UNIT – 1

INTRODUCTION TO MANAGEMENT

Management is an important factor for the success of any organized

activity. Today management basically concern with changes and challenges,
and it is difficult to manage. Management is an art of getting things done
through others. Management is to plan, organize, direct and control the
resources of the organization for obtaining common objectives or goals. It is
related with resources like material, money, machinery, methods,
manufacturing and marketing.

Management principles are universal in nature. Management is

necessary for all types of organization, such as public sector, private sector,
govt. department, hotel, hospital, hostels, educational institutes, require
management for several growth and expansion.

DEFINITION OF THE MANAGEMENT

According to Harold Koontz

“Management is the art of getting things done through and with people in
formally organized groups”.
According to the GeorgeR.Terry
“Management is a disconnect process consisting of planning organizing
activating and controlling performed to determine and accomplish the
objectives by the use of people and resources.”

According to the Donald . J. Cough

“Management is the art and science of decision making and leadership”.

According to the MaryCushingNile

“Good Management, or scientific management, achieves a social objective
with the best use of human and material energy and time, and with
satisfaction for the participants and the public.”

According to the Henry Fayol

“To manage is to forecast, to plan, to organize, to command, to coordinate,
and to control.

NATURE OF MANAGEMENT:
1. Multidisciplinary: Management is basically multidisciplinary. This
implies that, although management has been developed as a
separate discipline, it draws knowledge and concepts from
various disciplines. It draws freely ideas and concepts from such
disciplines as psychology, sociology, anthropology, economics,
ecology, statistics, operations research, etc. Management
integrates the ideas and concepts taken from these disciplines

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 and present newer concepts which can be put into practice for
managing the organization.

2. Dynamic nature of principle: Based on integration and supported

by practical evidences, management has formed certain
principles. However, these principles are flexible in nature and
change with the changes in the environment in which an
organization exists.
3. Relative, not absolute principles: Management principle are
relative, not absolute, and they should be applied according to
the need of the organization. Each organization may be different
from others. The difference may exist because of time, place,
socio-cultural factors, etc.
4. Management Science or Art: There is a controversy whether
management is science or art. However, management is both a
science and art.
5. Management as profession: Management has been regarded as
profession by many while many have suggested that it has not
achieved the status of a profession.
FUNCTIONS OF MANAGEMENT:
1. Planning: Involves selecting the objectives and actions to
achieves them planning stage involves decision making and
choosing future courses of action from the various alternatives
2. Organizing: Role of each person in any organization is fixed. The
concept of role is who will be doing what should be known, to
achieve organizational targets efficiently. It is intended that all
the tasks necessary to achieve targets are assigned to people
who can do the best.
3. Staffing: Staffing function includes keeping the various
organizational position fixed. This activity is done by identifying
work force requirements, keeping the records of the
performance of people working with the organization. So that
suitable people can be prompted and at the same time people
performing not up to the mark could be send for training. If all
the above activities are taking place in nice way in any
organization, it will give rise minimum work force turnover.

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 4. Directing: Directing means influencing people, so that they will
contribute to the organization targets directing involves
motivation, leadership styles and proper communication.
5. Controlling: It is the process of comparing the plans with the
results. If there is deviation attain taken to be bridge the gap
between plan and actual results.
6. Coordinating: The essence of management is the achievement
of coordination among people coordination is a complex process
following the principles by which organization activity can be
accomplished. Coordinative is possible only if all the personnel
working in the organization accept the target of the
organization. This target must be clearly defined and ‘sold’ to
everyone concerned.
IMPORTANCE OF MANAGEMENT:
1. Effective utilization of resources: Management tries to make
effective utilization of various resources. The resources are
scarce in nature and to meet the demand of the society, their
contribution should be maximum for the general interests of the
society. Management not only decides in which particular
alternative a particular resource be used but also takes actions
to utilize it in that particular alternative in the best way.
2. Development of resources: Management develops various
resources. This is true with human as well as non-human factors.
Most of the researches for resource development are carried on
in an organization way and management is involved in those
activities.
3. To incorporate innovations: Today changes are occurring at a
very fast rate in both technology and social process and
structure these changes need to be incorporated to keep the
organizations alive and efficient. Therefore, they require high
degree of specialization, high level of competence, and complex
technology. All these require efficient management so that
organizations work in the most efficient way.
4. Integrating various interest groups: In the organized efforts,
there are various interest groups and they put pressure over
other groups for maximum share in the combined output. For

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 example, in the case of business organization, there are various
pressure groups such as shareholders, employees, government
etc. These interest groups have pressure on an organization.
5. Stability in the society: Management provides stability in the society by
changing and modifying the resources in accordance with the changing
environment of the society. In the modern age, more emphasis is on
new inventions for the betterment of human beings. These inventions
make old systems and factors mostly obsolete and inefficient.
Management provides integration between traditions and new
inventions and safeguards, society from the unfavourable impact of
these inventions so that continuity in social process is maintained.
Characteristics of Management:

1. Setting goals for organizations: Goals differ from organization to

organization in business, the basic economic goal is to earn
maximum profit, while in service organization like hospital and
educational institution for the basic goal is to provide better
service and better education.
2. Awareness of opportunities and resources: Management have
awareness of opportunities and resources like men, materials,
money which assembles and integrates by management.
3. Management is transformation process: Management is a
transformation process consisting of planning, organizing,
staffing, directing and controlling.
4. Management is universal: The principles and techniques of
management are universally applicable to all group activities
performed at any level of organization.
5. System of authority: System of authority means a hierarchy of
command and control. Managers at different levels possess
varying degrees of authority.
6. Co – Ordination: Various human beings organized in formal
groups are endeavouring to achieve the common organizational
objectives, so various departments in the organization must
work in harmony with one another.
7. Management is Dynamic: The ever changing social environment
directly and indirectly effect the group activity thus changing

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 environments provide a challenge to management. Efficient
management cannot remain static it must adopt itself to
changing conditions.
8. Management is decision making: The managers are decision
makers the marketing managers decides about how to market,
when to market, where to market how to collect funds for
organization.
9. Management is a profession: Management is not only a science
but also an art. Art means managers has to handle the person
and things tactfully. Science means achieving objectives through
procedures.

LEVEL OF MANAGEMENT

When growing your business, your management structure becomes

more important as your company grows. When you’re starting out, and while
your company is small, you may be able to fulfill all roles in the management
hierarchy. If you have a scalable, successful business however, growth is
inevitable, and you will need to have managers at different levels to ensure
work is completed in the most effective and efficient manner possible. This
said, it is important to understand the 3 major types of managers in growing
and/or larger companies.

Organizations employ three levels of managers:

1. Top level management

2. Middle level management

3. Low level management

1. Top Level Management: The top level management includes top

executives such as chief executive offices, chief operating officer,
president, executive vice – president and various executive. These
managers are primarily involved in broad organizational matters such as
policy formulation, long range planning, goal setting and development of
organizational strategies. In general the top management effectively
deals with all elements and forces that affect the survival, stability and
growth of an organization.

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 2. Middle Level Management: the middle level management generally
consists of divisional and departmental heads such as plant manager,
production managers, marketing managers, personal managers,
personal directors etc. their job is to interpret policies and directions set
by the top level management into specific plans and guidelines for
action. Their responsibility is to co-ordinate the working of their
departments so that the set of objectives

3. Low Level Management: this level of management consists of

supervisors, superintendents, unit heads, foremen chief clerks, foremen
etc. their primary concetn is with the mechanics of the job and they are
responsible for co-coordinating the work of their employees. They must
possess technical skills so that they can assist their subordinate when
necessary.

EVOLUTION OF MANAGEMENT THOUGHT

Management started when man started living in groups. It relates to achieve certain
objectives. According to George management begin in family, and after that it is expanded
in tribes & finally the scope was increased up to urbanization. The reference of
management was found in Babylonia (civilization on the bank of Nile river). After that
Egypt provides us with an example of decentralized organization with little control.
Management thoughts are shown in planning and organizing in the construction of
Pyramids.
The ancient philosopher first recognized the need for proper methodology for employees’
selection and training.

Greek provides extensive documentation of management principles. These

principles of management are world wide famous. It is considered as management is an
art. It includes employees’ selection, delegation of authority, time study, motion study etc.

STAGE IN THE EVOLUTION OF MANAGEMENT THEOUGHT

The development of management thought could be traced to over

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2,000 years BC. However, the significant contributions that came up
during the last three centuries could be grouped under the following
four periods:
 Period of management awakening
 Scientific management period
 The human relations periods
 Modern management period

PERIOD OF MANAGEMENT AWAKENING

This was the period of the industrial revolution, which paved the way
for large growth and diversification of business enterprises. Some of
the chief features of the industrial revolution were:
a) Automation
b) New inventions increased demand
c) The number of commercial establishments expand
During this period, certain pioneers challenged the traditional
approaches to management with their new ideas and approaches.
Significant of these contribution are listed herein:
REBERT OWEN: Robert owen was the first person who spelled out the
mostly neglected critical issues relation to personnel management. He
belived that workers performance was influenced by a number of
factors such as the shop – floor working conditions, working hours,
housing facilities, training of workers, provision of canteen, rest places,
kind treatment and so on.
CHARLES BABBAGE: Babbage advocated the use of science and
mathematics for investigations and accurate data to run the factories
which were at that time using traditional methods, opinions, and rules
of thumb for decision making. Charles Babbage is more remembered
because
 He invented the analytical engine, which was the early version
of the modern computer
 He suggested the division of work into mental and physical
efforts, determining the precise cost for every process, payment
of bonus, profit sharing, and so on.
JAMES WATT JR AND ROBINSON BOULTON: both of these were the

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sons of james watt, who invented steam engine. They used, for the
first time, several management techniques such as forecasting,
marketing research planned machine layout, production planning,
standardisation of parts, welfare of workers, elaborate statistical
records, and others in their factor at Soho. These techniques are
considered as vital even in todays.

SCIENTIFIC MANAGEMENT: One of the earliest of these theorists was

Frederick Winslow Taylor. He started the Scientific Management movement,
and he and his associates were the first people to study the work process
scientifically. They studied how work was performed, and they looked at how
this affected worker productivity. Taylor's philosophy focused on the belief that
making people work as hard as they could was not as efficient as optimizing
the way the work was done. - See more at:

In 1909, Taylor published "The Principles of Scientific Management." In this,

he proposed that by optimizing and simplifying jobs, productivity would
increase. He also advanced the idea that workers and managers needed to
cooperate with one another. This was very different from the way work was
typically done in businesses beforehand. A factory manager at that time had
very little contact with the workers, and he left them on their own to produce
the necessary product. There was no standardization, and a worker's main
motivation was often continued employment, so there was no incentive to
work as quickly or as efficiently as possible.

Taylor believed that all workers were motivated by money, so he promoted

the idea of "a fair day's pay for a fair day's work." In other words, if a worker
didn't achieve enough in a day, he didn't deserve to be paid as much as
another worker who was highly productive.

Four Principles of Scientific Management

1. Every job should be broken into its elements and a scientific methods to
perform each element should be established.
2. Workers should be scientifically selected with right attitudes for the job
and ability and then properly trained to perform the work.
3. Management should cooperate with workers to ensure that all work is
done in accordance with the scientific principles.
4. Scientific distribution of work and responsibility between workers and
the managers. The management should design the work, set up and
supervise the work and the workers are free to perform the work.

Contribution of F. W. Taylor :-
1) At Midvale Steel Co. he improved proper distribution of work for each
worker.
2) In Midvale Steel Co. he analyzed the work done by workers in specific job &
allotted standard time.

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3) He also made experiments on time study & motion study to decide the work
load of each worker.
4) In Bethlehem Steel Co. he had made experiments with material handling
equipment for increasing the capacity of each worker.
5) In 1901, he presented a paper on differential piece rate system.
6) In 1906, he published article on art of cutting metals.
7) In 1903, he presented important paper on shop management – In that he
explained gang boss, speed boss, repair boss & inspector.
8) In 1911, he gave the principles of scientific management, for which he is
remembered as ‘Father of Scientific Management’. In that he has explained:-
i) Friendly relationship between workers & management.
ii) Scientific education to the workers.
iii) Scientific selection of workers so that each worker could be given
responsibility for the task.
iv) Development of the true science of management with proper analysis in
the organization.

