the following qualities: (i) Good personality; (ii) Tirelessness; (iii) Ability to take quick decision; (iv) Courage to face competitors; (v) Persuasion; (vi) Lesson out of experience; (vii) Intelligence; (viii) Different thinking; (ix) Reliability; (x) Physical fitness etc.
Initially, most of the persons thought that leadership qualities were inherited but later they concluded that the acquired qualities could be developed by experience and training. So, leadership qualities are not only born but also developed. This theory was mostly accepted during 1930s and 1950s.
Trait’s theory suffers from the following weaknesses:
1.No common equalities list: The qualities of a successful leader are listed by various thinkers. But the list of the qualities of a thinker may not tally with the list of qualities in another thinker. At the same time, no thinker has listed the qualities in order of importance. The list of qualities have confused the readers often.
2.Measurement of quality: Thinkers simply provide the list of qualities. They fail to give the scale to measure the qualities. Besides, it is very difficult to specifiy the qualities which are necessary for an effective leader.
3.No scope for future development: Trait’s theory focuses on the inborn qualities of an individual. These inborn qualities cannot be developed or acquired. But, the inborn qualities can be developed. It has been practically proved. But, trait’s theory does not give any scope for future development of inborn qualities. The reason is that the theory assumes that leaders are born but not made.
4.No consideration for situational factors: Thinkers do not take into consideration the situation which influences the leaders. The quality of the leader comes to light only when a situation arises. If there is no situation present, there will be no scope for the use of trait or quality.
5.No need of uniform traits: Different qualities are necessary for different levels of manage-ment. There is a direct contact between the leader and the followers at the lower level management. So, there is a compulsory need for technical knowledge. The policy of the management is interpreted at middle level management.
Here, better human relations are necessary between the leaders and followers. Top management people frame the policy of the organisation. They require more skills than others. So, it is concluded that the same leadership qualities are not necessary to all the management people.Next, leadership role is very limited in the case of large organisation and vice versa.
2. Behavioural approach or theory: Thinkers diverted their attention to study leaders’ behaviours instead of leaders’ qualities. The reason is that trait’s theory has many weaknesses. Behaviour Theory had popularity during 1950s. So the behaviour approach study emerged after 1950s and 1960s.
The basis of behaviour theory lies in the fact that how the management viewed the workers. Behaviour theory assumes that people are lazy and irresponsible by nature. So there is a need of an instrument to give motivation to workers. Here, leadership acts as an instrument. The manager is an instrument holder.
Therefore, the manager should be directive. F.W. Taylor finds the behaviour of workers through his scientific management approach. Elton Mayo and his associates conducted Hawthorne experiments and identified the workers’ behaviour. They came to the conclusion that human behaviour is mainly responsible for effective leadership.
Autocratic, democratic or supervisory styles are some of the leadership styles. Behaviour approach theory developed these leadership styles which produce different and conflicting results. Different and conflicting results were obtained due to changes in the behaviour of leaders and followers. Both leaders and followers change their behaviour according to the situations.
Behaviour theory concentrated on explaining the behaviour of leaders. The behaviour of the followers changed according to the changes in the behaviour of the leaders. So, what the leader does is the main concern.
3. Situationist approach or theory: Trait theory explains the characteristics required for an effective leader. But it does not specify the person who should possess particular traits to be a leader. In case of behaviour theory, it explains the leadership styles available to leaders but fails to recommend the last best leadership style. Both these theories initiated further researches and accepted that situation is also an important element. During 1970s the situation theory was developed.
The usefulness of traits and behaviours is tested in a particular situation. Some traits and behaviours are effective in a particular situation and ineffecitve in another situation. As per the situation theory, a leader is strongly affected by the situation in which he works. Situation helps the persons to develop their leadership qualities and emerge as leaders.
Here, traits or behvaiours are supporting elements to the leaders. Situation theory believes that there is an interlink between the group of workers and its leaders. Some group of workers have aspirations. They follow the leaders who one capable of realising their aspirations. Thus, it is the situation that shapes the leadership qualities.
4. Follower’s theory or acceptance Theory: According to this theory, only followers decide whether a person is a leader or not. Followers take a decision analysing the qualities of the person who helps to have their needs fulfilled. Here, there is a need for forming a group and fulfilling some needs of such a group. This theory cannot be applied without a group of followers.
Traits and behaviour are not considered as essential elements of leadership. Under this theory, if followers accept a person as their leader, he becomes a leader irrespective of his qualities and behaviour. Modern managers are of the opinion that Acceptance theory plays a significant role in managing the people at present.
In the political world also, a person who satisfied the needs of his followers will become a leader. Followers disown their leader when he fails to satisfy their needs. The needs of the group are the crucial and guiding factor in determining the leader.
5. System theory or a path-goal theory: System theory is focused on a person’s act rather than his traits or behaviour. A leader co-ordinates the efforts of his followers. The process of co-ordination is done by a person (leader). It is termed as person’s act. The process of co-ordination stimulates the people to achieve the goal in a particular situation.
System theory considers all the variables. The term variable includes the leader, followers, situation, leadership traits, environment goals and group’s nature, characteristics and needs, role behaviour of the leader and co-ordination efforts of the leader. So this theory is considered as modern theory of leadership.
The functions of a business leader are briefly explained below:
1. Taking initiative: A leader has to take all initiatives to lead the business activities. He should not except others to induce him to take initiative. He himself should come in the field and take all steps to achieve pre-determined targets.
2. Representation: A leader is a representative of an organisation. The leader represents the purpose of organisation to workers and outsiders.
3. Guide: The leader has the primary duty of guiding others. Proper direction should be given by a leader. If he does not do so, the organisation will not succeed. The leader should issue instructions and orders whenever needed. These instructions and orders should be properly communicated.
4. Encouraging others: The leader is the captain of a team. The leader must win the confidence of his colleagues before winning in a competition. The leader cannot succeed without teamwork. Encouragement is necessary to build up teamwork.
5. Arbitrator and Mediator: The leader can settle the disputes arising among the workers. Besides, he can create a smooth relationship among the workers. He performs these duties in a friendly manner. Generally, people accept friendly advice. Sometimes, the leader can act as a friend.
6. Planner: The type of activities or type of work is to be decided by the leader. The leader can decide when a work is to be done, where it should be done and by whom it should be done. This planning work is completed by the leader.
7. Rewards and Punishments: There is a standard for some set of work. Some workers perform their work within a standard time and properly. The leader can give rewards to those who have completed the work as per the standard. The leader can punish the worker who does not complete the work as per the requirements of job.
8. Integration: Each individual does a part of a whole work. They perform the work according to their specialisation. Here, there is a need for integration. So the leader integrates the efforts of all workers. In this way, integration is one of the functions of the leader.
9. Communication: Communication is necessary to every organisation. Nothing will succeed without effective communication. An effective commu-nication system conveys the authority and responsibility to each individual so that he may come to know what he is to do and what not.
An individual understands his authority and responsibility from organisational policies, procedures and programmes. The leader should arrange for an effective communication system in an organisation.
10. Production: A leader is expected to show high production figures. A production oriented style is followed by the leader. He should take all necessary steps to increase production.
Qualities of Leadership
A leader should have some leadership qualities in order to provide effective leadership. According to Henry Fayol, a leader should have the qualities of:
(i) health and physical fitness,
(ii) mental vigour and energy,
(iii) courage to accept responsibility,
(iv) steady, persistent thoughtful determination,
(v) sound general education, and
(vi) management ability embracing foresight and the art of handling men.
The important qualities of a leader are discussed below:
1. Physical appearance and strength: The leader has to put in hard work physically. He should have a capacity to work for long hours than others. It proves the diligence of the leader to his followers easily.
2. Mental vigour: The leader is also strong mentally. It means that the leader is expected to withstand strain in finishing the work properly.
3. Emotional stability: The leader should not be moved by emotion or sentiment. He should analyse the problem rationally and take a decision without bias. The leader should not have short temper. Besides, he should show firmness in his decision and not show despair or indecision on his face.
4. Sense of judgement: A leader should know the human psychology. He should understand the behaviour, needs, thoughts, motives etc. of his followers. This will help him to take a strategic decision and get it recognised by his followers. Besides, he can set right his actions.
5. Goodwill: A leader should be able to understand the feelings of others. He takes decision on the basis of expectations of his followers. If he does not do so, he will not win the goodwill of his followers.
6. Motivation: A leader should know the motivation techniques and how to use them. If a person is forced to do his job under the threat of getting punishment, he will not perform his work properly. At the same time, if the same person is motivated, he will perform his job more than the expectations of his leader.
7. Communication skill: Whatever the information needed to workers, it should be passed through the leader. So, the leader should communicate the information to the workers. Now, the leader is acting as an effective speaker and writer. If the leader has communication skills, he will direct his followers effectively.
8. Guiding ability: The leader acts as a teacher to new workers. So the leader helps his followers to learn their work. He should train the workers by work and deed to complete the job effectively.
9. Sociability: An able leader can easily mingle with the workers. The workers should be encouraged to discuss their problems and difficulties with their boss. The leader should also meet the workers frequently. The leader should show his keen interest to develop the ability of workers.
10. Technical knowledge: A leader should possess a thorough knowledge of the theory and practice of his job. Besides, he should know the current developments in his job along with technical knowledge.For example, a computer department manager should know all the latest developments in computers.
These are some qualities of a leader. Besides, he should be honest, sincere and fair. Sincere, fair and honest people are mostly liked by others and their leadership is accepted by one and all.
Types of Leaders
Leadership cannot exist without followers. The characteristics of the followers play a vital role in the exercise of leadership. The behaviour of a leader is based on the maturity levels of the followers. Here, maturity level refers to job enrichness and psychological maturity (motivation) of followers.
Thus, the leader has to adopt task behaviour if he has low level maturity followers and tell them what, when, where and how the given work is to be completed. In other words, if the leader has high-level mature followers, he can adopt assigning behaviour and the entire work along with freedom to complete the work. The types of leaders are classified on the basis of behaviour of leaders. They are briefly explained below:
1. Autocratic leader: A leader is one who wants to run the organisation all by himself. He frames the objectives of the organisation and requires the followers to achieve the objectives. These objectives are expected to be achieved within the time limit fixed by him. Besides, he gives specific directions to his followers and he is regularly informed of the progress in work.
A leader thinks that his followers do not have much ability to do a job effectively. So, he avoids discussions with his followers regarding job completion. The leader does not delegate any authority to his followers. He has close supervision and control over his followers. He uses the technique of giving rewards and/or punishments to his followers.
If any follower completes his job according to the expectations of the leader, he will be rewarded. On the other hand, if any follower fails to complete his job as per the requirements, he will be penalised and the punishment may be in the form of company action or dismissal.
2. Intellectual leader: A leader wins the confidence of his followers by his intelligence. Generally, the advice of a leader is sought in big business concerns. He gives advice on the matter in which he is expert. He may be a specialist in sales, personnel management and the like. He gets results through others. He excels as a leader because he uses his superior knowledge.
3. Liberal leader: A leader is one who permits his followers to do their job howsoever they want to do. The leader has not framed any policy or procedure which the followers are expected to follow in their jobs.
The liberal leader would not exercise any influence over his followers and vice versa. Wide scope and opportunities are available for free discussion which aims at performing the job effectively. The followers should have a high degree of maturity.
High degree of maturity means the followers have both the ability and willingness to work. If the followers have low maturity, the leader cannot succeed in his position. In other words, whenever the liberal leader has low maturity followers, he is not able to make his followers understand what, how, when and where to perform.
4. Democratic leader: A leader acts according to the wishes of his followers. The leader does what his followers want. The leader frames the policy or procedure according to the opinion of the majority of his followers. He acts as a representative of his followers to management.
The leader holds his leadership because he is loyal to his followers. He is always interested in protecting the interests of his followers. The leader is a friend of his followers and he is helpful to them.
5. Institutional leader: A leader exercises his power over his followers because of his position held in the organisational hierarchy. He exercises authority with which his post is invested. The leader can control the activities of his followers in order to achieve the objectives.