ELEMENTS OF SCIENTIFIC MANAGEMENT:

1. Separation of Planning & Doing:- Before Taylor’s scientific
management a worker used to plan about his work & instruments
necessary for that. Supervisors’ job was to see how the workers were
performing. This creates a lot of problems. So Taylor has separated
planning & doing authority.
2. Functional Foremanship:- Separation of planning from doing resulted
into development of supervision system. In this system 8 persons were
engaged, out of that 4 persons were engaged in planning department.
They are time & cost clerk, routine clerk, instruction card clerk &
disciplinarian. In production process 4 personnel were engaged, they are
speed boss, repair boss, supervisor & gang boss.
3. Job Analysis:- It is related with finding out best way of doing. It means
that least movements in doing job.
4. Time Study:- It means determining time required to complete a job in a
particular time. The movement which takes minimum time is the best
one.
5. Motion study:- It means study of movement while performing a job i.e.
elimination of wasteful movement in performing a job, only necessary
movements are engaged.
6. Fatigue Study:- It shows the amount & frequency of rest required,
while completing the work. After certain period of time workers feel
fatigue & can’t work with full capacity. Therefore they require rest in
between. When rest is allowed they start working with full capacity.
7. Standardization:- As far as possible standardization should be
maintained in respect of instruments & tools, period of work, amount of
work, working conditions, cost of production etc. these all things are
fixed in advance on the basis of job analysis.
8. E) Scientific Selection & Training of Workers:- Taylor has been
suggested that worker should be selected on scientific basis taking into
account their education, work experience, attitude & physical strength.
9. Financial Incentives:- Financial incentives help to motivate workers in
maximum efforts. Higher wages lead to increase in efforts. He applied

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 differential piece rate system. According to him workers have to
complete the work within specified time and then only he get wages at
higher rate per piece & one does not complete a job gets a lower rate.
Wages should be based on individual performance & not on the position
occupied.
10. Economy:- Techniques of cost estimated & control should be
adopted. Waste should be controlled properly. Profit will be achieved with
elimination of wastage. He explained how resources are wasted.
11. Mental Revolution:- Scientific management depends upon
mutual co-operation between workers & management. Taylor say’s great
revolution takes place in the mental attitude of two parties under
scientific management. He has given systematic design of work. Labour
management, co-operation required a complete mental change on the
part of both parties. The workers have specific duties towards
management & vice-a-versa. The method of scientific investigation &
knowledge should be accepted by both parties.

HENRY FAYOL (ADMINISTRATIVE MANAGEMENT)

Henry Fayol has been considered as the real father of modern
management. He was a French industrialist and graduated as a mining
engineer in 1860. In 1908, Fayol contributed his famous “functional approach”
to the management literature. Fayol’s writings were first published in 1908 in
French, but up to 1918, it was not translated into English. His ideas were
accepted after his death in 1925. Henry Fayol has written a book for his
contribution in which he has explained the problems managing & organization
from top management point of view. He has used the term administration
instead of management. Fayol found that activities of industries should be
divided into 6 group’s i.e.
 Technical (production)
 Commercial (buying, selling and exchange)
 Financial (optimum use of capital)
 Security (protection of property)
 Accounting (including statistics)
 Managerial (all functions of management)

14 PRINCIPLES OF HENRY FAYOL

1) Division of Work(specialization):- A business activity carried out by
small scale may be managed & controlled by proprietor. As business expands,
activities grow & need more people to control those activities. Organization is
jointly managed by a group of person. Fayol has advocated division of work to
take the advantage of specialization.
2) Authority & Responsibility:- Authority represents a power enjoyed by a
person of his position in the organization. It may be for taking decision,
spending money or in many other ways. Responsibility is obligation created
upon a person for the use of authority, which is entrusted to him. These two
terms are co-related. Fayol suggested that there must be balance between
authority & responsibility.
3) Discipline:- All the personnel serving in an organization must follow
discipline. Discipline is obedience, application of behavior & energy shown by

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an employee. Discipline may be self employed or command discipline.
Discipline can be obtained lower remuneration, dismissal, demotion of
position. While applying such circumstances proper proof should be taken into
account.
4) Unity of Command:- Each employee should receive order from single
superior. In the organization structure it should be clearly stated that who is
responsible to whom? & who should receive order from whom?
5) Unity of Direction:- According to this principle each group of activity with
some objective must have one head. There is a difference between unity of
command & unity of direction. Direction is concerned with planning & unity of
command is concerned with reporting.
6) Subordination of individual interest to general interest:- In an
organization individual interest should not be given any importance. The
manager should always keep organizational interest before him & should
determine such policies which will be beneficial to entire group & not just few
personnel. It is responsibility to management to create common understanding
between all.
7) Remuneration:- Every employee must be paid an adequate remuneration
for his services. Remuneration should be fair & should provide maximum
satisfaction to person who is working in the organization. Personal factors such
as demand for labor, position of the labor & competition as well as cost of
living index should be taken into account. General Economic Conditions should
be considered while deciding
the remuneration of an employee. In any case exploitation of the worker
should be avoided.
8) Order:- Fayol has suggested that at one position one person should be
appointed. Each person must have appropriated position in organization.
9) Centralization:- It means the extent to which authority should be
concentrated in the hands of top level management. It may be centralized or
decentralized. There are limitations of complete centralization & complete
decentralization. Therefore, there should be proper balance between this two.
10) Scalar Chain: - (Straight line & Command) It shows the straight line
of authority from highest level to lower level for communication. Scalar chain
is the extract of organization chart & shows the responsibility or position of
everybody in an organization.
11) Stability of Tenure:- Effort must be made to keep the employee stuck to
organization so that the labour turnover can be low by keeping check on
administrative cost of organization. Care must be taken to satisfy the staff
otherwise there will be bad effect & loss of labour.
12) Equity:- Equity is combination of justice & kindness; equity in treatment
& behavior is liked by everyone & it brings loyalty in the organization.
13) Initiative:- Within the limits of authority & discipline manager should
encourage their employees for taking initiative. Initiative is concern with
thinking. Thinking leads to execution of plan. Initiative increases energy on the
part of human being.
14) Espirit De Corps:- This is a French term. It means manager is like a
captain of a team who is responsible to maintain high moral between all
workers. It may be possible by effective communication among all persons in
organization. His understanding & differences in opinions should not be

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harmful. The best way of taking such situation is to establish dialogue between
parties.

HERTZBERG’S MASLOW’S HIERARCHY OF HUMAN NEEDS

Abraham Maslow was the Pioneer in contributing to a system of hierarchy of

needs. Maslow’s concluded that there are certain needs of employee when he
joins an organization. They have certain expectations from the organization
where they are motivated to satisfy their own needs.

The following are important positions advocated by Maslow about human

behavior.
1) Man is a wanting being. Man is a continuously working more & more. What
he wants or will want depend upon what he has. As soon as man’s one need is
satisfied another immediately takes place. It keeps a man to work
continuously, demanding more & more.
2) A satisfied need is not a motivator where as an unsatisfied needs work as
motivator. Hence a man works to satisfy his needs.
3) The need of man has hierarchy: - Maslow thinks that a man’s needs are
arranged in a series of level. As soon as the need at lower level is satisfied, a
worker is motivated to satisfy another need in hierarchy.

1) Physiological needs: - It is the lowest level in hierarchy. These needs

which are most the important in the human life must be satisfied by him. It
includes food, clothing, housing, air, water, etc. Physiological needs arise for
the survival of human being. Physiological needs are important for every
human being.
2) Safety needs: - Safety needs are known as ‘security needs’. These needs
are concerned with protection i.e. financial security, job security, emotional
harm, etc. As soon as physiological needs are satisfied these needs emerge. It
acts as motivating factor.
3) Social needs: - Social needs relates to love, affection & belonging & social
security. Every individual is associated with group members or group of
society. He gets affection from his group members. A man is motivated to
satisfy his social needs in following ways by:
1. Establishing a team work, team culture & team spirit.
2. Providing proper training facilities.
3. Conducting frequent meetings with team members.
4. Providing extra activities like social, cultural, sports to encourage the
people.
5. Arranging periodical get together & participation with managers.

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4) Esteem needs: - It includes two parts i.e. internal esteem & external
esteem needs, such as achievement of respect & status. It can be done in
following ways by:
1. Providing higher level of training & better educational facility.
2. Assigning challenging task, high responsibility & position.
3. Delegating some powers to subordinates.
4. Involving sub-ordinates in goal setting & decision making.
5) Self actualization: - This includes self fulfilment of job growth & achieving
once potential. Some methods to satisfy self actualization needs are: -
1. Involvement of capable people in policy making.
2. Realizing a sense of fulfilment & development.
3. Providing opportunity for involvement.
4. Providing training facility according to capacity.

Fredrick Herzberg’s two factor theory

Maslow Hierarchy of need point out about the behavior of the people. Using
this as a base, Herzberg & his associates interviewed 200 engineers &
accountants. The engineer & accountant describe the factors about the
feelings. He asked them what are the good times & the bad times on their
jobs. Engineer & accountants brought up the things [bad]. Unfair co policies,
poor relationship with boss, low payment etc. They did not mention about
good job experience. They talked about the opportunities they got for personal
growth & development.

Then they took interview with the workers with different industries. The results were same.
So he developed 2 factors theory. As per him a man has two sets of needs:

Merits: -
1. According to Herzberg one important way to increase job satisfaction is
to enhance job enrichment, job enrichment means more challenging
work.
2. Introducing new & more difficult task not handle earlier.

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 3. Eliminating a layer of supervision.
4. Increased worker’s autonomy & authority.
5. Workers may be given a complete natural unit of work. A natural unit of
work helps to increase identity

Demerits: -
1. A theory is based on a sample of 200 accountants & engineers. The
critical question is that these samples are limited & they are from
different occupation.
2. Commitment to objective is the function of reward associated with their
achievement the human being is directed for self actualization.
3. The average human being likes to accept the responsibility. Avoidance
of responsibility is lack of ambition for them.
4. Under the modernization & competitive world potential of the workers
should be utilized.

The system approach to management

The system approach to management to bring out a new way of thinking

about managerial problems and activity and about the organization
relationships to its own various units as well as other system in the outsides
environment this focus upon the organization system made up o many inter
related parts provides the necessary of managers in the form of planning ,
organizing, leading and controlling.

One of the modern approach to understand management is the system

approach the organization viewed as a system approach of every department
of the organization is considered as a sub –system. it is also possible that
every department can be as a system and sub- system.

1. INTER LINKED

2. INTER DEPENDENT

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 The feature of interdependence among the functions of
management. Though, in the chart, it is shown that planning is the first
function and control is the last function, in reality, there is no such starting and
ending function. The first task is the identification of managerial problem and
the last one is reaching the solution for a given problem. The dotted line
represents feedback line. In the process of control, if there is any deviation
from the plans or targets, it can be corrected by verifying each of the earlier
functions and identifying where things could have gone wrong.

3. COMPLEX AND INTER WIND

For instance, the planning and

control functions are inseparable. Any
attempt to control without plans is
meaningless. It is because, plans form
the basis for control. In other words,
there is planning in control and there
is also control in planning. Similarly,
there is organising in planning, and also vice verse. With the result, the
manager cannot say, yes, the planning function is over, now i can start the
organising function.

DESIGNING ORGANISATIONAL STRUCTURES

Organization
“Organization means the determination and assignment of duties to
people, and also the establishment and the maintenance of authority
relationships among these grouped activities it is the structural
frame work with in which the various efforts are coordinated and
related to each other”.

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Definitions:
“Organization are collectivises of people that have been established
for the pursuit of relatively specific objectives on a more or less
continuous basis”. _William Scott
“Organization is the form of every human association for the
attainment of a common purpose”. __Mooney and Reilly
“Organization involves the grouping of activities necessary to
accomplish goals and plans assignment and these activities to
appropriate departments and positions to appropriate departments
and positions for authority delegation and coordination” __Koontz
and O’Donnell

BASIC CONCEPTS RELATED TO ORGANISATION

Elements of Organization
1) Division of Work: - Objectives of organization are determined then
total efforts & necessary must be classified & grouped. There should not
be over lapping or duplication of work. Every one in the organization will
do a purposeful work for attainment of objectives for that manager has
to visualize the objectives. Division of total work is necessary so that
these should not be extra burden on a single person. The enterprise can
be divide according to function such as production, selling, finance,
advertisement, etc.
2) Authority: - In organization there is superior subordinate relationship.
Every superior needs authority. In absence of authority directing
becomes difficult. The subordinates have several responsibilities in
organisation. There is authority and responsibility structure so that
various positions are created.
3) Establishment of Relationship: - In every organization structure
there are different types of relationships. Such relationship may be
administrative or operative, vertical, horizontal, formal & informal. Some
will be working on the same authority level but most often at different
levels of authority. This relationship is established for carrying the work
smoothly. Relationship denotes the rules for team work in orderly
sequence for attainment of objectives.

CHARACTERISTICS OF ORGANIZATIONAL
1. Organisation is a group of people, small or large
2. The group works under an executive leadership.
3. Organisation is a tool of management.
4. It leads to division of work and responsibilities
5. It defines and fixes the duties and responsibilities of employees.

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 6. It establishes a relationship between authority and responsibility and
controls the efforts of the group.

IMPORTANCE OF ORGANIZING FUNCTION

1. Specialization - Organizational structure is a network of relationships in

which the work is divided into units and departments. This division of
work is helping in bringing specialization in various activities of concern.

2. Well defined jobs - Organizational structure helps in putting right men

on right job which can be done by selecting people for various
departments according to their qualifications, skill and experience. This
is helping in defining the jobs properly which clarifies the role of every
person.

3. Clarifies authority - Organizational structure helps in clarifying the role

positions to every manager (status quo). This can be done by clarifying
the powers to every manager and the way he has to exercise those
powers should be clarified so that misuse of powers do not take place.
Well defined jobs and responsibilities attached helps in bringing
efficiency into managers working. This helps in increasing productivity.

4. Co-ordination - Organization is a means of creating co-ordination

among different departments of the enterprise. It creates clear cut
relationships among positions and ensure mutual co-operation among
individuals. Harmony of work is brought by higher level managers
exercising their authority over interconnected activities of lower level
manager.

Authority responsibility relationships can be fruitful only when there is a

formal relationship between the two. For smooth running of an
organization, the co-ordination between authority- responsibility is very
important. There should be co-ordination between different
relationships. Clarity should be made for having an ultimate
responsibility attached to every authority. There is a saying, “Authority
without responsibility leads to ineffective behaviour and responsibility
without authority makes person ineffective.” Therefore, co-ordination of
authority- responsibility is very important.

5. Effective administration - The organization structure is helpful in

defining the jobs positions. The roles to be performed by different
managers are clarified. Specialization is achieved through division of
work. This all leads to efficient and effective administration.

6. Growth and diversification - A company’s growth is totally dependant

on how efficiently and smoothly a concern works. Efficiency can be
brought about by clarifying the role positions to the managers, co-
ordination between authority and responsibility and concentrating on
specialization. In addition to this, a company can diversify if its potential

17
 grow. This is possible only when the organization structure is well-
defined. This is possible through a set of formal structure.

7. Sense of security - Organizational structure clarifies the job positions.

The roles assigned to every manager is clear. Co-ordination is possible.
Therefore, clarity of powers helps automatically in increasing mental
satisfaction and thereby a sense of security in a concern. This is very
important for job- satisfaction.

8. Scope for new changes - Where the roles and activities to be

performed are clear and every person gets independence in his working,
this provides enough space to a manager to develop his talents and
flourish his knowledge. A manager gets ready for taking independent
decisions which can be a road or path to adoption of new techniques of
production. This scope for bringing new changes into the running of an
enterprise is possible only through a set of organizational structure.

Process of Organization:
1. Determination of objectives, strategies, plans and policies:
Objectives should be clear and precise, because the entire
organization is to be built around the objectives of the
enterprises.
2. Determination of activities: Determine activities needed to
execute these plans and policies and accomplish the
objectives. The work load is broken into component activities
that are to be performed by all the employees. The activities
are so split to determine the job which can be performed by an
individual.
3. Separation and grouping of activities: To attain the benefits of
specialization and division of labour, every company, will
separate its activities on the basis of primary functions like
finance, engineering, purchasing, production, sales and
industrial relations. All the similar or directly related activities
are grouped together in the form of departments.
4. Delegation of authority: Authority is necessary for the
performance of the job and therefore authority is delegated to
the subordinates for enabling them to carry out their work
smoothly and efficiently.
5. Delegation of responsibility: Responsibility may be described
as the obligation and accountability for the performance of

18
 delegated duties. A superior is always accountable for the acts
of his subordinate. Therefore, responsibility always flows from
subordinates to superiors.
6. Providing physical facilities and proper environment: Physical
facilities means provide machinery, tools equipments,
infrastructure etc, environment means provide proper lighting,
ventilation, heating, cooling arrangement at the work place,
reasonable hors of work, safety devices, job security etc

Principles of Organization:
1. Principle of unity of objectives: An organization structure is
effective if is enables individuals to contribute to entire
objectives.
2. Principle of co-ordination: The aim of the objective can be
achieved it proper co-ordination exists for efferent activities
3. Principles of organizational efficiency: An organization is
efficient it is structured to aid the accomplishment of
enterprise objective with a minimum of unsought
consequences or costs.
4. Span of management principle: In each managerial position,
there is a limit to the number of persons an individual can
effectively manage but the exact number will depend on the
impact of underlying variables.
5. Scalar principle: The clearer the line of authority from the
ultimate management position in an enterprise to every
subordinate position, the clearer will be the responsibility for
decision making the more effective will be organization
communication.
6. Principle of delegation by results expected: Authority
delegated to all individual managers should be adequate
enough to ensure their ability to accomplish the results
expected.
7. Principle of responsibility: The responsibility of subordinates to
their superiors for performance is absolute, and superiors can
not escape responsibility for the organization activity of their

19
 subordinates.
8. Principle of parity of authority and responsibility: The
responsibility for actions can not be greater than that implied
by the authority delegated, not should it be less.
9. Principle of unity command: The more complete an individual’s
reporting relationships to a single superior, the smaller the
problem of conflicting instructions and the greater the feeling
of personal responsibility for results.
10. Authority level principle: Maintenance of intended
delegation requires that decisions with in the authority of
individual managers should be made by them and not be
referred upward in the organization structure.
11. Principle of balance: The application of principles or
technique must be balanced to ensure the over all
effectiveness of the structure in meeting enterprise objectives.
12. Principle of flexibility: the more that provisions are made
for building flexibility in to an organization structure can fulfill
its purpose.
13. Principle of leadership facilitation: The more an
organization structure and its delegations of authority enable
managers to design and maintain an environment for
performance, the more they will help the leadership abilities of
those managers.
SPAN OF MANAGEMENT
The term Span of Management is also known as Span of Control or Span of
Authority or Span of Supervision. Simply stated Span of Management means
the number of subordinates that a manager can effectively manage. This
concept implies that the number of subordinates directly reporting to a
superior should be limited so as to make supervision and control effective,
because executives have limited time and ability. It is an accepted proposition
that the larger the number of subordinates reporting directly to a manager,
the more difficult it will be for him to supervise and coordinate their activities
effectively.
1. The Capacity and Ability of the Superior: The personal abilities and
influence of the superior (manager) play an important role in
determining the number of subordinates that can be effectively
supervised by him. If the superior possesses qualities of leadership,
decision-making ability, communication skill, motivating strength and
time management expertise, in greater degree, that the span of control
may be wider. In other words, if the superior (executive) can

20
 comprehend problems quickly, can get along well with people and can
command loyalty and respect from the subordinates, then he can
supervise a large number of subordinates effectively.

2. The Capacity and Skill of Subordinate : In case the subordinates

are competent, well trained, experienced and have good judgement,
initiative and a sense of obligation, then they seek less guidance from
their superior and therefore the superior manager will be in a position to
supervise a large number of subordinates. On the other hand, if the
manager has no confidence in the capacity and caliber of his
subordinates, then the span will be restricted to be narrow.'

3. Nature and Importance of Work Supervised: If the work is simple

and repetitive, the span of management may be wider, because it does
not require much attention and time on the part of the superior. On the
other hand where the subordinate's job is complex requiring close
supervision by the superior, then the number of persons under him
should be narrow or small. Such characteristics generally indicate
whether jobs are easy or complicated, dissimilarity of jobs assigned the
number of new problems that may be encountered, the need for
frequent consultations and communication, the physical dispersal of
jobs, geographically location of members, nature of decision making by
the subordinates and so on.
4. Clarity of Plans and Responsibility : If the plans and policies are
clear and easily understandable and if the functions and responsibilities
are laid down in as definite terms as possible, the the task of supervision
is easier and the span of management can be wider because the
subordinates need not go to superior frequently for orders, instructions
and guidance.
5. Degree of Decentralization : If there is proper delegation and
decentralization of authority, then the superior can successfully
supervise a large number of subordinates, because in that case he has
not to take any decisions himself and merely provides encouragement
and occasional direction. In case of centralization of authority, the span
will be narrow.
6. Staff Assistants : When staff assistants (experts) are employed to
advise and serve the superiors and the subordinates, then contract
between the superior and the subordinates may be reduced and the
span be broadened.

CLASSIFICATION OF ORGANIZATIONS

Organizations are basically clasified on the basis of relationships. There are

two types of organizations formed on the basis of relationships in an
organization

1. Formal Organization - This is one which refers to a structure of well

defined jobs each bearing a measure of authority and responsibility. It is
a conscious determination by which people accomplish goals by
adhering to the norms laid down by the structure. This kind of

21
 organization is an arbitrary set up in which each person is responsible
for his performance. Formal organization has a formal set up to achieve
pre- determined goals.

2. Informal Organization - It refers to a network of personal and social

relationships which spontaneously originates within the formal set up.
Informal organizations develop relationships which are built on likes,
dislikes, feelings and emotions. Therefore, the network of social groups
based on friendships can be called as informal organizations. There is no
conscious effort made to have informal organization. It emerges from the
formal organization and it is not based on any rules and regulations as in
case of formal organization.

TYPES OF MECHANISTIC AND ORGANIC STRUCTURE OF ORGANISATION

TYPES OF ORANISATION STRUCTURE.

1. Line organisation
2. Line and staff organisation
3. Functional organisation

1. Line organization is the most oldest and simplest method of

administrative organization. According to this type of organization, the
authority flows from top to bottom in a concern. The line of command is
carried out from top to bottom. This is the reason for calling this
organization as scalar organization which means scalar chain of
command is a part and parcel of this type of administrative organization.
In this type of organization, the line of command flows on an even basis
without any gaps in communication and co-ordination taking place.

Features of Line Organization

1. It is the most simplest form of organization.

2. Line of authority flows from top to bottom.

3. Specialized and supportive services do not take place in these

organization.

4. Unified control by the line officers can be maintained since they can
independently take decisions in their areas and spheres.

5. This kind of organization always helps in bringing efficiency in

communication and bringing stability to a concern.

22
Merits of Line Organization

1. Simplest- It is the most simple and oldest method of administration.

2. Unity of Command- In these organizations, superior-subordinate

relationship is maintained and scalar chain of command flows from top
to bottom.

3. Better discipline- The control is unified and concentrates on one

person and therefore, he can independently make decisions of his own.
Unified control ensures better discipline.

4. Fixed responsibility- In this type of organization, every line executive

has got fixed authority, power and fixed responsibility attached to every
authority.

5. Flexibility- There is a co-ordination between the top most authority and

bottom line authority. Since the authority relationships are clear, line
officials are independent and can flexibly take the decision. This
flexibility gives satisfaction of line executives.

6. Prompt decision- Due to the factors of fixed responsibility and unity of

command, the officials can take prompt decision.

Demerits of Line Organization

1. Over reliance- The line executive’s decisions are implemented to the

bottom. This results in over-relying on the line officials.

2. Lack of specialization- A line organization flows in a scalar chain from

top to bottom and there is no scope for specialized functions. For

23
 example, expert advices whatever decisions are taken by line managers
are implemented in the same way.

3. Inadequate communication- The policies and strategies which are

framed by the top authority are carried out in the same way. This leaves
no scope for communication from the other end. The complaints and
suggestions of lower authority are not communicated back to the top
authority. So there is one way communication.

4. Lack of Co-ordination- Whatever decisions are taken by the line

officials, in certain situations wrong decisions, are carried down and
implemented in the same way. Therefore, the degree of effective co-
ordination is less.

5. Authority leadership- The line officials have tendency to misuse their

authority positions. This leads to autocratic leadership and monopoly in
the concern.

2. Line and staff organisation: Line and staff organization is a

modification of line organization and it is more complex than line
organization. According to this administrative organization, specialized
and supportive activities are attached to the line of command by
appointing staff supervisors and staff specialists who are attached to the
line authority. The power of command always remains with the line
executives and staff supervisors guide, advice and council the line
executives. Personal Secretary to the Managing Director is a staff official.

Features of Line and Staff Organization

1. There are two types of staff :

a. Staff Assistants- P.A. to Managing Director, Secretary to Marketing

Manager.

b. Staff Supervisor- Operation Control Manager, Quality Controller,

24
 PRO

2. Line and Staff Organization is a compromise of line organization. It is

more complex than line concern.

3. Division of work and specialization takes place in line and staff

organization.

4. The whole organization is divided into different functional areas to which

staff specialists are attached.

5. Efficiency can be achieved through the features of specialization.

6. There are two lines of authority which flow at one time in a concern :

a. Line Authority

b. Staff Authority

7. Power of command remains with the line executive and staff serves only
as counselors.

Merits of Line and Staff Organization

1. Relief to line of executives- In a line and staff organization, the

advice and counseling which is provided to the line executives divides
the work between the two. The line executive can concentrate on the
execution of plans and they get relieved of dividing their attention to
many areas.

2. Expert advice- The line and staff organization facilitates expert advice
to the line executive at the time of need. The planning and investigation
which is related to different matters can be done by the staff specialist
and line officers can concentrate on execution of plans.

3. Benefit of Specialization- Line and staff through division of whole

concern into two types of authority divides the enterprise into parts and
functional areas. This way every officer or official can concentrate in its
own area.

4. Better co-ordination- Line and staff organization through

specialization is able to provide better decision making and
concentration remains in few hands. This feature helps in bringing co-
ordination in work as every official is concentrating in their own area.

5. Benefits of Research and Development- Through the advice of

specialized staff, the line executives, the line executives get time to
execute plans by taking productive decisions which are helpful for a
concern. This gives a wide scope to the line executive to bring

25
 innovations and go for research work in those areas. This is possible due
to the presence of staff specialists.

6. Training- Due to the presence of staff specialists and their expert

advice serves as ground for training to line officials. Line executives can
give due concentration to their decision making. This in itself is a
training ground for them.