The leader may or may not be an expert in his field. If he is an expert, he will have relationship behaviour with his followers. If he is not so, he has task behaviour with his followers. The followers prefer relationship behaviour to task behaviour. Whenever the leader adopts task behaviour, the followers are frustrated.
6. Inducing leader: The leader is one who influences his followers with his personality and persuades them to join him in doing a work. He loves and is loved by his followers. The followers have confidence in him and want his goodwill.
The leader gets things done by others through speaking nice words. The whole gang responds to the words of the leader.
7. Paternal leader: An individual who has become the leader in the place of his father as leader has close relationship with his followers and comes to their rescue ever so often.
Paternal leader has job maturity followers only. The reason is that the followers may be lacking only in their psychological maturity. They are not permitted to show their initiative. The leader lays certain conditions under which the followers are expected to work. So the followers are not aware of their potential fully.
8. Creative leader: The leader is one who encourages his followers to suggest new ideas, thoughts or ways. Sometimes, the leader himself puts forward new ideas. Whenever more than one new idea flows from the group, the leader will select the best one among them without personal bias. He controls his followers just like other leaders and makes them to achieve the specific goals. According to Ordway Tead, the followers adopt the big idea but not the big.
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Technique of Leadership
A leader can use a number of techniques to extract work from his followers. Some of the techniques are discussed below:
1. Securing co-operation: A leader should get co-operation from his followers. Unless he enlists their co-operation, he cannot succeed. There must be a willingness on the part of both parties. The leader must convince each follower to extend co-operation.
Both leaders and their followers must have interest in the growth of an enterprise. First, the leader himself extends his co-operation to his followers. The leader must treat his followers as co-workers and not as followers.
2. The use of power: Leadership goes with power. It cannot exist without power. So the leader must use his power which subsequently results in getting things done by others. At the same time, the leader should use power only to safeguard the interests of the enterprise. Some leaders expect more powers than required. It is not advisable. On the other hand, a leader can achieve the goals with the available power.
3. Co-ordination: A leader can co-ordinate the activities of his followers or commands. Definite, flexible and open orders alone co-ordinate the activities. Definite order means that an order is not oral and the terms used in definite order have unequivocal meaning. In the case of flexible order, only goals are communicated. Next, the followers achieve the goals by using the pre-determined time. A leader specifies the goals and leaves the other details to his followers in open order.
An order fulfils its purpose only when it is properly received and receiver must know the expectation of the issuer. Then only proper results will be obtained.
4. Discipline: Discipline is nothing but the adherence to rules, regulations and procedures. Discipline should be maintained to achieve the objectives. Individuals are restricted from doing things which are detrimental to the group interests. If a particular follower is violating the rules, he may be penalised. The very success of leadership and organisation depends upon the maintenance of discipline.
5. Morale: Leighton has defined morale, as the capacity of a group to pull together persistently and consistently for a common goal. “Morale is the attitude of an individual and group growing out of the conditions under which he or they complete the job effectively.”
The leader should create confidence in the minds of his followers. Here, confidence is necessary to both the leader and the followers. A leader has confidence in his followers and vice versa. Mental maturity plays an important role in creating confidence. Having confidence ensures effective performance of a job.
Characteristics of Leadership
1. There must be followers: A leadership cannot exist without followers. A leader who does not have followers, he cannot exercise his authority. Leadership exists both in formal and informal organisations.
2. Working relationship between leader and followers: It means that the leader should present himself in a place where the work is actually going on. Besides, the leader should be a dynamic person of the concerned group. If he is not so, he cannot get things done.
3. Personal quality: The character and behaviour of a man influence the works others.
4. Reciprocal relationship: Leadership kindles a reciprocal relationship between the leader and his followers. A leader can influence his followers and, in turn, the followers can influence the leader. The willingness of both the leader and the followers is responsible for the influence and no enforcement is adopted.
5. Community of interests: There must be community of interests between the leader and his followers. A leader has his own objectives. The followers have their own objectives. They are moving in different directions in the absence of community of interests. It is not advisable. It is the leader who should try to reconcile the different objectives and compromise the individual interests with organisation interests.
6. Guidance: A leader guides his followers to achieve the goals of the organisation. A leader should take steps to motivate his followers for this purpose.
7. Related to particular situation: Leadership is applicable to a particular situation at a given point of time. It varies from time to time.
8. Shared Function: Leadership is a shared function. A leader is also working along with his followers to achieve the objectives of the organisation. Besides, the leader shares his experience, ideas and views with his followers.
9. Power relationship: A leader has powers to exercise over his followers. The leader derives these powers from the organisation hierarchy, superior knowledge, experience and the like.
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Leadership Styles
The success of a business unit depends upon the leadership styles followed by the leaders. Leadership style describes how a leader has relationship with his group. Some of the leadership styles are discussed below:
1. Positive style: A leader motivates his followers to work hard by offering them rewards. A rule is framed in such a way that a reward will be ensured to those who show high efficiency. Positive leaders promote industrial peace. For example, higher bonus (bonus linked with wages) will certainly increase efficiency of the workers. Wages are payable under piece rate system.
2. Negative style: A leader forces his followers to work hard and penalises them if the work is not upto the organisation’s standard. The penalty is given according to the performance. The penalty will be a severe one if the performance has more short comings.
For example, if the manager gives ousting order for continuous absence from duty for ten days even though the worker is absent due to unavoidable circumstances. It is a negative style.
Negative style has high human cost. But, it is necessary in some circumstances. Under negative style, everybody tries to shift his responsibility over to others. Negative style leaders act more as bosses than leaders.
3. Autocratic or authoritarian style: Under this leadership style, the leaders have full power or authority to take a decision. The leaders create a work situation under which the subordinates are expected to work. They will work no more or less than the instruction of the leader. So, the leaders have full responsibility.
The followers are not aware of organisation goals. Besides, the followers feel insecure and are afraid of the authority of the leaders. The reason is that these leaders have the desire to wield loving more powers. Sala
The leader uses his power for the interest of his group and motivate his followers. Then the productivity is increased and the followers get full satisfaction from their job. Advantages
1. This leadership style provides strong motivation to the followers.
2. Quick decision is possible. The reason is that the leader himself takes decision for the whole group.
3. Less talented followers can perform their job effectively.
4. Followers need not take any decision.
5. Decision-making, planning or organising need no initiative.
The autocratic leadership style has some disadvantages. They are given below:
Disadvantages
1. Most of the people dislike this style. The reason is that this style has a negative motivation approach.
2. Frustration, low morale and conflict develop easily under autocratic leadership. 3. New ideas or creative ideas of the followers will not have a scope to be applied and benefits of these could not be obtained under autocratic style.
4. The followers have no opportunity for development.
Suitability
Autocratic style is not suitable to all business organisations. It is suitable to those organisations in which the followers are uneducated and unskilled. The reason is that they are unable to take decisions. If the organisation follows the punishment principle, this leadership style may be suitable.
4. Democratic style: It is otherwise called as participative style. It is just opposite to autocratic style. The authority is decentralised. So, the followers are permitted to take decisions under this style. The decisions are taken wholeheartedly. The reason is that the superior has consultation with his subordinates before taking a decision.
The subordinates know the goals of the organisation, so, they offer fruitful ideas during discussion. If a leader follows this style, he can use the force to control his followers instead of using authority.
Generally, most of the leaders follow this style. At present, the worker’s participation in management is gaining popularity.
Advantages
1. Consultation gives satisfaction to the followers. Followers are consulted before taking a decision.
2. Due recognition is given to the followers. So, they show more interest in increasing the company’s productivity.
3. Followers are aware of the activities in the organisation.
4. A leader can improve his decision-making ability through consultation with his followers while taking a decision.
5. Followers get opportunity to show their ability or talent.
Disadvantages
1. Decentralisation of power is used only when consultation is made for taking a decision. Nothing more than that is done.
2. Taking a decision and the implementation of it require more time. The reason is that several members are involved in taking a decision.
3. Followers can dominate the leader.
4. A leader can easily shift the responsibility to his followers for failure in taking and implementing a decision.
5. It requires communicating skill on the part of the leader. If does not have it, unfavourable things may happen in an organisation and the organisation may be financially and status-wise ruined.
5. Free-rein style: The leaders have no authority and responsibility under this style, so the followers themselves take decisions for which they get authority. This style is employee-centred. Employees (Followers) are free to establish their own goals and chart out the course of action. The employees train themselves and they are self-motivated.
The leader acts as a laison officer between the employees and the outside world. He brings the information which is needed to the employees. The information is utilised by the employees to do their job. Here, the leader fails to motivate his followers (Employees).
Advantages
1. Morale and job satisfaction of the followers are increased to some extent.
2. The talent of the followers is properly utilised.
3. The followers get full opportunity to develop their talents.
Disadvantages
1. The leader does not care to motivate his followers.
2. The contribution of a leader is nothing.
3. The leader does not support the follower and no guidance is available to the former.
Information is transferred through communication. The ability to communicate is essential for effective work performance. A manager functions with others’ assistance. Therefore, he should inform the workforce about management’s policies, goals, and programmes. Communication doesn’t cease until it gets to its target. In addition to other management duties, communication is one of them.
The Latin word “communis,” which meaning “common,” is the source of the English word “communication.” Consequently, a person should be informed with information that is relevant to him. To inform, to tell, to show, or to distribute information are all definitions of communication. It fosters positive workplace interactions and builds human confidence.
Meaning
Transferring information, ideas, or opinions to a larger group of people is done via communication. Information transmission to a single recipient is sometimes referred to as communication. However, the crucial component of communication is that the information sent be accurately received and transmitted in the intended manner.
Definition
As stated by Louis A. Allen, “Communication is the culmination of all the actions one does to foster understanding in the minds of others. It entails a methodical, ongoing process of communicating via telling, listening, and comprehending.”
“Communication is the vast area of human exchange of information and views and not the technologies of telephone, telegraph, radio and the like,” said Charless E. Red Field.
“Communication is an interchange of information, ideas, views, or emotions between two or more individuals,” Newman and Summer.
According to M.W. Cunning, communication is the act of passing through information (such as facts, ideas, attitudes, and opinions) to another person in order for them to be understood.
Keith Davis: “The process of conveying knowledge and understanding from one person to another is referred to as communication.”
In essence, it serves as a bridge of meaning between individuals. A person may safely traverse the river of misunderstanding that divides all individuals by utilising this bridge of meaning.
Theo Haimann: “Communication is the process of conveying ideas and making oneself known by others. It is basic and important to any administrative activity.”
J. Billy Hedge, “It is feasible to think of communication as an effort to let two or more individuals understand one another as completely and precisely as possible. It is an action marked by a desire on the part of one or more people to share information, ideas, or sentiments. Symbols, signs, motions, and drawings, together with other verbal and non-verbal components, are used in speaking and writing to carry out this objective.”
“Communication is a process which includes the transmission and exact replication of ideas secured by a feed back for the sake of evoking behaviours which would achieve organisational objectives,” wrote William Scott.
Mc Farland, D.K “A general definition of communication is the process of meaningful connection between people. More precisely, it is the method through which people come to comprehend one another and perceive meanings.”
Theodore G. Meyer “expressing one’s thoughts and views to others.”
HAROLD A. SIMON “Any method whereby decisional premises are transferred from one member of an organisation to another may be properly described as communication.”
According to Cyril I. Hudson, “Transmitting information from one person to another is communication in its most basic form.”
“Communication is an intercourse via words, letters, symbols, or messages and is a manner that one organisation member conveys meaning and understanding with another,” write Koontz and O’Donnell.
Brown, C.G “Whether or whether it inspires confidence, communication is defined as the flow of information from one person to another. However, the recipient must be able to grasp the information being sent.”
Only through good communication can management policies and programmes be put into action. From the following, we may comprehend the significance of communication:
1) A tool for improving management performance: Effective communication enables managers to make informed choices. The manager may be able to resolve the issues without too much effort. Through communication, the manager may influence subordinates to complete tasks. Through communication, he may convey to the subordinates the organisational goals.
As a result, communication serves as a managerial tool.
2) Achieving coordination: A big company organisation has a lot of employees. They divide up the labour and specialise in different areas. To achieve organisational objectives, this personnel must coordinate their efforts. Communication is used to achieve cooperation. Mary Curling Nilen asserts “Coordination requires effective communication.
For the transmission, interpretation, and implementation of policies, for the exchange of knowledge and information, and for the more subtle requirements of good morale and mutual understanding, they are essential uphill, downward, and sideways through all levels of authority and advise “.
3) Facilitates efficient operation: Communication makes it possible for employees to understand the true state of affairs inside an organisation. As a result, employees complete their tasks promptly, which contributes to an organization’s efficient operation. “Communication functions as the lubricant promoting for the smooth operations of the management,” claims G.R. Terry.
4) Improve management effectiveness: The manager spends roughly 80% of the time that is available to him disseminating information to others about the company’s goals, policies, procedures, and programmes. The manager may boost his efficiency and carry out his tasks more methodically with the aid of communication.
5) Assists in decision-making: A good communication system gives the management all the information they need to make good judgments at the right moment. Again, people who need them are informed of these choices. “The primary executive function is to build and sustain a system of communication,” says Chester Barnard.
6) Preserving industrial tranquilly: Poor or absent communication is the major cause of industrial disturbance. As a result, ties between management and employees become strained. In order to understand one another and promote industrial harmony, communication is essential.
7) Support for leadership: Management transmits its thoughts, emotions, opinions, and choices to the workforce via communication. The workers communicate their answers, attitudes, and issues to management in a similar manner. As long as there is two-way contact, management may see itself as the employer of choice.
8) Contribution to job satisfaction: Employees may work more effectively and efficiently if they understand what will be done and why. The management’s expectations are understood by the workforce. If their performance falls short of expectations, they may raise it. Employees could be curious about the relationship between performance and goal achievement. These are made feasible through efficient communication. Employees might have work satisfaction if there is adequate communication.
9) Time savings: Time is saved as a consequence of effective communication. A manager may quickly speak with all of his employees while seated in his office. The boss does not have to personally get to know each subordinate.
The manager may get all the data from his staff members. Both of them save time and effort as a consequence of this.
10)Support for public relations: The word “public” comprises current and future clients, shareholders, the general public, local, state, and federal governments, among others. Through efficient communication, the management may foster a positive reputation with the general public. The management is able to maintain stronger public relations in this manner.
Effects of Communication
Communication concept – chart with keywords and icons
The fundamental goal of communication is to influence the recipient’s attitude, behaviour, and actions. The sender’s efforts might result in any of the following outcomes:
Successful communication: The sender’s intended changes in the recipient’s activity, behaviour, or attitude are referred to as successful communication. It might also be referred to as effective communication.
No communication: The phrase “no communication” denotes that the recipient of the message has not changed in terms of behaviour, action, or attitude. The sender’s efforts in this case were completely ineffective.
Miscommunication: Unwanted alterations in the receiver’s conduct, behaviour, or attitude are referred to as miscommunication. The adjustments may not be what the sender anticipated. Therefore, the misunderstanding might result in utter waste and negative consequences.
Therefore, effective communication has both positive impacts and no effects. However, misunderstandings might result in negative outcomes.
Feedback
Management needs to evaluate the results of communication. As was already said, evaluating the results of communication may be done by watching the receiver’s actions. Sometimes, the signs are also provided by the facial expressions. Feedback is the observation of how communication affects the recipient.
Objectives of Communication
The major goals or purposes of communication are as follows:
Delivering accurate information: The appropriate person should get the information. The knowledge must be properly understood by the recipient in order for him to put it into practise.
Coordination of efforts: One of the duties of management is coordination. An efficient instrument for coordination is communication. Without effective communication, management cannot achieve coordination.
Improvement of management abilities: Effective communication aids in a manager’s comprehension of his staff members’ actions. The data, concepts, and views that the manager is aware of may come from his subordinates. In order for the management to be aware of events as they happen, This will improve managing abilities.
Improved workplace relationships: Management may share thoughts or opinions with workers, and vice versa. Everybody strives to comprehend the other’s point of view. It might improve workplace interactions and lessen misunderstandings.
The effectiveness of policies: Policies and programmes should be conveyed to the individuals in charge of carrying them out. These are essential for achieving the organization’s goals. Successful communication is a prerequisite for effective policymaking.
The aforementioned communication goals must be met for the organisation to be successful.
Elements of Communication
In any organisation, a message that is passed from one person to another comprises the following components:
Information: The substance of a communication that is to be delivered is referred to as “information.” The employees and staff are given the information.
Sender: The term “sender” refers to the individual who is in charge of transmitting the information. He might typically be the manager or the chief executive.
Receiver: The term “Receiver” refers to the individual who is expected to receive the information. The recipient may typically be the organization’s subordinate.
Communication channel: The route through which information is sent from the sender to the recipient. Today, a variety of communication mediums are accessible.
Symbols: With the use of symbols, the sender may accurately deliver the information. Said or written words, signs, playing cards, and even gestures may be symbols. Without employing symbols, the sender is unable to modify the recipient in the way they want. Written words may sometimes be more powerful than spoken ones, and vice versa. Therefore, the sender may employ the symbols in accordance with the situation.
Feedback: A mechanism must be used to determine the outcome of information transmission. In other words, the sender should be aware of the extent to which the recipient has correctly digested the information.
Barriers / Problems to Communication
Information may be filtered or misrepresented while being conveyed. The goal of communication will not be met if this takes place. The following are some examples of communication challenges or barriers:
1) Noise: While exchanging information, noise disruption is a potential. The noise may be caused by nearby conversations, machine activity, or other similar sounds. The communicator makes an additional effort to cut through the noise in these situations. The communicator must also use appropriate words that the listener may readily understand.
2) Information that is missing: The communicator could forget certain details. It could result from placing too much focus on a few bits of information. Sometimes, the communicator may fail to offer the needed information if he delivers the information in a rushed way.
3) Information alteration: If the communicator delivers the information through a third party, the information is changed. The information may be twisted or altered by the third party as it suits him. It could be done on purpose or accidentally. Normally, upward communication makes this feasible. The third party does this because he wants a good reputation with his superiors.
4) Overloading: This obstacle develops when the volume of communications to be transmitted climbs. In order to lessen burden, communication channels must be introduced. If it is not done, the messages may not be delivered in time to the appropriate people or locations. The management should thus set up a particular plan to communicate the urgent and crucial communications.
5) Lack of facilities: Effective communication among workers often depends on the need for meetings and conferences to convey information. There will be no way for management to effectively communicate with workers if there are no facilities for meetings and conferences.
6) Inadequate policies, regulations, and procedures: The management has to develop a communication policy that is sufficient to address all of the organization’s existing and future needs. The communication protocol need to be adaptable. To prepare for every eventuality, this is vital. If essential communications need to be transmitted during times of emergency, the “via appropriate channel” requirement may be modified. The information cannot be transmitted on time if this is not done. It indicates that communication is delayed.
7) Status patterns: Issues might develop as a result of the status that exists between superiors and subordinates. Superiors have a separate room, an executive chair and table, a phone connection, and other amenities to signify their position.
However, the subordinates simply have tables and chairs. The communication gap between superiors and subordinates is wider as a result of this uneven treatment. The creation of a strategic worldwide communication network has reversed the tendency, however.
8) Lack of focus: The information is not fully understood by the recipient. This receiver attitude could be brought on by the receiver being lost in his own thoughts, having trouble comprehending the idioms and words, or not believing the facts. The recipient could sometimes feel that the information is unimportant.
9) Quick conclusion: The recipient draws a judgement without properly weighing the evidence. Additionally, he has his own beliefs and opinions. Bo, the hasty judgement could
10) A lack of trust in the communicators: The communicator may not be able to successfully expand the information, in the receiver’s opinion. The recipient then rejects the information he has received. The whole goal of the might be defeated by this.
11) An improper mental condition: The recipient may sometimes not be in a sound mental condition to appropriately receive the information. If he’s anxious psychologically, it will undoubtedly have an impact.
12) Time constraints: Due to the communicator’s restricted time, there are less opportunities to speak.
13) Messages that were voiced : The receiver won’t be able to comprehend the information appropriately if there is no coherence and no clarity in the information.
14) Technical language: A variety of specialised languages are used in fields including computer science, system analysis, and operation research. To convey the message, many word kinds are employed. Multiple meanings may be attached to a single word.
15) Poor retention: Poor information retention is one of the hurdles to communication since, on average, workers only recall 50% of the knowledge that they are given.
Methods of Overcoming the Barriers of Communication
There is no way to completely remove the obstacles mentioned above. However, certain management decisions could somewhat reduce the impact of obstacles. Therefore, the management should take the required action to remove the obstacles. Here is an explanation of them:
The management has to explain its policies to the staff in simple terms. It ought to promote unrestricted information flow. Then, staff members at all levels of management will understand the importance of communication in its entirety.
The management creates a system that allows for the provision of just necessary information. Additionally, they are delivered in a certain way.
An appropriate channel should be used to provide all the information. However, it shouldn’t be required at all times. The rationale is that using the right channels might hinder the flow of information in an emergency. Only for routine information can an appropriate channel system be insisted upon.
Everyone in management is accountable for effective communication. The top management should periodically assess if there are any obstacles preventing the free flow of information. Only with the top management’s steadfast backing can it be accomplished.
The administration should provide sufficient amenities. In other words, the communication tools that are already in place should be effectively used.
Interpersonal communication is a process. Each one has faith in the other. Mutual understanding must exist. In big organisations, the pattern of rank imbalance may be lessened by developing strong relationships between superiors and deputies.
Both the communicator and the receiver should be able to understand the language used in the communication. Avoid using ambiguous language while providing the information.
Characteristics of Effective Communication
1) Full communication: Complete communication requires the presence of two people, namely the sender and the recipient. Additionally, the message should be understood by the recipient. For instance, if someone cries loudly at the top of his lungs in a closed room without anybody else there, he will not transmit anything. There isn’t a full exchange of information here.
2) Understanding in the same meaning: The recipient must comprehend the message correctly, or in the same sense as the sender. No meaningful communication will take place if he does not comprehend it. A message could not be properly understood by the recipient if it is written in unusual language, for instance.
3) Message to have Substance: The message must be substantive so that the recipient may use the ideas and information. It implies that only relevant information is sent to the parties involved. The recipient will not show any interest in the communication if it is not done.
4) Communication may be oral, written or a gestural: There are three different ways to communicate: verbally, in writing, or by gestures. The best medium of communication should be chosen for successful communication since all three ways of communication are equally important. Some of the sender’s motions include rolling the eyes and moving the lips.
5) Communication may be official or casual: A formal communication channel is one that is used to convey information. For instance, a manager may advise the supervisor of the issue, and the supervisor may then relay the information to the subordinates, and vice versa.
If suitable channels are not used to transmit the communications, they will constitute informal communication. These facts are communicated via direct interaction. Every time he meets someone from the organisation, the sender shares the information with them.
6) Vital to mangerial function: Communication is essential to the managerial planning function as well as the organising, staffing, directing, regulating, and decision-making processes. Therefore, communication is essential to all managerial responsibilities.
7) Constant process: Just as blood flows through our bodies, so does communication. When the message is understood by the recipient, communication has achieved its goal. Without communication, no organisation, company, or management can thrive.
8) Mutual respect: With teamwork, management can accomplish its goals. Mutual understanding is necessary for successful group endeavours. Mutual understanding can only be facilitated through conversation.
Process of Communication
Regardless of the transmitter and receiver’s modes of communication, two people are required. The sender could be used as a resource. Only when the recipient comprehends the message as the sender conveys does a communication process come to an end.
The procedure for efficient or appropriate communication is as follows:
1) Notion: The sender may come up with a communication-related idea. To put it simply, the sender chooses what needs to be expressed and how. This is the communication’s content.