7. Balanced decisions- The factor of specialization which is achieved by

line staff helps in bringing co-ordination. This relationship automatically
ends up the line official to take better and balanced decision.

8. Unity of action- Unity of action is a result of unified control. Control and

its effectivity take place when co-ordination is present in the concern. In
the line and staff authority all the officials have got independence to
make decisions. This serves as effective control in the whole enterprise.

Demerits of Line and Staff Organization

1. Lack of understanding- In a line and staff organization, there are two

authority flowing at one time. This results in the confusion between the
two. As a result, the workers are not able to understand as to who is
their commanding authority. Hence the problem of understanding can be
a hurdle in effective running.

2. Lack of sound advice- The line official get used to the expertise advice
of the staff. At times the staff specialist also provide wrong decisions
which the line executive have to consider. This can affect the efficient
running of the enterprise.

3. Line and staff conflicts- Line and staff are two authorities which are
flowing at the same time. The factors of designations, status influence
sentiments which are related to their relation, can pose a distress on the
minds of the employees. This leads to minimizing of co-ordination which
hampers a concern’s working.

4. Costly- In line and staff concern, the concerns have to maintain the high
remuneration of staff specialist. This proves to be costly for a concern
with limited finance.

5. Assumption of authority- The power of concern is with the line official

but the staff dislikes it as they are the one more in mental work.

6. Staff steals the show- In a line and staff concern, the higher returns
are considered to be a product of staff advice and counseling. The line
officials feel dissatisfied and a feeling of distress enters a concern. The
satisfaction of line officials is very important for effective results.

3. Functional organization has been divided to put the specialists in the top

26
position throughout the enterprise. This is an organization in which we can
define as a system in which functional department are created to deal with the
problems of business at various levels. Functional authority remains confined
to functional guidance to different departments. This helps in maintaining
quality and uniformity of performance of different functions throughout the
enterprise.

The concept of Functional organization was suggested by F.W. Taylor who

recommended the appointment of specialists at important positions. For
example, the functional head and Marketing Director directs the subordinates
throughout the organization in his particular area. This means that
subordinates receives orders from several specialists, managers working
above them.

Features of Functional Organization

1. The entire organizational activities are divided into specific functions

such as operations, finance, marketing and personal relations.

2. Complex form of administrative organization compared to the other two.

3. Three authorities exist- Line, staff and function.

4. Each functional area is put under the charge of functional specialists and
he has got the authority to give all decisions regarding the function
whenever the function is performed throughout the enterprise.

5. Principle of unity of command does not apply to such organization as it is

present in line organization.

Merits of Functional Organization

1. Specialization- Better division of labour takes place which results in

specialization of function and it’s consequent benefit.

27
 2. Effective Control- Management control is simplified as the mental
functions are separated from manual functions. Checks and balances
keep the authority within certain limits. Specialists may be asked to
judge the performance of various sections.

3. Efficiency- Greater efficiency is achieved because of every function

performing a limited number of functions.

4. Economy- Specialization compiled with standardization facilitates

maximum production and economical costs.

5. Expansion- Expert knowledge of functional manager facilitates better

control and supervision.

Demerits of Functional Organization

1. Confusion- The functional system is quite complicated to put into

operation, especially when it is carried out at low levels. Therefore, co-
ordination becomes difficult.

2. Lack of Co-ordination- Disciplinary control becomes weak as a worker

is commanded not by one person but a large number of people. Thus,
there is no unity of command.

3. Difficulty in fixing responsibility- Because of multiple authority, it is

difficult to fix responsibility.

4. Conflicts- There may be conflicts among the supervisory staff of equal

ranks. They may not agree on certain issues.

5. Costly- Maintainance of specialist’s staff of the highest order is

expensive for a concern.

Decentralization is a systematic delegation of authority at all levels of

management and in all of the organization. In a decentralization concern,
authority in retained by the top management for taking major decisions and
framing policies concerning the whole concern. Rest of the authority may be
delegated to the middle level and lower level of management.

Implications of Decentralization

1. There is less burden on the Chief Executive as in the case of

centralization.

2. In decentralization, the subordinates get a chance to decide and act

independently which develops skills and capabilities. This way the
organization is able to process reserve of talents in it.

3. In decentralization, diversification and horizontal can be easily

implanted.

28
 4. In decentralization, concern diversification of activities can place
effectively since there is more scope for creating new departments.
Therefore, diversification growth is of a degree.

5. In decentralization structure, operations can be coordinated at divisional

level which is not possible in the centralization set up.

6. In the case of decentralization structure, there is greater motivation and

morale of the employees since they get more independence to act and
decide.

7. In a decentralization structure, co-ordination to some extent is difficult to

maintain as there are lot many department divisions and authority is
delegated to maximum possible extent, i.e., to the bottom most level
delegation reaches. Centralization and decentralization are the
categories by which the pattern of authority relationships became clear.
The degree of centralization and de-centralization can be affected by
many factors like nature of operation, volume of profits, number of
departments, size of a concern, etc. The larger the size of a concern, a
decentralization set up is suitable in it.

DEPARTMENTATION
Departmentation is the foundation of organization structure.
Departmentation means division of work into smaller units and their
regrouping into bigger units (departments) on the basis of similarity of
features. Each department is headed by a person known as departmental
manager. Division of work into departments leads to specialization as people
of one department perform activities related to that department only.
Departmentation provides scope for organization’s growth (along the same
product line) and expansion.

Types of departmentation
1. Functional departmentation
2. Production departmentation
3. Process departmentation
4. Customer departmentation
5. Geographic departmentation

Aims of departmentation
1. To group activities
2. To personnel to make manageable units
3. To bring specialization in the performance of various activities.
4. To fix responsibility of the heads of various departmentation.

Advantages of departmentation
1. Every – one with duties and authority
2. Well define job and responsibilities
3. It is opportunity to take initiative and learn new managerial skill
4. It provides top management to coordinate the activities of different
department.

29
ts. Considering the dangers involved in the use of committees, a few
authorities went to the extent of giving a sarcastic definition to the committee
as “group of unfits engaged by unwilling to do unnecessary”. In particular, the
committees suffer from the following demerits
1. High Cost in Time and Money
Committees take a lot of time to take a decision. The prolonged sessions of the
committee results in a high expenditure. Generally speaking, committees are
constituted only to avoid or postpone decisions. Hence, delay in decision has
become an inherent feature of committees.

2. Indecisive Action
In many cases, committees are unable to take any constructive decision
because of the differences of opinions among their members.

3. Compromising Attitude
In reality, many decisions taken by a committee are not the result of joint
thinking and collective judgements. But they are only compromises reached
between the various members Hence, the decisions of the committees are not
real decisions in the strict sense.

4. Dominance of a Few
Collective thinking and group judgement are only in theory but not in practice.
The decisions of the committees are generally the decisions of the chairman or
any strong dominant members.

5. Suppression of Ideas
Many smart members who can contribute new ideas, deliberately keep their
mouth shut in order to avoid hard feelings.

6. Splitting of Responsibilities
The greatest disadvantage of this system is the splitting of authority among
the committee members. When authority is split up, no one in particular can
be held responsible for the outcome of the committee.

7. Political Decisions
Since the committee decisions are influenced by the dominant members, the
decisions of the committee cannot be taken as meritorious one with broader
outlook

30
 Unit – 2

PLANT LOCATION

Plant location refers to the choice of region and the selection of a

particular site for setting up a business or factory. Since there may be several
choices which may be available for setting up of a plant, the choice is made
only after considering cost and benefits of different alternative sites.

It may be understood as the function of determining where the plant

should be located for maximum operating economy and effectiveness. A
selection on pure economic considerations will ensure an easy and regular
supply of raw materials, labour force, efficient plant layout, proper utilization
of production capacity and reduced cost of production.

Factors affecting plant location:

1. Nearness to Market: If the plant is located close to the market the cost of
transportation can be minimized. This also helps the producers to have
direct knowledge of the requirements of the customers.
2. Nearness to supply of raw materials: As far as possible the site selected
should be near the source of raw materials, so that the cost of
transportation can be minimized and storing cost can be reduced due to
shorter lead time.

31
 3. Availability of labour: Availability of right kind of labour force in required
number at reasonable rates is also a deciding factor in selection of site
4. Transport and communication facilities: Generally, industries have a
tendency to locate the industrial units near the railway station, highway
or port areas.
5. Availability of power and fuel: Coal, electricity, oil and natural gas are
the important sources of power in the industries. Ex: Tata iron and steel
industry is established near the coalmines of Bihar.
6. Climatic conditions: Climatic conditions largely affect certain production
processes and also the efficiency of the employees. Ex: Textile mills
require moist climate that why these plant located at Mumbai and
Ahmedabad.
7. Availability of water: Water is used in industries for processing as in
paper in chemical industries, for generation of power in hydroelectric
power, plants and also required for drinking sanitary purpose also.
8. Ancillary industries: Many industries such as processing and assembly
industries are not producing al the parts of their product but purchase
some of the parts from ancillary industries producing it.
9. Financial and other aids: For the development of backward regions
central as well as state government provide certain incentives and
facilities such as cash-subsides, concession financial assistance, land,
power and other facilities at cheaper rates, tax concession etc.

PLANT LAYOUT

Plant layout is defined as physical arrangement of production facilities.

It is the arrangement of facilities like machinery and equipments, personnel,
storage space, material handling devices and other supporting services for
their optimum utilization. Decision about plant layout is also a strategic
decision as it is a one time decision and frequent changes in the arrangement
are not possible and also it is very costly for the organisation.

Objectives of plant layouts

1. Smooth and continuous flow of materials

2. Reduction of in process inventory
3. Minimization of material handling
4. Effective utilization of all the resources
5. Effective utilization of the available space.
6. Safe working conditions
7. Comfort for employee to work.

Factors influencing plant layout:

1. Management policy: Management has to decide on many matters e.g.

nature and quality of products, size of the plant, integration of

32
 production process, plans for expansion, amount of inventory in stock,
employee facilities
2. Manufacturing process: The type of manufacturing process e.g.
synthetic/analytical, continuous/intermittent and repetitive/non-
repetitive, will govern the type of plant layout.
3. Nature of product: Small and light products can be moved easily to the
machines, whereas for heavy and bulky products the machines may
have to be moved.
4. Type of equipment: The use of single purpose and multi-purpose
machine substantially affects the plant layout. Similarly, noisy and
vibrating machines require special attention in the plant layout decision.
5. Types of buildings: The plant layout in a single storey building will be
different from that in a multi storey building. The covered areas, the
number of storey’s, elevators and stairs, parking and storage area all
affect the layout.
6. Availability of total floor area: The allocation of space for machines,
work-benches, sub-store aisles etc., is made on the basis of the available
floor area use of overhead space is made in case of shortage of space.
7. Arrangement of materials handing equipment: Provide sufficient aisles
for free movement of material handling equipment such as hand truck,
fork truck etc.
8. Service facilities: The layout of factory must include proper service
facilities required for the comfort and welfare of workers. These include
canteen, lockers, drinking water, first aid etc.
9. Possibility of future expansion: Plant layout is made in the light of future
requirement and installations of additional activities.

Principles of plant layout:

1. Principle of integration: The best layout is one which integrates the men,
materials, machinery, supporting activities and any other such a factors
that results in the best compromise.
2. Principle of minimum movement: The number of movement of workers
and materials and the distance moved should be minimized. The
materials should be transported in bulk rather than in small amounts.
3. Principle of smooth and continue flow: It states that bottlenecks,
congestion points and bulk tracking should be removed by proper line
balancing techniques.
4. Principle of cubic space: Space of a room, it the ceiling height is also
utilized, more materials can be accommodated in the same space.
5. Principle of satisfaction of safety: Working places-safe, well-ventilated
and free from dust, noise fumes and other hazardous conditions, help to
increase the efficiency of the workers and improve their morale.
6. Principle of flexibility: It means the best layout in one which can be
adopted and re-arranged at a minimum cost with least inconvenience.

TYPES OF PLANT LAYOUT

33
1. 1. Product or Line Layout

2. Process or Functional Layout.

3. Fixed Position Layout.

4. Combination type of Layout.

1. Product or Line Layout:

If all the processing equipment and machines are arranged according to the
sequence of operations of the product, the layout is called product type of
layout. In this type of layout, only one product of one type of products is
produced in an operating area. This product must be standardized and
produced in large quantities in order to justify the product layout.

The raw material is supplied at one end of the line and goes from one
operation to the next quite rapidly with a minimum work in process, storage
and material handling. Fig. 8.3 shows product layout for two types of products
A and B.

Advantages offered by Product Layout:

(i) Lowers total material handling cost.

(ii) There is less work in processes.

(iii) Better utilization of men and machines,

(iv) Less floor area is occupied by material in transit and for temporary
storages.

(v) Greater simplicity of production control.

(vi) Total production time is also minimized.

Limitations of Product Layout:

(i) No flexibility which is generally required is obtained in this layout.

34
(ii) The manufacturing cost increases with a fall in volume of production.

(iii) If one or two lines are running light, there is a considerable machine
idleness.

(iv) A single machine break down may shut down the whole production line.

(v) Specialized and strict supervision is essential.

2. Process or Functional Layout:

The process layout is particularly useful where low volume of production is

needed. If the products are not standardized, the process layout is more low
desirable, because it has creator process flexibility than other. In this type of
layout, the machines and not arranged according to the sequence of
operations but are arranged according to the nature or type of the operations.
This layout is commonly suitable for non repetitive jobs.

Same type of operation facilities are grouped together such as lathes will be
placed at one place, all the drill machines are at another place and so on. See
Fig. 8.4 for process layout. Therefore, the process carried out in that area is
according to the machine available in that area.

Advantages of Process Layout:

(i) There will be less duplication of machines. Thus, total investment in equipment
purchase will be reduced.

(ii) It offers better and more efficient supervision through specialization at various
levels.

(iii) There is a greater flexibility in equipment and man power thus load distribution is
easily controlled.

(iv) Better utilization of equipment available is possible.

(v) Break down of equipment can be easily handled by transferring work to another
machine/work station.

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(vi) There will be better control of complicated or precision processes, especially
where much inspection is required.

Limitations of Process Layout:

(i) There are long material flow lines and hence the expensive handling is required.

(ii) Total production cycle time is more owing to long distances and waiting at various
points.

(iii) Since more work is in queue and waiting for further operation hence bottle necks
occur.

(iv) Generally, more floor area is required.

(v) Since work does not flow through definite lines, counting and scheduling is more
tedious.

(vi) Specialization creates monotony and there will be difficult for the laid workers to
find job in other industries.

3. Fixed Position Layout:

This type of layout is the least important for today’s manufacturing industries. In this
type of layout the major component remain in a fixed location, other materials, parts,
tools, machinery, man power and other supporting equipment’s are brought to this
location.

The major component or body of the product remain in a fixed position because it is
too heavy or too big and as such it is economical and convenient to bring the
necessary tools and equipment’s to work place along with the man power. This type
of layout is used in the manufacture of boilers, hydraulic and steam turbines and
ships etc.

Advantages Offered by Fixed Position Layout:

(i) Material movement is reduced

(ii) Capital investment is minimized.

(iii) The task is usually done by gang of operators, hence continuity of operations is
ensured

(iv) Production centers are independent of each other. Hence, effective planning and
loading can be made. Thus total production cost will be reduced.

(v) It offers greater flexibility and allows change in product design, product mix and
production volume.

Limitations of Fixed Position Layout:

(i) Highly skilled man power is required.

36
(ii) Movement of machines equipment’s to production centre may be time consuming.

(iii) Complicated fixtures may be required for positioning of jobs and tools. This may
increase the cost of production.

4. Combination Type of Layout:

Now a days in pure state any one form of layouts discussed above is rarely
found. Therefore, generally the layouts used in industries are the compromise of the
above mentioned layouts. Every layout has got certain advantages and limitations.
Therefore, industries would to like use any type of layout as such.

Flexibility is a very important factory, so layout should be such which can be molded
according to the requirements of industry, without much investment. If the good
features of all types of layouts are connected, a compromise solution can be obtained
which will be more economical and flexible.

PRODUCTION

Production is a scientific process which involves transformation of raw

material (input) into desired product or service (output) by adding economic
value. It refers to the relationship between the inputs and the output. It is
calculated as a ratio between the amount produced and the amount of
resources (land, labour, capital, technology etc.)

Definition: Productivity is defined as the rate at which the goods and services
are produced.

Method of Production:

Job production: In this system, goods are produced according to the orders
with this method, individual requirements of the consumers can be met. Each
job order stands alone and is not likely to be repeated. This type of production
has a lot of flexibility of operation and hence general purpose machines are
required. Factories adopting this type of production, are generally small in size.

Advantages:

1. It is the only method, which can meet the individual requirement.

2. There is no managerial problem, because of very less number of
workers, and small size of concern.
3. Such type of production requires less money and is easy to start.

Disadvantages:

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 1. There is no scope for continuous production and demand
2. As the purchase of raw materials is less, hence cost of raw materials per
unit will be slightly more.
3. For handling different type of jobs, only skilled and intelligent workers
are needed, thus labour cost increases.

Batch production: This type of production is generally adopted in medium

size enterprise. Batch production is in between job production and mass
production. Batch production is bigger in scale than the job production. While
it is smaller than that of mass production, batch production requires more
machines than job production and fewer machines that the of mass
production.

Advantages:

1. While comparing with mass production it requires less capital

2. Comparing with job production, it is more advantageous commercially.
3. If demand for one product decrease then production, for another product
may be increased, thus the risk of loss is very less.

Disadvantages:

1. Comparing with mass production cost of scales and advertisement per

unit is more
2. Raw materials to be purchased are in less quantity than that in mass
production; therefore it is slightly costlier than that of mass production
because less quantity discount is available.

Mass production: This method of production is used by concerns where

manufacturing is carried on continuously in anticipation of demand though
demand of the product may not be uniform through the year.

In mass production, simplification and standardization of products are made

with the help of specialized (one purpose) machine, articles of standardized
nature can easily and economically be produced on a large scale.

There is a small difference between mass production and continuous

production. This is mainly in the kind of product and its relation to the plant. In
mass production plant and equipment are flexible enough to deal with other
products, involving same production process. Where as in continuous or
process production only standardized product in a sequence produced. In this
method layout and requirement of additional tools and equipment

Advantages:

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 1. A smooth flow of materials from one work station to the next in logical
order.
2. Since the work from one process is fed directly into the next, small in
process inventories result
3. Total production time per unit short
4. Simple production planning control system are possible
5. Little skill is usually required by operations at the production line, hence
training is simple, short and inexpensive.

Disadvantages:

1. A breakdown of one machine may lead to a complete stoppage of the

line that follows the machine. Hence maintenance and repair is
challenging job.
2. Since the product dictates the layout, changes in product design may
require major changes in the layout.
3. Generally high investment are required owing to the specialized nature
of the machines and their possible duplication in the line.

WORK STUDY

Work study is the systematic examination of the methods of carrying on

activities so as to improve the effective use of resources and to set up
standards of performance for the activities being carried out.

Work study is one of the most important management techniques which

is employed to improve the activities in the production. The main objective of
work study is to assist the management in the optimum use of the human and
material resources.

Definition: Work study refers to the method study and work measurement,
which are used to examine human work in all its contexts by systematically
investigating into all factors affecting its efficiency and economy to bring forth
the desired improvement.

Work study mainly includes two techniques 1) method study and 2) work
measurement.

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METHOD STUDY

It is the systematic recording and critical examination of existing and

proposed ways of doing work, as a means of developing and applying easier
and more effective methods and reducing costs.

Every organisation tries to achieve best quality production in the

minimum possible time. The time required to manufacture an item depends on
the manufacturing procedure. Method study or motion study finds best
possible manufacturing procedure which involves least time and do not cause
fatigue to workers.

Definition: The systematic recording and critical examination of existing and

proposed ways of doing work, as a means of developing and applying easier
and more effective methods and reducing cost it is also called motion study.

Objectives of method study

1. Improved working processes

2. Improvement in the layout
3. Safe working environment
4. Effective utilisation of resources
5. Efficient material handling
6. Efficient planning

Basic procedure for Method Study:

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 Method study

Aim: to develop better working

methods

PROCEDURE
1. Select: The work to be studied
2. Record: All the relevant facts of the present or
proposed method study by observation
3. Examine: The recorded facts critically every thing
that is done, considering in turn, the purpose of the
activity, the place where it is performed, the
sequence in which it is done, the person who is
doing it and the means by which it is done.
4. Develop: The most practical, economical and
effective method considering all the circumstances.
5. Define: The new method so that it can always be
identified.
6. Install: The method as standard practice
7. Maintain: That standard practice by regular routine
checks.

Result
Increase efficiency, cost effectiveness and
productivity through
a) Improved workplace layout
b) Improved equipment design
c) Reduction in worker fatigue
d) Improved product/ process design

PROCESS CHARTS

The current process of doing the job has to be recorded, while doing so
every detail however small it may be, has to be identified. Where the process
is too long, involving many stages of production, inspection or transportation,
the present process of doing the job is recorded sufficiently together with all
the relevant information, using the process chart symbols.

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A) Process Charts:

1) Out line process chart: This chart outlines the main events sequence wise

considering only operations and inspections in the given job

Ex: TASK : Changing refill of a Ball Point pen

Chart begins : Unscrew the cap

Chart ends : Screw the cap

Chart by : --------------

Chart Ends : --------------

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2) Flow process chart: These are scale drawings of the work place, which
indicate where each activity takes place. This chart is capable of reflecting
undue delays in transferring work between workstations duplication of work,
and unfair work assignment, which may delay the completion process. It
classified into three types

Man Type : It records what the worker does

Materials Type : It records what happens to the materials

Equipment Type : It records how the equipment used.

a) Man Type

Ex:

Job : Writing a letter using short hand typist

Chart begins : Typist in own office-awaiting dictation

Chart ends : Typist puts letter and copy in out tray

Typist office : 6 meters manager’s office

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44
Work Measurement:

Work measurement is the application of technique to establish the time

for a qualified worker to carry out a specified job at a defined level of
performance.

Definition: Work measurement is the application of techniques designed to

establish time for a qualified worker to carry out a specified job at a defined
level of performance.

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Procedure for Work Measurement:

Work measurement

Aim: to develop time

standard

Procedure
 Describe: the given work for measurement
 Break: the job into elements
 Measure: the performance of operator
 Determine: the basic time
 Provide: time allowance for fatigue etc.
 Determine: standard time

Result
Increased efficiency and higher productivity
through
 Scientific basis to develop incentive
systems
 Maintain reasonable levels of employment
 Reliable means of planning and control

Techniques of work measurement:

1. Time study. Synthesis from standard data

3. Predetermined Motion Time System (PMTS)

4. Analytical estimating

5. Work Sampling

Time study: It is defined as the art of observing and recording the time
required to do each detailed element of all industrial operation.

Time study equipment: Time study equipment can be broadly grouped two
categories

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Time measuring device B) Time study boards and time study chart

A) Time measuring devices:

a) Stop Watch b) Motion picture camera c) Time recording machine

d) Electronic timer.

a) Stop Watch:

i) Decimal minute stop watch: In this type of watch the movements is started
and stopped by moving the slide “A”, forward and backward respectively are
complete revolution of large hand represents 1 minute and since the dial is
divided into 100 parts reading to with in 0.01 minutes can be obtained. Every
time the large hand make one revolution the small hand will register 1 minute
and is able to register up to 30 minutes.

ii) Decimal hour stop watch: The dial in this watch is divided into 100 parts.
The needle completes 10 revolutions in one hour. The least count in this watch
is 0.001 hours. The small dial of this watch is divided into 30 equl spaces
(representing 0.01 hour) and the small needle makes 31/3 revolutions in one
hour.

b) Motion picture camera: Every element of the operation involving motion of

the workers is made into film through motion picture camera when this film is
run at a slow speed through a projector; the time of each element is recorded
using a stopwatch.

c) Time recording machine: A moving tape is run is this machine at a uniform

velocity of 10 inches/minutes with the help of electric motor. The machine has
two keys: one key, when pressed, indicates starting of an operation, and the
other key used to take a print on the scaled tape at the end of elements.

d) Electronic timer: The timing of starting and ending of an operation of an

element is automatically recorded through electronic timers.

B) Time study boards and time study charts:

Time study board: These are simple and handy hard wood boards equipped
with stopwatch holders and clamps for holding the observation sheets and
time study forms. These boards help to see and record the observation and
time at the same instant.

Observations forms: Printed or cyclostyled forms are used for recording the
observation during that time study. It ensures that time study are made in
standard manner and that no essential data are omitted. These forms are
attached to the study board by means of clip provided

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2) Synthesis from standard data: This one technique of work measurement
to obtained synthetic times that are synthesis from element times previously
obtained from direct time studies. The analysis and measurement stage are
thus conducted prior to the actual study.

3) Predetermine motion time system (PMTS): Every element of work is

composed of some combination of basic human motions. Apart from mental
activity all works can broken down into elements that usually a fundamental
movement of the body or body members. After this analysis stage the basic
motions that have been isolated have a time allotted to them on the basis of
predetermine motion times.

4) Analytical estimation: Analytical estimating serves as best for measuring

work. In the analysis stage we find the usually these basic elements or much
larger as compared to the elements in PMTS or time study. For measuring
stages the time, which will be occupied by the element at a specific speed of
working is estimated.

Also refer applicability of work study.

For problems refer text books.

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 UNIT –III

Material management

Material management is the planning, organizing and controlling the

flow of material from their initial purchase, through their internal operations, to
the distribution of finished products. Thus material management has wide
scope and it involves pre-production as well as post production activities.
Several activities like purchasing, stores management, inventory
management, transportantion, material function. As stated earlier it
constitutes huge investment and hence material management becomes a very
important strategic activity.

Materials refer to inputs into the production process, most of which are
embodied in the finished goods being manufactured. It may be raw materials,
work-in-progress, finished goods, spare parts and components, operating
supplies such as lubricating oil, cleaning materials, and others, required for
maintenance and repairs.