2) Encoding: The sender has control over the sequence of symbols used to convey the information. Additionally, the symbols aid in the receiver’s comprehension. The choice of communication modalities is part of encoding. To convey the same idea further, several communication techniques use various terminology. Showing a green light for a train to begin running is one way to start a discourse or an activity.
3) Transmission: Transmission verifies the communication route. Letters, telegrams, telephones, and other similar devices are all considered channels of communication. A telegraph cannot be used to send a long message. As a result, telephone transmission of sensitive information is prohibited. It is preferable to use an envelope labelled “Confidential” or “Personal matter” when sending confidential correspondence. Any obstructions to communication should be removed from the chosen channel.
The fourth phase in the communication process is receiving the message. In this respect, the receiver should pay close attention. Because only pertinent information should be considered, extraneous information should be disregarded. Simply hearing is insufficient. The full message should be understood by the recipient.
5) Decoding: Decoding is the process of translating symbols that the sender has encoded into the message so that it may be understood. The message might be misinterpreted by the recipient. The explanation is that the sender’s and the receiver’s perceptions could vary. If the recipient fully comprehends the message, the communication will be effective.
6) Reaction: It is the receiver’s duty to ensure that the communication they have received reaches its intended recipient. The message the recipient gets may be disregarded. To finish the communication process, something must be done. The message may sometimes be to “stop the work.” It implies that the recipient should have a response of some kind.
Principles of Effective Communication
For all forms of communication to be successful, the communicator or sender must adhere to the following rules.
Language: The sender must use straightforward language, and the recipient should be familiar with it. Utilizing “familiar terms” while delivering information is referred to as using simple language.
Clarity: The language used to convey the concept must be understandable. The terminology used should be clear. Instead than letting the recipient’s words speak for themselves, the sender should explain what they imply.
Purpose of Communication: Communication’s main goal is to provoke a behavioural reaction from the recipient, hence this is the third goal of communication. The subordinate must then accept the command as the following step. Therefore, the sender or communicator must exert effort to fulfil the response’s goal.
Physical and human setting: The recipient of the communication is referred to as the physical setting. An individual, a member of the affected department, or the whole organisation may be the recipient. The settings under which the message is communicated are referred to as the human context. Therefore, the communicator or sender should consider the environment and the audience while conveying the message.
Consultation: It is important to include other people in the development of a Communication. It aids the sender in gaining more information about and objectivity on the message. Additionally, individuals that take part and assist with communication planning will contribute actively to you.
Message content: The communicator should choose his tone of voice in light of the message’s subject matter. In order to communicate effectively, the communicator may sometimes raise his voice or become strident. loud
Follow-up action: It’s important to take follow-up action to make sure the message was properly comprehended by the recipient. After getting the message, the recipient could do anything. The sender should be aware of the recipient’s course of action. has
Time and opportunity: When sending a message, the sender should take the recipient’s interests and requirements into account. It aids him in determining the proper moment for the information to be communicated. In doing so, the sender takes advantage of the chance to share the message for the recipient’s long-term and immediate benefit.
Communication skill development for communicators: Effective communication skill development for communicators requires proper training. This significantly contributes to improving communication effectiveness.
Communication with action support: The message should be supported by the sender’s actions or attitudes. For instance, the sender may raise his hand to signal, “Stop the work.” Therefore, the sender’s behaviour shouldn’t be in conflict with his or her message or words.
Employee cooperation: Effective communication requires the staff’s cooperation. Through the management staff’s cooperation, the communication strengthens the company concern.
Listening: One of the sender’s most crucial responsibilities is listening. Listening in this context refers to the receiver’s responses. The sender has to develop inner ear listening skills. By keeping an ear out for more communication, the sender may gain vital information. Therefore, the sender should cease talking since listening is impossible when someone is still talking.
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Factors Deciding the Communication Programme
An organization’s senior management is in charge of putting a communication programme in place. The management has to decide on a communication strategy. The following elements will be taken into consideration while choosing a communication programme:
Price: The price of a communication programme is taken into account first. The price should not exceed the company’s financial capacity. In addition, the value of a communication campaign should outweigh the costs or expenditures associated with it.
Confidentiality: Whatever the information, it shouldn’t be revealed. A communication programme should guarantee confidentiality. A communication programme without confidentiality is like a pot with a hole in it. No one is able to add water to this pot.
Accuracy: The communication plan is set up such that there is no room for misunderstanding. Accuracy is crucial to communication success.
Quickness: The word must reach those in need in a timely manner. It could be wasted if it doesn’t come in time. The “speed post” and “courier service” are being used by the general population for quick communication.
Convenience: The programme for contact with people in charge. Enterprises or all information won’t be accessible to those in need if a communication software has a burdensome feature.
Suitability: No programme may be appropriate at all times inside a single company. As a result, the communication programme should be flexible enough to adapt to the demands of the business and the scenario at hand.
Accurate recording: All correspondence should be accurately recorded. In the future, it could be necessary to refer back to or make a strategic choice using the same message.
Expressive: The message should leave the recipient with a positive image of the programme. If this is the case, the receiver’s behaviour could alter for the better. The message may provide the sender pleasure. Thus, the communication process will be effective.
Media of Communication
Information transfer inside a company is commonplace. Both upward and downward communication is possible. The upper management uses the route for downward communication. The staff or lower level managers employ the upward communication route. Among the communication mediums are some of the following:
1)Bulletin: The bulletin contains information about promotions, postings, and transfers. The administration has also embraced this medium. The first recipients of the information are those who are worried. After then, it is announced to the wider public. In this approach, the most current administration level changes are communicated to every employee. This is a very important one. Each employee may anticipate his future business partners.
2) Announcements: Several choices are made at department manager and board meetings. Workers are informed of these choices through an announcement. This will motivate people to provide quality work. In addition to circulars, this notice is issued.
3) Gatherings: Direct communication has a greater impact than other forms of communication. A meeting for a specific group of employees may be organised by management, at which time the employees may express their opinions and grievances.
The management may maintain a friendly connection with the workforce by setting up general meetings with the target audience of employees. This will make sure that the business runs smoothly.
4) Suggestion and complaint boxes: Employees sometimes hesitate to communicate their thoughts to management directly. Suggestion and complaint boxes may help prevent this. The management will be given sanctions and good suggestions. Employees who submit the finest ideas may get rewards from management.
It is upward communication that is just one way. Additionally, information on the irregularities of coworkers and managers will be gathered and sent to management. The management may take appropriate measures in this respect.
Every time a complaint is brought before management, the appropriate procedures should be taken to address the complaint. The management is aware of the actual working environment.
5) Business publications: A business may release a magazine. The magazine provides information on employees’ working conditions and compensation plans. Each employee is interested in learning how the business is doing. The spread of false information within the workforce will be stopped by the disclosure of different benefit plans. The firm publications might help the employees’ spoken communication skills.
Types of Communication
The following criteria may be used to group different types of communication:
I. On the basis of Organisational Relationship
1) Formal communication: Information is exchanged through official channels. The term “formal channel” describes the method by which information is transmitted and has a designated place in the organisational structure. It may sometimes be referred to as “via correct channel”.
In an effort to control communication and guarantee quick, accurate, and smooth information transfer, correct channels are used. Therefore, formal communication helps an organisation run effectively.
Benefits of Official Communication
Formal communication safeguards senior staff members’ respect and authority. When sharing information, no one is permitted to bypass anybody.
A company may readily remedy the liability.
The appropriate person has access to the information.
Formal communication makes it easier for the employer and the employees to comprehend each other’s attitudes and behaviours.
The staff members maintain good morale and discipline.
Disadvantages of Formal Communication
1)In formal communication, there is a chance that information will be filtered.
2)The future is hazy. Therefore, information based on actions cannot be formalised.
3) Formal communication adds to the line officers’ workload. The line officer’s responsibility to act on all downward and upward messages that flow through him is the primary motivator. When he has little time to adequately carry out his executive tasks.
4) Information is transmitted from one person to another until it reaches the appropriate person. It necessitates delaying the dissemination of the knowledge. Additionally, a message could be miscommunicated.
5) There isn’t much interaction between senior management and entry-level employees. Therefore, neither the lower level employees nor the top executive are aware of the goal or attitude of the other. As a result, they don’t have a friendly connection.
Informal Communication
Information is transferred without following any formalities or organisational norms and procedures. In addition to formal communication, most CEOs also employ informal communication. Oral communication dominates informal interactions. Informal communication often proves to be highly successful.
The inherent need of humans to interact with one another leads to formal communication. Under this approach, communication might even take the shape of a single look, gesture, smile, or even just silence. Under informal communication, personal topics are also discussed and sent. It also goes by the name “Grapevine.”
Grapevine
The main channel for upward communication is the grapevine. There is no definite method for information transmission in the context of communication. They may spread the knowledge any way they like.
Information covers the thoughts and emotions of workers in a certain circumstance as well as their perceptions of the management.The grapevine system is the grapevine. Grapevine often functions as a cluster chain.
As an example, A shares a secret with three of his famous friends. They (three people) then divulge information to two of their (three people’s) recognised individuals. Then, they (two people) reveal anything to only one of their (their) known acquaintances.
The number of recipients is steadily decreased. The explanation is that people who already know the knowledge stop sharing it since it has grown stale. It is important to keep in mind that the grapevine is a very inactive form of communication. These engaged communicators are referred to as “Liaison agents.”
Advantages of Informal Communication
Information is communicated fast.
Informal communication is socially condemned. Information is conveyed effortlessly. The information is freely exchanged between the sender and the recipient.
There is no command channel. A senior member of staff from one department may provide the information to a member of staff from another department at a lower level. It encourages productive employee collaboration.
Informal communication may take many different forms. It implies that there is no restriction on the amount of information that may be shared in an informal setting.
Disadvantages of Informal Communication
The sequence is off.
Informal communication often contains false information. Thus, it is useless.
On occasion, it may lead to a lot of misunderstanding or confusion among the workers.
Fixing accountability in the context of informal communication is quite challenging. The difficulty in identifying the original information provider is the cause.
The knowledge may be utterly corrupted by the time it reaches the top executive. The systems are present in all organisations, Roth. Others favour casual contact, while some appreciate it.
On the basis of Direction of Flow of Communication
According to the direction in which they are sent, the following forms of communications are categorised. They are detailed below:
Executive downward communication is a kind of communication that originates at the top and reaches lower officials via middle management. Scalar chain is used for conveying the information. The scalar chain’s adoption guarantees effective communication.
Objectives of Downward Communication
To provide detailed task instructions.
To provide information on the policies and processes of the organisation.
To provide information on the significance of each task and the connections between them.
To provide information about the employees’ preferred jobs.
To supply knowledge that makes it easier to attain objectives.
Advantages of Downward communication
This communication strategy aids in clarifying organisational norms and regulations to new employees and outside parties.
Having authority over subordinates is beneficial.
It facilitates employee motivation and gets the most out of the workers.
Advantages of Downward communication
Management personnel at all levels interpret and reinterpret the information supplied.
The sent information could be corrupted.
Upward Communication: Just as downward communication, upward communication is the opposite. Upward communication is the transmission of information from the lowest level, or subordinates, to the top executive. The middle level executive should get the information.
2. Downward Communication
Upward communication comes in two flavours. In response to the first transmission, there is first feedback of information. An executive is able to comprehend how the subordinates feel about their work and workplace. Additionally, by following the given directions and instructions, he may determine the amount of the task performed.
Second, the information is provided freely by the subordinates. This voluntarily provided material may relate to grievances, novel concepts, opposing viewpoints, recommendations from subordinates, etc. The senior executives are informed of the true state of the organization’s operation via upward communication.
Advantages of Upward communication
Early resolution of the subordinates’ complaints is possible.
Effective upward communication enables management to act quickly.
Disadvantages of Upward communication
The information provided by subordinates may be disregarded by superiors.
The data could be misrepresented.
Top executives may refuse to hear complaints and address the
Horizontal Communication: The sharing of information among leaders in an organisation who are on equal footing is referred to as horizontal communication. Other names for it include lateral communication. The sender and recipient could work in the same department or separate ones. The coordination of the activity of multiple departments or individuals is the fundamental goal of horizontal communication.
Advantages of Horizontal Communication
Horizontal communication aids management in organising the efforts of several divisions.
It prevents work from being done again. In the end, it reduces the amount of time, money, material, and labour wasted.
Disadvantages of Horizontal Communication
There is a chance that the executives may develop differing viewpoints. The explanation is that every individual has an own strategy. It could affect the organization’s production and efficiency.
The communication is not given the appropriate weight by the recipient.
The information sender has no influence on the information recipient.
Diagonal Communication: Diagonal communication takes place when two or more people are involved but they are not on the same level or in the same sector of the organisation. It often kicks into action when other communication channels are unable to adequately deliver the information. For instance, the auditor may have permission to speak with the cashier directly in order to get information as the auditor is responsible for checking and verifying the cash balance at the end of the financial year. Diagonal communication is it. The information does not have to be sent by the cashier to the auditor. The unity of command premise is disregarded by this communication mechanism.
III. On the Basis of Way of Expression
These forms of communication are categorised according to their modes of expression. Below is a discussion of them:
Oral Communication
It is known as verbal communication otherwise. When there is little to communicate, oral communication is utilised. In an emergency, oral communication is often used. There isn’t enough time to print or write information, which is the cause. The tone or style of the voice reveals the true message to the listeners. Sometimes, the sender may convey information clearly via their attitudes and facial expressions. The emotions and attitudes of the sender and recipient influence how the message is received.
Forms of Verbal or Oral Communication Techniques
Orders, instructions, replies, information, and observations given face-to-face.
Phone or intercom conversations.
Lessons.
Meetings.
Gatherings.
Interviews
Group conferences between executives and employees.
News magazines and television via the cinema.
Radio.
A message recorded on tape (It is normally followed in big sized business units).
Calling
Whistling
Advantages of Oral Communication
The primary benefits of oral communication are as follows:
Cost-effective: Verbal communication is quite affordable. Because oral communication requires less time, labour, and stationery, it is advantageous.
A personal touch: Verbal communication cuts out middlemen. Personal communication is used to transmit the information from one person to another. They may have a casual conversation on the subject.
Effective: In oral communication, the recipient not only hears the words but also watches the sender’s facial expressions, eye movements, and hand gestures, which allows the recipient to completely comprehend the information. The sender’s bodily motions guarantee good communication.
A better understanding: Whenever the recipient has a question, he may resolve it by asking for further information. The sender may judge if the recipient has understood what they have spoken. For better comprehension, the sender may include as much information as possible.
Instant motivation: A top executive who is in constant communication with his staff will find it simple to inspire them. The personal touch of the top executive with his subordinates is enhanced via oral communication. Therefore, there is a chance of present motivation.
Flexibility: Oral communication allows for more flexibility since the sender may always edit their remarks. Oral communication has no written record, thus all of the information may be changed without any problems.
Using the information: Oral communication is the most effective way to spread information quickly during crises. For instance, oral communication alone would accelerate the flow of information and enable the injury- and delay-free rescue of personnel in the event of a fire on company property.
Disdvantages of Oral Communication
There are certain drawbacks to oral communication as well. Here is a list of them:
Physical distance: If the sender and the recipient are both at far locations, oral communication will be highly challenging to adopt. Even if the information is sent over the phone, it is not reliable.
Lack of evidence: When communicating verbally, the sender’s words may influence the receiver’s behaviour. The individual who inspired the action is not held accountable if it goes wrong. The absence of any proof of motive is the cause. The recipient of information might be the person that is impacted. In the future, motivation will not be possible without textual communication.
Lengthy information: If the message is really long, oral communication is not the best way to convey it. It takes a long time to transmit the information. Top executives lack the time or are not prepared to spend it on explaining the knowledge to others.
Generates needless issues: The recipient of spoken instructions may comprehend them at the time of communication, but he or she may forget them afterwards. The recipient then responds in accordance with his willingness. It causes needless issues in an organisation. They appear as a result of the lack of records.
Information is sent to a huge number of recipients, but not all of them find it valuable. Oral communication could not result in the expected outcomes. Then using textual communication is preferable.
Filtering the information received: The receiver has the option to disregard the data. The information cannot be properly received if the recipient is in a bad attitude. It is not up to the sender to evaluate it. The whole information may not be conveyed in the situation.
Misunderstanding: The sender should utilise language that is often used. If he doesn’t, the recipient could interpret the remarks differently than the speaker intended. Additionally, the sender’s poor verbal (or) oral expressiveness might cause misunderstandings. As a result, it is recommended that unclear words be avoided and the clearest possible spoken presentation be employed.
2. Written Communication
Any information is sent via this kind of communication. Both small and big organisations, as well as individuals, depend on written communication. Written communication is any kind of communication that is documented in black and white. When delivering information to a remote location, written communication is used. Written communication makes both managers and employees blind.
Written Communication Formats
The types of written communication are as follows:
Diagrams.
Graphs
Pictures
Circulars
Notes
Manuals
Reports
Bulletin
Advantages of Written Communication
The following is a discussion of the primary benefits of written communication:
Binding the authorities: Typically, written correspondence binds both the sender and the recipient. Nobody gets away from their obligations.
Covering distance: The sender is indirectly required to employ textual communication if the intended recipient is located distant from them. Therefore, written communication may go anywhere.
Helpful for long information: Written communication is the most effective way to convey information.
Reaches a sizable audience: A circular, a kind of written communication, disseminates information to a large audience.
Written communication covers policy issues, rules and regulations, secret concerns, service conditions, orders, instructions, and the like. It also provides a permanent record for future use. These are required for reference in the future. Written communication aids the authority in making quick judgments and taking appropriate action.
Decrease conflict: Written communication helps to diffuse or prevent workplace conflicts. The explanation for this is because each individual has a copy of the information that he utilises whenever necessary.
Aids in analysis: After obtaining the information, the recipient may analyse the situation. Written communication allows the recipient time to reflect, evaluate, and choose the best course of action moving forward.
Preventing alteration: Using written communication helps to prevent unauthorised adjustments. The issuing authority must certify to every modification. In most organisations, changing the information is prohibited.
Advantages of Written Communication
The following flaws exist in written communication, despite it being the greatest form of communication:
Expensive and time-consuming: Time must be spent on the information’s preparation, printing, and typing. This task entails a lot of paperwork and calls for more than one staff person. It takes a lot of time and has a high informational cost.
Red-tapism: This lack of flexibility leads to red-tapism.
No secrecy: There is no confidentiality in written communication. It’s because everything is presented in black and white. Additionally, the typist handles textual communication. As a result, the message is no longer kept a secret.
Lack of adaptability: Written communication is impersonal. Once transferred, information cannot be readily retrieved.
Written communication is the best, despite some of its drawbacks. If the superior types the item himself, the confidentiality may be preserved.
Indian workers haven’t always given their jobs their undivided attention. In India, management skills are also in limited supply.
The management is often in need of excellent executives and managers. Effective managers keep an eye or maintain supervision on their employees’ work.
In order to meet immediate goals, performance must be monitored.
At every level of management, performance is monitored from the top i.e, supervision is performed by top management.
The effectiveness of the management members is monitored by top management and middle management.
However, employees are managed by members of bottom management, who also monitor their performance.
Members of bottom management interact with employees on a daily basis. A high level of supervision is required of members of the lowest management. they are referred to as first line managers.
First-line supervisors keep an eye on the work being done. So, to be a supervisor is to watch over workers while they are at work.
A person who is in charge of monitoring workers’ job performance is referred to as a supervisor.
There are several names for supervisor. They include: the foreman, the departmental head, the chargehand, the departmental incharge, the overseer, the sectional head, the head clerk, the chargeman, the chief clerk, the head assistant, the inspector, the superintendent, or the section officer, among others.
Functions of Supervisor
The job of a supervisor immediately affects employee actions that are crucial to accomplishing an organization’s goals.
Therefore, the manager is considered as the key figure in management. The supervisor typically carries out the following duties:
He issues commands, offers directions, and enforces laws.
He transforms the objectives, plans, strategies, and materials into goods and services.
He establishes appropriate working environments or climates.
He assigns tasks, establishes protocols, and suggests approaches.
He sets up equipment and supplies for the employees.
He imparts technological expertise to employees.
He inspires the staff by showing them how successfully they can do their duties.
He sets a good example for others in his group or under him.
He listens to his subordinates’ problems and frustrations and works to address them.
He may, if necessary, inform upper management of the concerns or sentiments of his subordinates.
He has power over how well employees perform.
He suggests that his subordinates be given promotions, transferred, and paid more.
In any sort of organisation, the supervisor’s job is a crucial one. is in charge of employees who are directly involved in the organization’s core functions.
The operation’s effective completion falls largely under the supervision of the supervisor.
The use of the machinery and equipment is made efficient by the supervisor’s placement of the personnel.
The following headings are used to group the supervisor’s duties:
A. Obligations to coworkers or inferiors.
B. Management-related obligations.
C. Responsibility for carrying out his own tasks.
D. His obligations to his coworkers.
A. ResponsibilitiesToward Employees OR Subordinates
The supervisor gives his employees or subordinates directives and instructions.
The supervisor tries to gain the respect of his employees.
The manager has to foster a feeling of teamwork among the employees.
The supervisor must establish work schedules, processes, and techniques.
The supervisor must pay attention to the grievances and issues of his staff members and assist in finding solutions.
The supervisor must provide up training opportunities for newly hired employees.
A supervisor must inspire his staff members and recognise effective job performance.
The boss must serve as an example for his employees.
The manager is responsible for maintaining order among the staff.
The supervisor must pay attention to the ideas made by the subordinates and then make recommendations to them based on the situation.
The supervisor must clearly convey to his staff what the organization’s goals are.
B. Responsibility towards Management
The supervisor must update the management on the assignment’s status.
The supervisor is required to let management know about any issues or challenges the subordinates are having.
The supervisor must cooperate with his superiors and, if necessary, take on additional responsibilities.
The supervisor must make sure that the task is carried out as his superiors have requested.
The supervisor must serve as an effective link between the management and employees.
The supervisor should take measures to operate more economically.
C. Responsibilities towards his own Function
The supervisor must carefully prepare the tasks that are given to him.
The manager must assign the task to his staff members based on aptitude and interest.
The supervisor is responsible for carrying out management’s policies and plans.
The supervisor must acquire the supplies and equipment and perform routine inspections.
The supervisor must get familiar with the most recent production procedures and quickly adopt them.
The manager must organise the workforce.
The supervisor must monitor the performance of his employees and provide recommendations for future development.
The supervisor must initiate all necessary actions to put the management’s goals and policies into effect.
The manager must take action to increase the output of his employees.
D. Responsibilities towards his Colleagues
The supervisor must cooperate with his subordinates.
The supervisor must take into account and accept his coworkers’ criticism of his goals.
The supervisor must consent to the employee’s move from one department to another.
If necessary, the supervisor must provide other departments with vital information.
From time to time, the supervisor’s duties are modified. The supervisors handled personnel issues in the 19th century. The personnel department is now in charge of handling personnel concerns.
The recruiting, firing, remuneration, punishment, training, placement, and advancement of workers are all considered to be personnel concerns.
The efficient use of human labour justifies acknowledging the supervisor’s responsibilities.
Qualities of Supervisor
The supervisor’s characteristics are highlighted in the previous description of his duties.
Additionally, the supervisor’s primary concern is maximising productivity at the lowest possible cost.
The manager must thus do his job honestly and sincerely. The traits of a supervisor are highlighted by the following points:
Technical expertise: The supervisor should possess the essential technical expertise for his position. He should also understand how to use this technological knowledge to his job effectively.
Organizational knowledge: For the supervisor to perform his duties effectively, he or she should be familiar with organisational concepts.