Objectives of materials management

1. To ensure smooth and continuous supply of items so that machine and
labour utilization is kept high and production activities are carried as per
the preprepared schedules.
2. To procure the materials at the lowest cost and improve the profitability
of the organisation.
3. To efficiently manage the inventories by achieving high inventory
turnover ratio.
4. To enuse that supplies are of very high quality and meets the
specifications of the products and services.
5. To select best suppliers and maintain cordial relations with all the
suppliers.
6. To maintain proper record for the various items available in the
organisation.
7. To train manpower for better management of stores, ensure effective
purchases and inventory management.
8. To help the organisation in making decisions on when to buy a
component and when to manufacture in house.

INVENTORY

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Inventory: it is defined as a stock or store of goods. These goods are
maintained on hand at or near a business location so that the firm may meet
demand and fulfil its reason for existence.

Types of inventory
1. Raw material: raw material is inventory items that are used in the
maufacture’s conversion process to produce components,
subassemblies, or finished products. These inventory items may be
commodities or extracted materials that the firm or its subsidiary has
produced or extracted.
2. Working in process: it is made up of all the materials, parts assemblies,
and subassemblies that are being processed or are waiting to be
processed within the system.
3. Finished goods: a finished good is a completed part that is ready for a
customer order. Therefore, finished goods inventory is the stock of
completed products these goods have been inspected and have passed
final inspection requirements so that they can be transferred out of work
in process and into finished goods inventory.

Inventory Control: The systematic location, storage and recording

of goods in such a way the desired degree of service can be made
to the operating shops at minimum ultimate cost.
Objectives of Inventory Control:
1. To support the production departments with materials of the
right quality in the right quantity, at the right time and the
right price, and from the right supplier
2. To minimize investments in the materials by ensuring
economies of storage and ordering costs
3. To avoid accumulation of work in process
4. To ensure economy of costs by processing economic order quantities
5. To maintain adequate inventories at the required sales outlets to meet
the market needs promptly, thus avoiding both excessive stocks or
shortages at any given time
6. To contribute directly to the overall profitability of the enterprise

INVENTORY ASSOCIATED COSTS:

1. Holding cost: tax and insurance on equipment, cost of maintenance and
repairs.
2. Ordering cost: cost of placing an order with a vendor of materials,
preparing a purchase order, processing payment, receiving and
inspecting the materials.
3. Carrying cost: cost connected directly with materials, obsolescence ,
depreciation,
4. Financials costs: taxes, insurances, storage,

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 5. Capital cost: interest on money invested in inventory, interest on money
invested in land and building to holding inventory.

INVENTORY techniques

ABC Analysis: ABC analysis is a technique of controlling inventories based

on their value and quantities. It is more remembered as an analysis for
‘Always Better Control’ of inventory. Here all items of the inventory are listed
in the order of descending values, showing quantity held and their
corresponding value. Then, the inventory is divided into three categories A, B
and C based on their respective values.

A category comprises of inventory, which is very costly and valuable.

Normally 70% of the funds are tied up in such costly stocks, which would be
around 10% of the total volume of stocks. Because the stocks in this category
are very costly, these require strict monitoring on a day-to-day basis.
B category comprises of inventory, which is less costly. Twenty percent of the
funds are tied up in such stocks and these accounts for over 20% of the
volume of stocks. These items require monitoring on a weekly or fortnightly
basis.
C category consists of such stocks, which are of least cost. Volume-wise, they
form 70% of the total stocks but value-wise, they do not cost more than 10% of
the investment in the stocks. This category of stocks can be monitored on a
monthly or bi-monthly basis.

VED ANALYSIS
VED Analysis attempts to classify the items used into three broad
categories, namely Vital, Essential, and Desirable. The analysis classifies items
on the basis of their criticality for the industry or company.

51
 1. Vital: Vital category items are those items without which the production
activities or any other activity of the company, would come to a halt, or
at least be drastically affected.
2. Essential: Essential items are those items whose stock – out cost is very
high for the company.
3. Desirable: Desirable items are those items whose stock-out or shortage
causes only a minor disruption for a short duration in the production
schedule. The cost incurred is very nominal.

Continuous Inventory Systems:

In a continuous inventory system (also referred to as a perpetual

system and a fixed-order-quantity system), a continual record of the
inventory level for every item is maintained. Whenever the inventory on hand
decreases to a predetermined level, referred to as the reorder point, a new
order is placed to replenish the stock of inventory. The order that is placed is
for a fixed amount that minimizes the total inventory costs. This amount,
called the economic order quantity, is discussed in greater detail later.

A positive feature of a continuous system is that the inventory level is

continuously monitored, so management always knows the inventory status.
This is advantageous for critical items such as replacement parts or raw
materials and supplies. However, maintaining a continual record of the amount
of inventory on hand can also be costly.

A simple example of a continuous inventory system is a ledger-style

checkbook that many of us use on a daily basis. Our checkbook comes with
300 checks; after the 200th check has been used (and there are 100 left),
there is an order form for a new batch of checks. This form, when turned in at
the bank, initiates an order for a new batch of 300 checks. Many office
inventory systems use reorder cards that are placed within stacks of
stationery or at the bottom of a case of pens or paper clips to signal when a
new order should be placed. If you look behind the items on a hanging rack in
a Kmart store, there will be a card indicating it is time to place an order for the
item for an amount indicated on the card.

Periodic Inventory Systems

In a periodic inventory system (also referred to as a fixed-time-

period system or a periodic review system), the inventory on hand is
counted at specific time intervals; for example, every week or at the end of
each month. After the inventory in stock is determined, an order is placed for
an amount that will bring inventory back up to a desired level. In this system
the inventory level is not monitored at all during the time interval between

52
orders, so it has the advantage of little or no required record keeping. The
disadvantage is less direct control. This typically results in larger inventory
levels for a periodic inventory system than in a continuous system to guard
against unexpected stockouts early in the fixed period. Such a system also
requires that a new order quantity be determined each time a periodic order is
made.

An example of a periodic inventory system is a college or university

bookstore. Textbooks are normally ordered according to a periodic system,
wherein a count of textbooks in stock (for every course) is made after the first
few weeks of a semester or quarter. An order for new textbooks for the next
semester is then made according to estimated course enrolments for the next
term (i.e., demand) and the amount remaining in stock. Smaller retail stores,
drugstores, grocery stores, and offices sometimes use periodic systems--the
stock level is checked every week or month, often by a vendor, to see how
much should be ordered.

Stores Management: It deals with planning, coordination and control of

various activities pertaining or effective efficient and economic storage and
store keeping.
 Store: Generally, un worked material is known as store
 Storage: The store room is the place where stores are housed
 Storage: Storage is meant holding in custody all kinds of stores and
materials semi-processed and fully processed products.
 Store Keeping: It may be defined as that aspect of materials control
concerned with physical storage of goods.

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54
55
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PURCHASE MANAGEMENT: purchasing the process of buying goods or
services required for the organization. It is the process of acquiring necessary
supplies in exchange of funds. Purchasing department has to buy various
items like raw materials, components, machinery, tools, supplies and services
required for producing the goods or services.

Objectives:
1. To procure right material
2. To procure materials in desired quantities
3. To procure material of desired quality
4. Purchasing from reliable source
5. To pay less for materials purchased
6. To receive and deliver materials at right place and time.

Purchasing process:
The following are the logical steps in the purchasing process:
1. Requisitioning purchases
2. Exploring sources of supply
3. Issuing of tenders and obtaining quotations
4. Opening of tenders and quotations and preparation of comparative
statement
5. Negotiating over the purchase price and terms of supply
6. Placing purchase order
7. Receiving of materials along with the invoice
8. Checking inward invoice
9. Inspecting and testing materials

57
10. Forwarding the materials to stores
11. Checking invoice and passing of bills for payments

HUMAN RESOURCE MANAGEMENT (HRM) is a relatively new approach to

managing people in any organisation. People are considered the key resource
in this approach. it is concerned with the people dimension in management of
an organisation. Since an organisation is a body of people, their acquisition,
development of skills, motivation for higher levels of attainments, as well as
ensuring maintenance of their level of commitment are all significant
activities.

FUNCTIONS OF HUMAN RESOURCE MANAGEMENT

OPERATIVE FUNCTIONS:
The operative function are the function related to the particular department or
section. It is depending on the nature of department with other department.
1. job analysis: a job analysis is the process used to collect information
about the duties, responsibilities, necessary skills, outcomes, and work
evvironment of a particular job.
2. Human resource planning: Human Resource planning is the process by
which a management determines how an organisation should move from
its current manpower position to its desired manpower position. Through
planning a management strives to have the right number and the right
kinds of people at the right places, at the right time, to do things which

58
 result in both the organisation and the individual receiving the maximum
long-range benefit.
3. Staffing : Staffing refers to the managerial function of employing and
developing human resources for carrying out the various managerial and
non-managerial activities in an organisation. This involves determining
the manpower requirement, and the methods of recruiting, selecting,
training and developing the people for various positions created in the
organisation. Staffing is the process of filling positions or posts in the
organisation with adequate and qualified personnel. Staffing is the
process of acquiring, deploying, and retaining a workforce of sufficient
quantity and quality to create positive impacts on the organisation
effectiveness
4. RECRUITMENT: Recruiting involves attracting candidate to fill the
positions in the organization structure. Before recruiting, the
requirement of positions must be cleared identified. It makes easier to
recruit the candidates from the outside. Enterprises with a favourable
public image find it easier to attract qualified candidates.
5. SELECTION: Human resource selection is the process of choosing
qualified individuals who are available to fill positions in an organization.
In the ideal personnel situation, selection involves choosing the
information about the applicants with a view to matching these with the
job requirements. It involves a careful screening and testing of
candidates who have put in their applications for any job in the
enterprise. It is the process of choosing the most suitable persons out of
best applicant to fill a position. Selection is the process of choosing
people by obtaining and assessing all the applicants. The purpose of
selection is to pick up the right person for every job.
6. PLACEMENT: If the selected candidate decides to join the organisation,
he/she has to report to the concerned authority and formally joins the
organisation by giving his consent in writing. Then he/she is placed to
perform specific job. Thus, placement refers to selected candidate’s
joining the positions in the organisation for which they have been
selected.

7. INDUCTION: Induction is the process of introducing new employees to

the organisation. The new employees should know under whom and with
whom he/she is to work, get acquainted and adjusted to the work
environment, get a general idea about the rules and regulations,
working conditions etc. Usually the immediate supervisor of the new
employee introduces him to his work environment. A proper induction
programme is likely to reduce his anxiety on how to cope with the work
and how to become part of the organisation and helps in development of
a favourable attitude towards the organisation and the job.
8. PROMOTION ;When an employee is assigned a job involving greater
responsibilities, more pay, higher status and prestige than his/her
present job, it is known as promotion.
9. Transfer: Transfer refers to a type of job change where any employee is
assigned a different job of the same rank and pay, or when an employee
is assigned a similar job in another unit of the firm.

59
 10. Demotion: When the performance of an employee is not
satisfactory and it cannot be improved, he may be assigned a job of
lower rank carrying lower status and pay. This is known as ‘demotion’.

Development: it is the process meant to improve the knowledge, skill,

attitude and values of employees so that they can better contribute to their
job.

1. PERFORMANCE APPRAISAL: Performance appraisal or Performance

evaluation is a method of evaluating the behaviour of employees in a
work place, normally including both the quantitative and qualitative
aspect of job performance. Performance here refers to the degree of
accomplishment of the tasks that makeup an individual‘job.

2. TRAINING: Training is an instrument of developing the employees by

increasing their skills and improving their behavior. Technical,
managerial skills are needed by the employees for performing the jobs
assigned to the. Training is required to be given to new employees as
well as existing employees.

3. Career planning : it is a deliberate process of knowing who you are so

that you can be sure of where you want to go or what you want to be at
some defined point in the future.

4. Career development : Skill Development means developing yourself and

your skill sets to add value for the organization and for your own career
development. Fostering an attitude of appreciation for lifelong learning is
the key to workplace success. Continuously learning and developing
one's skills requires identifying the skills needed for mobility at Cal, and
then successfully seeking out trainings or on-the-job opportunities for
developing those skills.

5. Collective bargaining: it is constitutes the negotiation between

management and union with the ultimate objective of the agreeing on a
written contract covering with term and conditions of the settlement of
disputes issues.

6. Integration: it is the process of reconciling and reuniting the

organisational goals with is members.

7. Motivation: it is the act of stimulating and inspiring the subordinates to

achieve the goals of the organisational.

8. Job satisfaction: it is the result of various attitudes the employes holds

towards his related factors.

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 9. Grievances handling: It any discontent or dissatisfaction, whether
expressed or not, whether valid or not, arising out of anything connected
with the company which an employee thinks believes or even feels to be
unfair, unjust or inequitable.

10. Employee participation: it is the involvement of employees in

organization for decision making and problem solving of the workers.

MAINTENANCE: it includes the following activities

1. Organizational Health: it is defined as an organization’s ability to

function effectively, to cope adequately, to change appropriately, and to
grow from within.