The supervisor should be aware of the level of power delegation that is advantageous to the organisation, the number of members who are really under their supervision, the duties that call for specialisation, etc.
Effective communication skills: An effective communicator is a supervisor. To be understood, he must talk in straightforward terms. He needs to express himself clearly. Tone variations are more efficient in communicating concepts than long passages of speech. The supervisor must speak in terms that his subordinates are familiar with.
Administrative skills: The supervisor should possess administrative skills. He should be skilled at persuading his subordinates or employees to cooperate or coordinate.
Listening skills: It’s important to pay attention to the supervisor. The rationale is that the supervisor should listen to what his employees have to say, learn from their experiences, and comprehend the challenges they encounter. The supervisor shouldn’t give the impression to the staff that they are being ignored or that their concerns won’t be taken seriously.
Honesty: The boss ought to be a guy of integrity and honesty. His actions and choices should serve as evidence of his sincerity and moral character.
Memory: The supervisor must be able to recall both the commands he got from higher-ups and the instructions he gave to his employees. The manager is not expected to remember everything, but he should remember everything important.
Recognize and respect other people’s emotions: The manager should use a delicate approach. In order to respect sentiments, he should listen to his subordinates’ issues when they are brought up and bring them up to the top management for resolution.
The capacity for organised thought: The supervisor’s duties include organising, directing, coordinating, and controlling. He should thus be aware of how to execute tasks in a systematic manner. Through organised thought, tasks may be completed in a timely manner.
Complete information: The manager should be fully aware of all of his employees. Each subordinate’s aptitude, qualification, area of interest, experience, and willingness need to be known to the supervisor.
The capacity to appraise people: The supervisor should be able to fairly evaluate employees. It aids the manager in ensuring that his responsibilities are completed.
Physical appearance: The supervisor’s physique should be more dominating than that of his subordinates.
Patience: The boss should maintain his composure when his employees make errors. Instead of penalising his employees, the boss should make the necessary corrections. The supervisor should not be upset with his employees; instead, he should explain to them the repercussions of their errors.
A manager has to be inspired by himself in order to properly inspire his staff.
In front of his subordinates, the supervisor shouldn’t vent his dissatisfaction over his position, pay, or working circumstances. His subordinates will get irritated as well if he does this.
The boss must be self-assured and should encourage his employees to be as well.
Principles of Supervision
The following is an explanation of the supervisory principles:
The achievement of the organization’s goals is ensured by the efficient use of supervision.
The supervisor is responsible for providing efficient supervision.
The organization’s acceptance of the supervisor’s function and their effectiveness are factors in their effectiveness.
The supervisor should evaluate his team and choose which course of action best advances the organization’s goals. This makes effective supervision possible.
The successful meeting of group requirements is a prerequisite for any supervisor’s success.
The survival of the group and its advancement toward its goals serve as the standards by which the supervisor’s effectiveness is assessed.
Types of Supervision
The methods used by the supervisor are used to categorise the different forms of supervision. This categorization of supervision is as follows:
Autocratic or authoritarian supervision: In this kind of supervision, the supervisor is fully in charge and accountable for all group decisions. There is no interaction between the supervisor and his staff members. but merely demands compliance. In this situation, the boss continuously directs the workers on what to do, how to accomplish it, etc. In other words, the boss may be described as a “do this, do that” boss.
Independent or free-rein supervision: In this scenario, the superior does not interfere with the work of the subordinate. He seeks to exert the least amount of control. The supervisor’s key responsibilities include overseeing the purchase of raw materials, obtaining information on rules and regulations from upper management, and communicating such information to his subordinates. The supervisor may act as a mediator to find a solution to the subordinate’s issues.
Democratic governance: It is based on democratic ideals. Only after hearing thoughts and proposals from his subordinates does the supervisor make a choice. They are welcome to speak and consult with the supervisor at any time. In other words, the supervisor has complete trust in and authority over his employees.
Kinds of Supervisors
Depending on the kind of supervision he uses, different supervisor types are categorised. The following types of supervisors have been established by Prof. R.K. Burns:
Bureaucratic regulation: The supervisor established (or abided by) the laws and regulations. Personal interaction with subordinates is quite uncommon. To the greatest degree feasible, the supervisor refrains from speaking with either superiors or subordinates.
Autocratic directive: The supervisor only uses one-way communication. who seeks more authority and accountability. The supervisor has tight control over his staff and excels in the technical aspects of the position. He does not take into account the subordinate’s attitudes since he wants to do more work. The supervisor has greater control over the employees. Therefore, the subordinates show the boss minimal regard.
The supervisor has close relationships with both upper management and subordinates. He has experience leading subordinates. He is concerned about his safety and progress. The subordinates in this situation are self-centered. The boss is a laid-back person.
Democratic-integrative: This sort of manager strives to create a true team environment. The manager is interested in security, recognition, and growth for both himself and his employees. He practises a give-and-take approach with his staff members. The supervisor has an honest two-way conversation. Interest in the group drives the boss.
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Supervisory Techniques
A supervisory technique is a strategy or process to be used while supervising others.
The use of supervisory techniques is based on the attitude of the subordinates.
The kind of supervision is determined by the supervisor’s method. The following are some of the supervisory techniques:
Democratic or consultative method: A supervisor will only choose which techniques or processes to use after discussing with his staff. Under this method, all democratic values are applied. The subordinates are given a chance to voice their thoughts. The supervisor becomes more self-assured and
Authoritarian or dictatorial method: The administration that has centralised authority uses this style. As a result, the supervisor has greater influence over his employees. The management’s established processes and procedures must be scrupulously followed by the subordinates. While not appropriate for the current commercial environment, this method works well in unorganised labour situations.
Non-interfering or fee-rein technique: The subordinates are free to choose from among the various organisational techniques or processes. The quality and quantity of the product are important to the supervisor. The boss serves as a consultant and aids the staff members in finding solutions to issues. Under this strategy, subordinates reveal hidden skills.
The skill of management lies in motivating people to complete tasks. Work completion is a challenging endeavour. It has to do with how people act. Any organization’s success is based on the actions and motivation of its personnel.
The objectives of the organisation are accomplished through directing human behaviour in the desired direction. It is important to determine the causes of this behaviour before leading or guiding the staff. Based on such factors, management strategically inspire the workforce.
DEFINITION
A motive is “any feeling or desire that so shapes one’s will that the person is driven into action,” according to Stanley Vance.
According to Robert Dubin, motivation is “the complex of factors supporting and maintaining an individual at work in an organisation.”
According to Beach, motivation is the readiness to use energy in order to attain a goal or get a reward.
According to Hodge and Johnson, “Motivation is the capacity of a person to meet immediate organisational needs.”
According to Shartle, “Motivation is a stated need or tension to travel in a certain direction or to accomplish a particular objective.”
According to Owen, “Motivation is an orderly explanation of why a person chooses to focus his efforts in one direction as opposed to another.”
Motivation is described as “the degree of preparedness of an organism to pursue some destinated objective, and requires the identification of the type and location of the factors producing the degree of readiness” in the Encyclopedia of Management.
“Motivation is the process of trying to persuade people to accomplish your will via the chance of getting benefit,” said Eduir B. Flippo.
According to Michael J. Jucious, motivation is the process of energising a person or oneself to take a particular course of action or press the appropriate button.
Mc Farland, Delton E “Motivation is primarily a psychological term. It has to do with the internal motivations that drive an employee or subordinate to operate in a certain manner or not.”
“Motivation is a generic word applicable to the full class of urges, wants, needs, wishes and similar impulses that encourage a person or a group of individuals to work,” write Koontz and O’Donnell.
According to J.E. Rosenz Weig and F.K. Kast, “Motivation is a process of inspiration that propels the team members to achieve the intended objectives.”
K. Blood and S. Zedeck, “A inclination to perform in a certain goal-directed manner is called motivation.
“Motivation” is the process of energising individuals to do desired action, according to Scott.
The nature of motivation may be understood from the following elements since it is concerned with the direction of managerial functions:
Ongoing process: When a social animal, men have many desires that cannot all be met at once; instead, as one need is gratified, another one arises. Motivation is an unending process, just as satisfying desires is.
A psychological concept: Motivation is concerned with the fact that an effective worker cannot perform the job satisfactorily unless he is properly motivated, and that effective performance necessitates proper motivation, which can only be achieved through a careful examination of the psychology of the workforce.
The whole person is motivated: Because motivation is linked to psychology, and because man’s fundamental needs are interconnected and inextricably linked, each need must be met for a person to be completely and not partially motivated.
Motivation may be financial or non-financial: There are two types of motivation: financial and non-financial. Financial motivation includes raising pay, allowances, bonuses, perks, and the like. Non-financial motivation includes praising employees, giving them more responsibilities, and encouraging them to participate in decision-making.
A frustrated man cannot be motivated until his fundamental requirements are met. A dissatisfied man cannot be motivated unless his basic needs are met. If a man’s basic needs are not met, he may be frustrated and, to some degree, mentally unwell.
Objectives are motivators: Man works to attain his own goals, and once those goals are met, he loses interest in working. Therefore, management should discover each person’s goals so that it may urge them to work by giving them instructions.
Unifying force: The urge to actualize one’s own image is referred to as the unifying force. Since motivation is greatly influenced by an individual’s self-image, the unifying force is a powerful motivational factor.
Motivation can be positive or negative: Positive motivation refers to the use of incentives, which may be monetary or non-monetary. Pay revision, job confirmation, and the like are examples of positive motivations. Negative motivation refers to the emphasis of penalties. Demotion and termination from the service are two examples of negative motivation.
Job satisfaction and motivation are not the same things: Job happiness is the result of good work performance, but motivation is goal-oriented behaviour.
Importance of Motivation
Two key components are required for any job performance: the ability to work and the willingness to work. Since unwillingness to work is useless, there is a need for motivation to instil a sense of willingness in the minds of workers to perform a task. As a result, performance may be expressed in the following formula:
Performance = aptitude x drive (willingness)
E.F.L. Brech described motivation’s significance as “The motivation issue is crucial to management decisions, and in its executive form, it is one of the general manager’s main responsibilities. We may confidently assert that an organization’s tone reflects the driving forces at the top.”
Following is a basic explanation of the significance of motivation:
Maximum use of elements of production: When workers work truly under the influence of motivation, it is possible to utilise labour and capital to the fullest extent possible.
Willingness to work: While a man may be technically, psychologically, and physically capable of carrying out the task at hand, he may not be eager to do so. Motivation encourages employees to accomplish their jobs more effectively.
Less absenteeism: Financial incentive programmes encourage employees to put in more hours by allocating financial rewards based on the amount of hours worked, which lowers absenteeism.
Reduced labour turnover: The firm may plan its operations on a long-term basis with the aid of motivation, which has both financial and non-financial incentive schemes, which helps to maintain the present labourers.
Availability of the appropriate people: Financial and non-financial incentives not only retain current workers but also draw in new hires by attracting the right individuals from outside the organisation to work there.
Development of positive labour relations: Positive labour relations are ensured by motivation’s ability to address issues like absenteeism, turnover, indiscipline, and complaints.
An increase in production and efficiency: Employees’ pay rise in line with gains in output and efficiency, and management also benefits from motivational programmes as the organization’s productivity and profitability rise as a result of the concerted efforts of the motivated employees.
Sense of belonging: An effective incentive plan fosters a stronger bond between the business and its employees, who start to feel as if the company is theirs and start to see it as having similar interests to their own.
Basis of collaboration: Because cooperation cannot be attained without incentive, cooperation is a precondition for increasing productivity and efficiency.
Aids in achieving organisational objectives: By motivating workers, who feel fully invested in carrying out organisational tasks, organisational goals are promptly realised. Employees are more likely to work tirelessly to attain these goals.
Improvement of skill and knowledge: Employees have pledged to execute or complete their jobs efficiently; as a result, they may enhance the knowledge and skills necessary for the position.
Types of Motivation
Some of the many motivational styles include the following:
Negative motivation: This type of motivation is based on the threat of punishment if a worker does not complete their work, such as a pay cut, layoff, promotion, or demotion. While this type of motivation is most effective in the short term, it does not provide the organisation with long-term benefits and can lead to disloyalty to both the group and the organisation.
Positive motivation: According to Flipps, positive motivation is the process of attempting to persuade others to follow your instructions through the promise of gain or reward. Positive motivation techniques include giving praise, taking part in decision-making, taking pride in oneself, and delegating power and responsibility.
Extrinsic motivation: Motivation is only present once a task is finished. Examples of extrinsic incentive include pay increases, retirement benefits, rest breaks, vacations, health wages, health insurance, and similar things.
Motivation from inside: When doing tasks, one is motivated from within. When the task is really done, these reasons provide gratification. Some examples of intrinsic motivation include praise, recognition, power, devolution of duty and authority, competitiveness, and involvement in the decision-making process.
Financial motivation: Money is either directly or indirectly related to financial motivation. Wages and salaries are the most significant financial drivers. Other financial incentives include bonuses, profit-sharing, vacation compensation, free medical care, retirement perks, and insurance.
Non-financial motivation: Non-financial motivation is the kind of drive that is not based on receiving cash compensation. Some examples of non-financial incentive include praise, work rotation, devolution of authority and responsibility, involvement, acknowledgment, and power. Non-financial incentives, in Robert Dulin’s words, are “psychic benefits or rewards of higher standing, which might be acquired in the work organisation.”
Theories of Motivation
The X theory and Y theory are two hypotheses that Prof. Douglas McGregor proposed in his well-known book, “The Human side of Enterprise.” Below is a succinct description of the “X” hypothesis.
X-theory: According to this hypothesis, a management makes decisions alone since they are fully informed and believes that they know best. A manager is capable of making choices. Any choices made by the boss should be followed by the employees.
Assumptions of the theory:
Work is essentially unpleasant for employees.
In their idleness, workers may find a means to put off doing the task at hand.
Worker performance may be mediocre.
The fear of punishment might spur employees to action.
The worker may be aware of the risks involved with failing to complete a task.
No employee is prepared to take on any kind of obligation.
The repercussions of inactivity need to be explained.
Employees are not motivated by success. They favour keeping things as they are.
A worker likes to follow instructions from others.
Workers detest being more productive. They worry about losing their current jobs, which is the cause.
The worker is a component of production as well and is not entitled to any special treatment.
Worker isn’t honest
When forced to make a choice, the employee delays.
The X-theory is seen as a tool for managing and controlling the workforce. The managers are in charge of making decisions across all disciplines. Employees are free to voice their ideas and feelings. However, management make the choices, and employees must adhere to them.
Y-theory: Y-theory just goes against X-theory. Consequently, X-theory is regarded as a conventional theory and Y-theory as a contemporary theory. The Y-theory emphasises the role of employees in achieving organisational goals.
Assumptions of Y-Theory
The typical person has a propensity to labour. A work is just as natural as a pastime.
The worker may extend his cooperation for task completion after he has a clear understanding of the job’s aim.
The employee might give his or her all in order to achieve business goals quickly.
The employee is self-directed, self-motivated, disciplined, and controlled.
The employee is willing to take on more responsibility if the management has established the proper motivating plan.
The current employee is qualified to do the job and is capable of making wise judgments.
A worker anticipates being acknowledged for a job well done.
A worker may perform well even in exchange for non-monetary benefits like greater responsibility or decision-making power.
No enterprise makes use of human potential to its fullest capacity. from Sobe
A worker has integrity and is willing to put in a lot of effort, according to the Y-theory. He exhibits originality and inventiveness and is eager to engage in the decision-making process. One may argue that Y-theory is positive and upbeat whereas X-theory is gloomy and dismal.
THEORY X
THEORY Y
1. Workers dislike to work by themselves.
1. Workers feel that work is as natural as play.
2. Workers are not ready to accept responsibility.
2. Workers are ready to accept responsibility if proper motivation is available to them.
3. Workers prefer to be directed by others.
3. Workers are directed by them-selves.
4. Workers are unambitious
4. Workers are ambitious.
5. Workers by nature resist changes and want security.
5. Workers are ready to cope with changes.
6. Workers lack creativity and fail to solve organisational problems.
6. Workers have a high degree of creativity and succeed in solving organisational problems.
7. It focuses the lower level needs of workers i.e., physiological and safety.
7. It focuses not only the lower level needs but also higher level needs i.e., social, esteem and self-actualisation of workers.
8. Strict control is necessary to achieve organisational objectives.
8. Workers exercise self-control and self-direction to achieve organisational objectives.
9. Authority is not delegated.
9. Authority is delegated.
10. Autocratic leadership is followed.
10. Democratic leadership is followed
Theory Z
William G. Ouchi, a professor, created hypothesis Z. This argument is based on a comparison of American and Japanese management styles. Theory Z explains how Japanese management techniques may be adapted to the environments of other nations, particularly the United States.
This theory emphasises the managerial aspect of organisational behaviour. Theory Z may be used as a motivational model. This idea supports the management school of thought. Consensus is used to make both important and small decisions in a genuinely democratic and dynamic administration.
Additionally, there is a strong sense of family between the boss and the workers. In other words, there is a strong emphasis on intimate, trustworthy relationships between employees, supervisors, and other groups.
The external control of human behaviour is emphasised in Theory Z. Employee friction is reduced and team spirit is ensured through mutual trust. Depending on the individuals they work with and the sort of work being done, management professionals in practise develop their own management styles.
Features of Theory Z
Trust: When there is trust and openness among management executives, employees, workers, and labour unions, conflict is minimised to the greatest extent possible. Employees also provide their fullest cooperation to help the organisation accomplish its goals. William G. Ouchi asserts that a good organisation requires trust, honesty, and transparency.
Lifetime Employment: In order to foster a close relationship between staff members and the organisation, it is important to provide lifelong employment to every employee. To prevent layoffs during challenging economic times, shareholders or business owners can forego their dividends or earnings.
Employee Involvement: Employee involvement refers to the taking part of workers in the decision-making process. It’s not required for workers to participate in every decision. Any decision that might have an impact on workers in any manner, however, should be made collaboratively. Employees should be informed of the management’s viewpoint if it intends to make a choice independently so that they do not feel disregarded. Such participation fosters a feeling of accountability.
Organization with Integrity: An integrated organisation values job rotation. The interconnectedness of tasks is better understood because of job rotation. Team spirit is fostered by this kind of knowledge.
Promotion of a worker is only permitted up to a certain level. The advertising that results in the adoption of the newest technology being saturating is the cause. The promoted employees are not able to handle change. Instead, the management emphasises horizontal mobility of employees so that workers do not feel stagnant in the same position for an extended period of time.
Coordination: A leader’s job is to organise the work of the team and foster a sense of class inside the company. Each and every employee should be interviewed by the boss, who should then analyse the issues.
No Formal Structure: According to theory Z, the organisation has no formal structure. A complete teamwork should be present at all times, including cooperation, ideas, tactics, plans, and information. For instance, a cricket team performs effectively and handles issues without any official reporting arrangements.
Motivation: Employees will be motivated if they are given the opportunity to collaborate with their superiors or on particular initiatives. The explanation is that their participation offers the possibility of increased revenue in the future.
Informal Control System: Organizations should implement an informal control system. Therefore, for this aim, cooperation and mutual trust are prioritised above superior-subordinate relationships.
Working Conditions: For employees to be more satisfied, a stable work environment is essential.
Criticism of Theory Z
Theory Z is not thought of as a motivational strategy. As a result, it has drawn criticism for a number of reasons. Following is a list of the complaints:
The Japanese management methods are the foundation of Theory Z. Japanese culture has influenced managerial strategies in that nation. Where Japanese culture is predominant, Theory Z may be implemented. The cultures of different nations are distinct from one another. Therefore, theory Z cannot be used in all situations.
There is not enough data to support Theory Z. As a result, this theory’s application in real life is quite restricted.
In terms of criteria for when it should be used in an organisation, Theory Z falls short.
The lack of a formal framework is one of theory Z’s characteristics. If the organisation attempts to adopt theory Z, there are certain operational issues caused by the lack of formal structure.
According to hypothesis Z, employment for life is not conceivable. The explanation is that employers are not willing to keep a worker who is otherwise unproductive since replacements are readily available.
According to Theory Z, there should be a sense of class in the organisation. This is quite difficult to do. The cause is because different workers have different eating, dressing, and other routines.
Owners or shareholders in India won’t accept less profit or a smaller share of the pie to prevent layoffs.
A company would encounter several issues brought on by trade unions if upward advancement of employees is banned.
It is difficult for workers to move horizontally. It is impossible to transfer a skill required for one job to another.
If an organisation adheres to the limitation in upward promotion, it will not be able to benefit from specialisation.
To put it simply, hypothesis Z does not provide the management any solutions to the issue. Perfect solutions are required in the current, rapidly evolving computing environment.
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Maslow Hierachy of Needs
In essence, there are two categories of requirements: intrinsic needs and learned needs. Nature itself have innate wants. Anger, hunger, sexual desire, etc. are a few examples. Natural wants are another name for innate desires. Experience is the foundation for acquired needs. For instance, if a student in the area drives a “Bajaj M80,” other students in the area may like to do the same. The term for this is acquired need.
Primary needs and secondary requirements are two more categories for categorising needs. In order to live and to preserve life, one must have their basic requirements met. for instance, food, drink, air, etc. Recognition, love, affection, and other wants related to the mind and spirit are examples of secondary needs.
Dr. Abraham H. Maslow assigned a specific ranking to the different human requirements. This ruling is generally recognised. Dr. A.H. Maslow was a pioneer in correctly classifying human needs in this manner. Maslow asserts that human desires are limitless and eternal. When one want is met, a new desire appears in its place.
The employees are not motivated by their gratified demands. The only things that make a guy work hard are unmet desires. According to Maslow, needs or desires are met in a certain sequence.
Maslow’s Hierarchy of Needs
Basic physiological requirements include the need for food, water, shelter, clothes, and sexual satisfaction. These requirements are built into nature. These are essential for both humans and other animals. Other wants won’t arise if these requirements are not met. Man can only exist on food. These requirements are a stronger driving force than others.
Safety and security requirements: Safety and security requirements only appear after the most fundamental physiological requirements are met. Physical danger or the loss of established, fundamental physiological demands are both safety concerns. Concerns about security include sickness, lack of support, and job loss. As a result, the employees strive to get benefits like pensions, insurance, and job stability.
Man is a social animal that craves a sense of belonging. In society or in a family, he wants to love and be loved. Some examples of social needs include the sharing of emotions and complaints, love, sociability, acknowledgment, discussion, and a sense of belonging.
Esteem and status requirements: Also referred to as ego or egoistic requirements. Some examples of esteem and status needs include self-assurance, independence, success, competence, knowledge, status, recognition, and appreciation. Rarely are most of them rewarding.
Self-actualization requirements: Self-actualization requirements are also known as selfrealization requirements. The desire to become all that one is capable of being is referred to as self-actualization. For instance, a doctor may believe that he can save a patient’s life. A teacher believes he can provide pupils with the greatest instruction possible. In other words, the person performs at the highest possible degree of excellence.
The first three requirements—basic physiological needs, safety and security needs, and belonging and social needs—are considered lower level needs out of the five needs described above. He considers the latter two requirements to be higher level needs, namely self-actualization and status demands.
Through monetary and non-monetary compensation, lower level requirements are met. The phrase “non-monetary reward” refers to things like favourable working circumstances, affection, and recognition. The demands at a higher level are met through granting input into decision-making, distributing power and responsibility, granting more flexibility, providing possibilities for growth, and other similar actions.
Critical Appraisal of Maslow’s Hierarchy of Needs
The hierarchy of needs aids management in understanding employee behaviour and inspiring it. Maslow acknowledged that the hierarchy of needs is not fixed and that it might vary from individual to person, nonetheless. Consequently, Maslow’s theory of the hierarchy of needs has the following flaws:
The Maslow hierarchy of requirements does not always, everywhere, and under all conditions apply.