2. HR AUDIT: The human resource audit is based on the premise that

human resource processes are dynamic and must continually be
redirected and revitalized to remain responsive to the ever changing
needs. Human Resource Audits are not routine practices aimed at
problem solving. Instead of directly solving problems, HR audits, like
financial audits, help in providing insights into possible causes for
current and future problems.

3. Hr accounting: Human resources are considered as important assets and

are different from the physical assets. Physical assets do not have
feelings and emotions, whereas human assets are subjected to various
types of feelings and emotions. In the same way, unlike physical assets
human assets never gets depreciated.

Compensation:

It includes the determination of wages and salaries matching with contribution

made by the employees to achieve organisational goals.

1. Job evaluation: it is the process of determining the relative worth of the

job.

2. Wages: it is paid with in one day or 21 days. It also paid with in one
month.

3. Salaries: it is paid after one month in the organisation.

4. Incentives: it is the additional payment to regular wages and salaries.

5. Bonus: it is also additional payment of statutory bonus according to the

payment of bonus act 1965.

MANAGERIAL FUNCTION

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 1. Planning : It is the basic function of management. It deals with chalking
out a future course of action & deciding in advance the most appropriate
course of actions for achievement of pre-determined goals. According to
KOONTZ, “Planning is deciding in advance - what to do, when to do &
how to do. It bridges the gap from where we are & where we want to
be”. A plan is a future course of actions.

2. Organizing : It is the process of bringing together physical, financial

and human resources and developing productive relationship amongst
them for achievement of organizational goals.

3. Staffing: It is the function of manning the organization structure and

keeping it manned. Staffing has assumed greater importance in the
recent years due to advancement of technology, increase in size of
business, complexity of human behavior etc.

4. Directing : It is that part of managerial function which actuates the

organizational methods to work efficiently for achievement of
organizational purposes.

5. Controlling : It implies measurement of accomplishment against the

standards and correction of deviation if any to ensure achievement of
organizational goals.

Job Description: Job description is an accurate and concise description of (a)

the overall purposes of the job (b) the principal duties of the person doing this
job. The job description emphasizes the job requirements. Clear job description
constitutes the basis for advertising the vacancy positions and for drawing up
job specifications. Once individuals are selected to the posts, job description
allows them to know exactly what their roles are and what is expected of
them.

Job Evaluation: An attempt to determine and compare the demands which

the normal performance of particular job makes on normal workers without
taking account of the individual abilities or performance of workers concerned.
It rates the job not the rank.

Merit Rating: Merit rating is the process of evaluating the relative merit of
the person on a given job. It is an essential task of the personnel manager to
distinguish the meritorious employees from the other. The data collected from
this task is used for strategic decisions such as releasing an increment in pay,
promotion, transfer, and transfer on promotion to a critical assignment or even
discharge.

1. Paired comparison method: Here, every employee is compared with all

others in a particular cadre in the department. By comparing each pair
of employees, the ratter can decide which of the employees is more
valuable to the organization.

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 2. Rating scale: Here, the factors dealing with the quantity and quality of
work are listed and rated. A numeric value may be assigned to each
factor and the factors could be weighed in the order of their relative
importance. All the variables are measured against a three or five point
scale.

3. Forced distribution method: Here, employees are given a set of

alternatives and they have to choose one, which reflects their
understanding of the true nature of the job. Their thinking is conditioned
by the given set of answers.

4. Narrative or essay method: Here, the candidate is required to narrate in

an essay format his/her strengths, weaknesses, and potential to
perform. Here, the candidate is not restricted by any given set of
alternatives. The candidate is free to decide what to furnish or what not
to furnish.

Management by objectives (MBO): The short-term objectives mutually agreed

upon by the management and the employees are used as performance
standards. This method considers the actual performance as the basis for
evaluation. It is a systematic method of goal setting. In addition, it provides for
reviewing performance based on results rather than personality traits or
characteristics. However, this is not practical at all levels and for all kinds of
work in the organizations.

WAGES: wages is the return given to workers for their mental and physical
efforts which they put into the production process.

Elements of an ideal wages system

 Guarantee of minimum wages
 Based on ability of the workers
 Simple
 Motivating
 Flexible
 Regular payment
Types of wages
 Time wages system: in this system, the workers are paid wages
according to the time spent at the work place. E.g. a day, a week, a
month etc.
 Piece wage system: in this system, wages are paid to workers according
to their output. This wage system is directly related to the skill,
production capacity, speed and precision of the worker.

Marketing: Marketing as a social process by which individuals and groups

obtain what they need and want through creating, offering exchanging
products and services of value with others.

Selling versus Marketing:

Selling refers to the act of transferring the ownership of the goods and
services from the seller to the buyer. Marketing refers to the whole process

63
encompassing the entire range of activities starting from identifying the
customer’s requirements to satisfying these in a mutually beneficial manner.

Marketing Function:
1. Buying: Buying involves both the marketing and the customers. The
marketing manager must know about the type of customers, their
consuming habits demands and buying pattern.
2. Selling: It creates a demand for a product selling function involves.
 Product planning and development Finding
 out or locating buyers
 Demand creation through salesmanship, advertising and sales
promotion
 Negotiation of terms of sales such as price, quantity and quality etc.
3. Transporting: It involves the creation of place utility. In order to have
value goods must first be transported from the place they are produced
to the place where they are needed.
4. Storage: It concerned with storing finished products properly without any
damage, until they are dispatched to the customers it is also concerned
to the customers it is also concerned with maintaining stock of raw
materials with maintaining stock of raw materials, components etc. to
meet production schedules.
5. Finance: Finance is the life blood of business value of goods is expressed
is money and it donated by price to be paid by buyer to seller credit is
necessary in marketing it plays all important role in retail trade
particularly in the sales of costly consumer goods.
6. Marketing research: The marketing personnel must study the trends in
market demand, supply prices and related market information. The
knowledge about the latest market information may help the firm to
reduce risk loss in purchasing, in pricing, in forecasting market demand
and in facing competition in the market.

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Marketing Mix: It refers to the combination of four basic elements, viz.,
product, price, promotion and the place, known as the four P’s of marketing.
1. Product Mix: It is used to describe the assortment of different product
types (product lines) and their varieties (product depth). In addition,
different tangible and intangible features of the product also form the
product mix.
2. Price Mix: Price mix refers to the decisions relating to the price charged
for the product, service or idea.
3. Promotion Mix: Refers to the activities relating to promotion of the
product, service or idea.
4. Place Mix: Place or physical distribution mix refers to the activities that
are involved in transferring ownership to consumers at the right time
and price.

Product life cycle:

1. Early growth: when the results of usage of product start flowing into
the market and the results are encouraging, more and more buyers
come forward to try. The sales revenue remains very low till this point of
time. This is also a very critical stage, as the manufacturer cannot avail
scale economies.
2. Rapid growth: A new product enters the stage of rapid growth
when it satisfies the needs of the customers. The sales start picking up
with repeat purchases and by word of mouth publicity, coupled with
continued promotion outlay from the manufacturer’s side. As new
customers get attracted to the product for the first time, sales soar,
sales revenues increase faster than costs, and profits start accruing. This
trend attracts the attention of the competitors who release a similar
product copying the best features of the new product.
3. Maturity: when the product’s sales growth slows down, it is called
maturity. Due to this slow down, the industry as a whole suffers from
overcapacity. At this stage, firms tend to attract the customers away
from their competitors through cheaper prices and larger promotional
efforts and outlay. Those who cannot afford such large promotional
outlay and woo customers of the competitors.

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4. Saturation: When the sales growth slows down to zero, such a stage is
called saturation. This size of the market does not increase beyond this
stage. In other words, old customers who have stopped buying the
product replace any new customer entering the market. All sales are
simply replacement sales or repeat purchases by the same customers.
5. Decline: When sales of a product tend to fall, such a stage is called
decline. When a product ceases to satisfy the customer’s needs in
relation to those available in the market, it is no more preferred. As a
result, its competing products offering superior benefits take over the
market. This leads to weakened profitability.

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HUMAN RESOURCE MANGEMENT- UNIT IV

Behind the production of every product or service there is an human mind, effort and
man hours (working hours). No product or service can be produced without help of
human being. Human being is the fundamental resource for making or constructing
anything. Today many experts claim that machines and technology are replacing
human resource and minimising their role or effort. However, indeed, machines and
technology are built by the humans; they need to be operated or at least monitored
by humans. Maybe because of this reason, companies have continuously been
searching for talented, skilled and qualified professionals to further develop latest
machines and technology, which again have to be controlled or Monitored by humans
to bring out products.

It is undisputed fact that humans are being replaced by artificial intelligence which
means robots. But all jobs cannot be handed over to Robots, to say in other words
robots have its own limitations and all roles cannot be handled by robots. Though
British theoretical physicist Stephen Hawking, Cambridge professor expressed about
destruction of middle-class jobs due to raise of artificial intelligence, he still felt that
natural intelligence or need for application of human mind is inevitable in certain
roles.

Meaning:

Human Resource Management: Human resource management is the process of

managing the human resources of an organization in tune with the vision of the top
management.

Human Resource Management is the process of recruitment and selecting employee,

providing orientation and induction, training and development , assessment of
employee (performance of appraisal), providing compensation and benefits,
motivating, maintaining proper relations with employees and with trade unions,
maintaining employees safety, welfare and healthy measures in compliance with
labor laws of the land.

Definitions:

Many great scholars had defined human resource management in different ways and
with different words, but the core meaning of the human resource management deals
with how to manage people or employees in the organisation.

Edwin Flippo defines- HRM as ―planning, organizing, directing, controlling of

procurement, development, compensation, integration , maintenance and separation
of human resources to the end that individual, organizational and social objectives are
achieved.

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The National Institute of Personal Management (NIPM) of India has defined human
resources – personal management as ―that part of management which is concerned
with people at work and with their relationship within an enterprise. Its aim is to bring
together and develop into an effective organization of the men and women who make
up enterprise and having regard for the well – being of the individuals and of working
groups, to enable them to make their best contribution to its success.

Human Resource management includes:

1. conducting job analyses,

2. planning personnel needs, and recruitment,

3. selecting the right people for the job,

4. orienting and training,

5. determining and managing wages and salaries,

6. providing benefits and incentives,

7. appraising performance,

8. resolving disputes,

9. communicating with all employees at all levels. Formerly called personnel

management.

10. Maintaining awareness of and compliance with local, state and federal labor laws.

11. These are also called as functions of human resource management for the
purpose of effect you utilization of human resource.

Objectives of HRM

Societal objective.To be socially responsible to the needs and challenges of society

while minimizing the negative impact of such demands upon the organization. The
failure of organizations to use their resources for society's benefit may result in
restrictions. For example, societies may pass laws that limit human resource
decisions.

HR manager

The Human Resource Manager is a mid-level position responsible for overseeing

human resources activities and policies according to executive level direction. They
supervise human resources staff as well as control compensation and benefits,
employee relations, staffing, training, safety, labor relations, and employment
records.

Key responsibilities of Human Resource Manager.

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Human Resource Manager is one of the most important key to open a lock hanging on
the door of success in an organisation. If an Human Resource Manager is efficient
enough to handle and to take out best from his team members any oragnisation and
can achieve more from his target goals. Human Resource manager plays an very
important role in hierarchy, and also in between the higher management and low
level employees.

Scope of Human Resource Management

The scope of Human Resource Management refers to all the activities that come
under the banner of Human Resource Management. These activities are as follows.

Human resources planning :- Human resource planning or Human Resource Planning

refers to a process by which the company to identify the number of jobs vacant,
whether the company has excess staff or shortage of staff and to deal with this
excess or shortage.

Job analysis design :- Another important area of Human Resource Management is job
analysis. Job analysis gives a detailed explanation about each and every job in the
company.

Recruitment and selection :- Based on information collected from job analysis the
company prepares advertisements and publishes them in the newspapers. This is
recruitment. A number of applications are received after the advertisement is
published, interviews are conducted and the right employee is selected thus
recruitment and selection are yet another important area of Human Resource
Management.

Orientation and induction :- Once the employees have been selected an induction or
orientation program is conducted. This is another important area of Human Resource
Management. The employees are informed about the background of the company,
explain about the organizational culture and values and work ethics and introduce to
the other employees.

Training and development :- Every employee goes under training program which
helps him to put up a better performance on the job. Training program is also
conducted for existing staff that have a lot of experience. This is called refresher
training. Training and development is one area where the company spends a huge
amount

Performance appraisal :- Once the employee has put in around 1 year of service,
performance appraisal is conducted that is the Human Resource department checks
the performance of the employee. Based on these appraisal future promotions,
incentives, increments in salary are decided.

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Compensation planning and remuneration :- There are various rules regarding
compensation and other benefits. It is the job of the Human Resource department to
look into remuneration and compensation planning.

Motivation, welfare, health and safety :- Motivation becomes important to sustain the
number of employees in the company. It is the job of the Human Resource
department to look into the different methods of motivation. Apart from this certain
health and safety regulations have to be followed for the benefits of the employees.
This is also handled by the HR department

Industrial relations :- Another important area of Human Resource Management is

maintaining co-ordinal relations with the union members. This will help the
organization to prevent strikes lockouts and ensure smooth working in the company.