Some individuals don’t need social needs since they may have experienced love loss as children.
Various individuals have wants at different levels. The rationale is because there has been much expertise with the demands at the lower levels. People with lower level requirements may not be as ambitious or anticipate having higher level wants.
An individual’s views, expectations, and experience determine his behaviour. These do not lead to the Maslow-categorized needs.
No one can be motivated by only one need. For there to be adequate motivation, there are a number of requirements that must be met.
Not all employees are motivated by the same needs. A worker might be motivated by a need. It may not inspire another employee.
HERZBERG’S THEORY
Frederick Herzberg had researched motivation in the late 1950s. A work-motivation hypothesis has been created as a result of the investigation. This idea has wide-ranging effects on management and the efficient use of human resources. Herzberg Motivation Idea of Needs is the name given to this theory. It is also known as the Hygiene Theory, Maintenance Theory, or Two-Factor Theory of Motivation.
Herzberg attempted to comprehend the motivation issue from his investigations and to pinpoint human behaviour, nature, and desires that are essential to both organisations and people. He spoke with 200 engineers and accountants from 11 different sectors in the Pittsburgh region for this research. He asked them to recall times when they felt happy or awful about their professions and to explain the circumstances around those sentiments.
According to the research, there are significant differences between the characteristics that contribute to work satisfaction and job discontent. These two emotions weren’t at odds with one another. If a component contributes to work satisfaction, its absence would not indicate job unhappiness but rather what would be referred to as job contentment.
Similar to this, an element is in charge of work discontent. A lack of such a component might be referred to as a lack of work discontent rather than job contentment. So, this idea is supported by two different sorts of elements. They are elements influencing both job satisfaction and job dissatisfaction.
Herzberg asserts that motivational variables are in charge of work happiness. The reasons for job dissatisfaction are related to hygiene or maintenance issues.
Motivational Factors
While the lack of some elements may not result in unhappiness, their presence might motivate employees. We refer to them as motivational elements. Herzberg listed many motivating elements, including I success, (ii) acclaim, (iii) promotion, (iv) the task itself, (v) the potential for progress, and (vi) responsibility.
Maintenanace Factors
The existence of a certain set of characteristics motivates the workforce, while their absence results in significant unhappiness. In other words, having these criteria helps to avoid complaints. These elements were referred to by Herzberg as maintenance of hygiene elements.
Herzberg classified the following characteristics as maintenance factors in his research. They are (i) company administration and policy, (ii) technical oversight, (iii) interpersonal relationships with subordinates, (iv) remuneration, (v) job security, (vi) personal life, (vii) working conditions, (viii) status, (ix) interpersonal relationships with superiors, and (x) interpersonal relationships with peers.
Internal incentives that are present while the job is being done are known as intrinsic factors. Therefore, the employees are both directly and internally motivated.
Extrinsic factors are rewards from outside sources that are only available after a job is completed. Extrinsic elements include things like insurance, holiday pay, leave, and retirement benefits. The employees in this situation are motivated, albeit indirectly.
Organizational managers began to focus more on internal characteristics as a consequence of Herzberg’s study since they often led to successful outcomes. He reached a decision as a result of his research. The employees could be inspired:
if the work is difficult;
if there is a chance for development;
if there is a chance of success;
whether the employees are sufficiently empowered and accountable;
if the employees are given credit; and
whether the employees can progress in their field.
Motivational Techniques
The following list of motivating strategies is briefly explained:
Financial incentives: Financial incentives include compensation revisions or raises, ancillary benefits, bonuses, etc. Incentives that are monetary have more motivational power than those that are not.
Job-based strategies include job rotation, job expansion, work enrichment, job simplicity, and job analysis and assessment. Job enrichment raises understanding of the significance of doing a certain job. Job switching helps to some degree to break up the monotony of the job. The number of operations increases with job expansion.
MBO technique: Employees and management collaborate to determine the scope of responsibility and the desired outcomes. They evaluated their contribution to the growth of the organisation using MBO as their operational manual.
Leadership techniques: Some of the leadership styles are autocratic, democratic, and persuasive. They have their own effects on both the short- and long-term motivation of employees.
Sensitivity education: Manager groups get this kind of education. Following sensitivity training, they inspire their subordinates. With the use of sensitivity training, managers may better understand who they are, get perspective on their workplaces, think critically, and build social skills while interacting with subordinates.
Requirements of a sound Motivational System
A strong incentive system helps the organisation most. Therefore, while designing a motivating system, adequate attention should be taken. Some conditions for an effective motivating system include the ones listed below:
A motivating system should strike a balance between organisational employees’ goals and philosophies.
Members of the organisation should have a good understanding of the organization’s motivational system.
The employees’ whole range of activities should be covered by the incentive system.
The efforts and rewards should be in line with the motivating system.
A flexible motivating mechanism is necessary. It implies that sometimes, adjustments are made to the motivating system in accordance with needs.
The management may examine the position in order to address issues with personnel placement, advancement, training, and transfer. An excellent foundation for carrying out the aforementioned responsibilities is provided by job analysis and assessment.
An person is given a job based on his or her aptitude, proficiency, experience, technical expertise, area of interest, etc. Job assessment and analysis assist in determining the precise wage for each employee. It would prevent employee resentment and hostility.
Meaning of Job
A job is a position with some degree of difference or resemblance to other positions. A job would be something like the position of general manager. In any organisation, there is only one position like this. Salespeople, clerks, and other positions are among those that are many in every organisation.
Job Analysis
Employment analysis focuses on the elements and traits that make up each job. Job analyses outline the responsibilities and tasks associated with each position. Based on a job analysis, pay is set. It establishes the level of expertise required to carry out each task.
Task analysis reveals the circumstances in which each job is carried out as well as the level of risk associated with it. The management uses job analysis to determine the qualifications needed for each position and to choose the methods or procedures to carry them out.
The methods listed below may be used to analyse each job:
The management has provided a questionnaire for all job applicants to complete.
The job applicants must maintain a journal. The logbook should include all of the crucial performance information.
Management conducts a face-to-face interview with candidates for the position. The opportunity for job holders to discuss potential issues and challenges with work performance follows.
A different individual is chosen to monitor how job holders behave while carrying out their duties.
The management then creates a thorough report. You may think of it as a job analysis.
The management conducts job analyses at least every two to three years. The explanation is that, in the quickly evolving company environment, social or technological change may have an impact on employees’ behaviour.
Advantages of Job Analysis
A job analysis makes it easier to choose and put the proper people in each role.
Management can provide the necessary personnel the proper training.
A job analysis is used to determine a reasonable salary rate.
Job analysis aids in merit assessing and evaluating jobs.
Job analysis enables managers to make prompt judgments. The choice can have anything to do with selection, promotion, or transfer.
Job analysis may be used to put an end to labour conflicts.
The management may implement appropriate disciplinary measures. 8. Appropriate staff selection guarantees work satisfaction and employee morale.
Job analysis eliminates compensation disparities and lowers absenteeism and labour turnover.
It serves as a foundation for performance evaluations and supports the management’s control role.
Job Evaluation
The approach of job assessment is quite helpful. The compensation rate is set based on the job’s requirements, not on the presence of males. Job rating is another name for job appraisal. Job assessment is a methodical process that assesses the relative worth and relevance of each job based on its tasks, responsibilities, and other factors.
In other words, a job assessment is a financial representation of every work. Job evaluation’s primary goal is to determine a man’s compensation rate in accordance with the work he does. It entails setting higher pay rates for occupations with a high level of risk, and vice versa. For instance, a college speaker should be compensated more than a classroom instructor.
The management hires someone who satisfies the minimal qualifications of a position. The minimum and maximum criteria for each job are determined through job assessment.
Job Evaluation Procedure
The process for evaluating a job is as follows:
A thorough examination of the position, taking into account education, training, experience, and intellect.
Determining the level of responsibility and the amount of physical and mental work required.
A job summary.
Think about a job’s qualifications in terms of education, training, and experience. Experience may get 10 points and training 5 points if it is deemed to be twice as valuable as training.
Job evaluation.
Evaluation of various positions.
Decide how many points should be awarded for each job-related attribute.
Total the points earned for each task.
Arrange the tasks according to their point totals.
A financial expression of the job’s worth based on the points earned.
Advantages of Job Evaluation
The following are the key benefits of job evaluation:
Since compensation is set based on the kind of employment, management may be able to regulate labour costs.
It is simple to rank jobs.
Management may set comparable tasks at the same salary. In other words, management finds it simple to implement the equal pay for equal work premise.
There is a chance that staff morale may go up.
Management is able to implement an appropriate promotion policy.
Job assessment aids in staff recruitment, placement, and training for management.
It offers a justification for varying pay scales for various vocations.
It strengthens bonds between coworkers and between employees and their employers.
The management sets the pay for a new position without any effort.
Management is able to create appropriate incentive programmes.
Job assessment reduces the amount of staff turnover.
Disadvantages of Job Evaluation
Following is a discussion of the key drawbacks of job evaluation:
Job evaluations focus on the job itself rather than the worker.
Workers who are above average suffer from wage uniformity.
Similar to other elements, job assessment is one of the factors that go into determining a salary rate.
It is quite challenging to translate all the elements into financial terms for job appraisal.
The evaluation of each work attribute is entirely subjective.
Job assessment overlooks the state of the labour market, which is equally to blame for the rigidity of pay rates.
The employees may not comprehend the job assessment. The employees may thus be suspicious of the management’s motives.
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Principles or Guidelines for Job Evaluation
The management must take great care since the purpose of the job assessment is to determine the value of the job as determined by job studies.
The management and employees should cooperate with one another.
The terminology utilised in the job appraisal process varies. Before the job really begins, they are thoroughly communicated to the employees.
A job’s conclusion is only completed when all raters concur.
Before establishing the method for job appraisal, the size and kind of the organisation must also be taken into account.
The goals of the job assessment may be decided upon and communicated to those who would likely be impacted.
The management must make a choice about how to spend the available funds.
To prevent misunderstandings, all parties involved should be informed about the chosen job assessment method and how it operates.
To ensure the employment assessment system runs well, interested parties are urged to participate.
The salary rates for occupations must be on par with those for similar jobs in the same business and sector.
The company may employ the and include a provision for merit that increases with labour grades and length of service in the job assessment programme.
To encourage employees’ confidence in the work assessment system, temporary overpayments may be provided.
Method or System of Job Evaluation
The following is a discussion of job appraisal techniques:
1)Ranking system: Under the ranking system, occupations are rated according to their responsibility and practicability. Each job is valued relative to other occupations in terms of money. The ranking system may be effectively used in small organisations.
The management may use this strategy in areas with a high volume of comparable work being done. The primary shortcoming of this approach is the impossibility of correct appraisal.
2)Classification Method: Grading technique may be used as a classification strategy. At first, grades are described as being universal to many occupations. The management then researches the varied specifications for each task.
Following that, occupations are evaluated based on their own criteria. Class one, class two, class three, as well as competent, semi-skilled, and unskilled, are a few examples. A committee normally handles this.
3)Factor point scoring: The management is able to pinpoint the elements that each work has in common. Points are then assigned to each of these factors based on their relative relevance.
The last step is to base the salary rate on the total points earned by each task. The similar elements of any job are education, experience or talent, responsibility, and working environment.
4)Factor comparison method: This approach resembles factor point scoring in certain ways. The management may uncover certain common elements using this strategy as well. The management might choose a critical position first. The management should choose a critical position with great care.
Through the process of allocating funds factor-wise, the wage rate is set to the primary task. For instance, education costs Rs. 4, talent or experience costs Rs. 4, physical needs cost Rs. 1, responsibilities cost Rs. 2, and working conditions cost Rs. 3.50.
The entire hourly wage rate is Rs. Here, prevalent characteristics include education, talent or experience, physical needs, accountability, and working environment. The scales of the key job are used to factor-compare the other tasks.