Manpower Planning: It is the scientific process of evolving the right quantity of right
men to be required in future at right time on the right job.

Definition: Manpower planning may be defined as a rational method of assessing the

requirements of human resources at different levels in the organization. It ends with
proposals for recruitment, retention, or even dismissal, where necessary.

Objectives of Manpower Planning:

Making correct estimate of manpower requirement

2. Managing the manpower according to the need of enterprises

3. Helps in recruitment and selection

4. Maintaining production level

5. Making employees development programme effecting

6. Establishing industrial peace

7. Reduction in labour costs

8. Minimization of labour costs.

Recruitment: Applications are invited at this stage for further scrutiny and short
listing. Before advertising for the position, it common to check up of the position
could be filled in internally.

Selection: The process of identifying the most suitable persons for the organization is
called selection. Selection is also called a negative function because at a stage the
applications are screened and shortlisted based on the selection criteria. The main
purpose of selection is to choose the right person for the right job. The job analysis,
job description, and job specifications are carried out before the position is
advertised. These provide adequate insight about nature of the job, its description,

70
and its specifications and further focus on what type of person is to be selected for a
given position. These simplify the process of selection.

Selection process involves the following stages:

9. Initial screening/Short listing

10. Comprehensive application/bio data screening

11. Aptitude or written rests

12. Group discussion

13. Personal interviews

14. Group discussion

15. Personal interviews

16. Medical examination

17. Employment offer letter

Training and development

Training: Training is short-term process of utilizing systematic and organized

procedure by which the staff acquires specific technical knowledge and functional
skills for a definite purpose. The focus of training is the job or task.

Training Needs:

High turnover among the new recruits

- Increase in wastage of materials

- Increase in the number of rejected units of production

- Increase in the number of customer complaints

- Increase in the accident rate

- Reduced productivity levels

- Increase in machine breakdowns

Methods of Training: There are two methods of training

A. On-the job training

B. Off-the job training

A) On-the job training: It is designed to make the employees immediately productive.

It is learning by physically doing the work. The focus here is to provide specific skills
in a real situation. These methods include:

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1)Job instruction training: This is a method used for such jobs which can be performed
with relatively low skill. Here, the trainees systematically acquire skills by following
routine instructions in key processes from a qualified instructor.

2) Experiential learning: This is a modern approach to the learning process. This

method is more . used for training the senior executives. It is a technique, which
empowers the manager-trainee with the freedom of choice to act upon and the
capacity to initiate, rather than simply respond, to circumstances.

3) Demonstration: Here, the work procedures are demonstrated to the trainees. Each
of the trainees is asked to carry out the work, on a sample basis, based on his/her
observation and understanding of the demonstration.

4) Apprentice training: Those who are selected to work in the shop floor are trained as
apprentices in the factory for a brief period ranging from three months to one year,
depending upon the complexity of the training. Those who show good progress in this
training are likely to be absorbed in the same organization. Those who complete
apprentice training are likely to get good jobs outside also.

B) Off-the-job training methods: provide a relatively broad idea relating to a given job
or task. These are meant for developing an understanding of general principles,
providing background knowledge, or generating an awareness of comparative ideas
and practice. These methods include:

1) Lectures/talks and class room instructions: These techniques are designed to

communicate specific interpersonal, technical, or problem-solving skills. Here, the
trainer can maintain a tight control over learning. However, this method restricts the
trainee's freedom to develop his/her own approaches to learning.

2) Conferences: Conferences refer to get-together of the experts from different areas

of a given topic. These experts present their views based on their work experience
and research results. When employees participate in such events they get a feel of
the real world. They may also get motivated to perform better.

3) Seminars: Seminars are held periodically by the professional organisations for the
benefit of all the practicing managers by taking into consideration the recent
advances in a specialized area. Participation in such seminars enables the executives
to get exposed to the recent developments in the area of their interest

4) Team discussions: This technique develops team spirit among the executives from
different departments. It also enables them to understand and appreciate each
other's problems. It reinforces a feeling of unity among those who work towards
common goals.

5) Case study: This is a predominant technique followed even in premier management

institutes. This technique helps to provide an understanding of what has gone wrong
in a particular case, such as Delhi Cloth Mills (DCM). Similarly, what are the factors
responsible for the success of organizations such as Reliance or Hindustan Lever.
Case study technique is a very good method of learning the principles and concepts.
However, this method has one weakness. The circumstances you are likely to face in

72
your life may be very different from the cases you have analyzed earlier! Case studies
help to enhance the analytical & decision making skills.

6) Role-playing: The participants are assigned roles and are asked to react to one
another, as they would do in their managerial jobs. These roles are eventually
exchanged. In other words, each participant will get a turn to play all the roles. For
instance, the role-playing in a grievance-handling situation involves two players: In
the first step, the worker presents his grievance to the personnel manager. In the
second step, the worker plays the role of the personnel manager while the personnel
manager plays the role of the worker. Role-playing allows participants to understand
problems of each other. It enhances the interpersonal-handling skills.

7) Programmed instruction: It is a system of instruction within which pre-established

subject matter is broken into small, discrete steps and carefully organized into logical
sequence in which, it can be learned by the trainee. Each step is built upon the
previous one. The programmed instruction techniques can be in the form of
programmed tests and manuals, or video displays. For instance, withdrawal of money
through automatic teller machines (ATMs) involves responding to programmed
instructions; working on a personal computer or internet involves responding to a
series of programmed instructions.

7) Simulation exercises: These include interactive exercises in which trainees practice

their skills on working models or in mock situations based on real-life situations.

8) Group decision-making: Group decision-making refers to the process of making

decisions based on the opinions expressed by all the concerned — may be
subordinates, peers, or outside consultants. The manager thus ensures that more
people are involved in taking decisions. Each member of the group will accept the
responsibility for the decisions made as he is a party to it. This method facilitates to
generate more alternative solutions to a given problem because more people are
involved in the thinking exercise. This facilitates coordination among the groups also.

Wages and Salary Administration: Wages and salary administration is the process of
fixing wages/salary for different jobs in the organization through job evaluation,
negotiations with the unions, and so on

Grievance Handling: A complaint from employees, when ignored, takes the form of a
grievance. Grievance is a complaint genuine or otherwise, about any issue relating to
the job such as about supervisor, wages, working conditions and so on. It is necessary
to create an inbuild mechanism to redress the grievances, at the earliest, at the
departmental level. If the individual grievances are ignored, they may take the form
of industrial disputes.

Performance Appraisal: Performance appraisal is the process of measuring and

evaluating the performance or accomplishments, including behaviour, of an employee
on the job front for a given period. The purpose is to assess the worth and value of a

73
person to the organization. It is also meant for assessing his/her potential for future
development in an objective manner.

Why appraise the performance:

To assess the employee's present level of performance

2. To identify the strengths or weaknesses of individual employee

3. To provide feedback to the employee so that he can improve his/her performance

4. To provide an objective basis for rewarding the employees for their performance

5. To motivate those employees who perform

6. To check and punish those employees who fail to perform

7. To identify the gaps in performance, and thus, assess training and development
needs

8. To identify the employee's potential to perform

9. To provide a database for evolving succession strategies

10. To provide a basis for many other decisions such as fixation of incentives or
increment, regularization or confirmation of the services of the employee, promotion,
transfer or demotion.

Steps in performance Appraisal:

1. Create set up performance standards

2. Mutually set identifiable and measurable

3. Measure present level of performance

4. Compare and appraise present level of performance with standard

5. Discuss the appraisal with employee

6. Identify and initiate the corrective action

Job Evaluation: An attempt to determine and compare the demands which the normal
performance of particular job makes on normal workers without taking account of the
individual abilities or performance of workers concerned. It rates the job not the rank.

Objectives:

1. To establish correct wage correct wage differentials for all jobs with in the factory

2. To bring new jobs into their proper relatively with jobs previously established

3. To help clarify lines of authority, responsibility and promotion

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 4. To accomplish the foregoing by means of the facts and principles, which can be
readily explained to and accepted by all concerned

5. To establish a general wage level for a given factory which will have parity with
those of neighboring factories

Advantages:

1) It is simple, inexpensive and expeditions

2) It is easily understood and easily administered
3) It helps setting better rates than the arbitrary rates based purely an judgment
and experience
4) Same unions prefer it, because it leases more room for bargaining.
Disadvantages:

1. Job may be ranked on the basis of incomplete inform action and without the
benefits of well defined standards

2. The rank position of different jobs is likely to be influenced by the prevailing wage
ranks

3. No one committee number is likely to be familiar with all the jobs

Method of Job Evaluation: It is broadly be classified as

1) Qualitative
2) Quantitative Method
1) Qualitative Method: It can broadly be classified as ranking or classifying the job
from lowest to highest
A)Ranking technique: In this method, the jobs in the organization are arranged in
either in the ascending or descending order and numbered serially. The basis of such
arrangement could be the job description in terms of duties, responsibilities,
qualifications needed, relative difficulty involved in don the job, or value to the
company.

Points considered:

1. Amount of work involved

2. Supervision needed

3. Extent of responsibility required

4. Difficulties involved in the work

5. Work conditions required

b) Classification Method: This is also called job-grading method. Here, the number of
grades and the salary particulars for each grade are worked out first. The grades are

75
clearly described in terms of knowledge, skill and so on. Major steps for job
evaluation:

1. Deciding the number of grades

2. Writing grade descriptions

3. Identifying/listing of the jobs to be evaluated

4. Preparing job descriptions

2) Quantitative Method: Where point values are assigned to the various demands of a
job and relative value is obtained by summing all such point values.

a) Factor comparison method: Every job requires certain capabilities on the part of the
person who does the job. These capabilities are considered as critical factors, which
can be grouped as follows:

Mean effort Skill

Physical

Responsibility

Merit Rating: Merit rating is the process of evaluating the relative merit of the person
on a given job. It is an essential task of the personnel manager to distinguish the
meritorious employees from the other. The data collected from this task is used for
strategic decisions such as releasing an increment in pay, promotion, transfer, and
transfer on promotion to a critical assignment or even discharge.

Objectives of Merit Rating:

 To determine salary increments

 To decide who has to be transferred, promoted, or demoted

 To discover the workers needs for retaining and advanced training

 To unfold the exceptional skills among the employees based on their innate
potentials

 To guide and monitor the performance of those who are lagging behind.

Method of Merit Rating: Ranking method:

In this method, all the staff of a particular cadre or a department are arranged either
in the ascending or the descending order in order of merit or value to the firm.
Though this is a simple method, it cannot be followed where the employees in the
department are many in number.

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Paired comparison method: Here, every employee is compared with all others in a
particular cadre in the department. By comparing each pair of employees, the rater
can decide which of the employees is more valuable to the organization.

Rating scale: Here, the factors dealing with the quantity and quality of work are listed
and rated. A numeric value may be assigned to each factor and the factors could be
weighed in the order of their relative importance. All the variables are measured
against a three or five point scale.

Forced distribution method: Here, employees are given a set of alternatives and they
have to choose one, which reflects their understanding of the true nature of the job.
Their thinking is conditioned by the given set of answers.

Narrative or essay method: Here, the candidate is required to narrate in an essay

format his/her strengths, weaknesses, and potential to perform. Here, the candidate
is not restricted by any given set of alternatives. The candidate is free to decide what
to furnish or what not to furnish.

Management by objectives (MPO): The short-term objectives standards. This method

considers the actual performance as the basis mutually agreed upon by the
management and the employees are used as performance for evaluation. It is a
systematic method of goal setting. In addition, it provides for reviewing performance
based on results rather than personality traits or characteristics. However, this is not
practical at all levels and for all kinds of work in the organizations.

Unit- V PROJECT MANAGEMENT

Project it is consists of a number of tasks that must be done for the

project to the completed. These tasks have durations, they typically cost

77
money, and they often require non financial limited resources such as people
and facilities.

Project management is the application of knowledge, skills, tools, and

techniques to project activities in order to meet or exceed stakeholder needs
and expectations from a project. Project management is the process is the
process of conceiving, designing ,preparing evaluating, scheduling ,
organizing, monitoring and controlling the transformation of a system form an
initial state, to a specific state, and the motivation of all those involved in it in
order to achieve the project object with defined schedule, cost and
performance parameters.

Net work analysis: It is refers to a number of techniques for the planning

and control of complex projects. The basis of network planning is the
representation of sequential relationships between activities by means of a
network of lines and circles. The idea is to link the various activities in such a
way that the overall time spent on the project is kept to a minimum.
Features of Network Analysis:
1. Logical base of planning: Network analysis is highly applicable at several
stages of project management right from early planning stage of
selecting right option from various alternative to scheduling stage and
operational stage.
2. Simple in nature: Net work analysis is straightforward in concept and can
be easily explained to any laymen. Data calculations are simple and for
large projects computers can be used.
3. Improves coordination and communication: The graphs generated out of
network analysis display simply and direct way the complex nature of
various subdivisions of project may, quickly perceive from the graph
4. Wider application: The network analysis is applied to many types of
projects. Moreover, they may be applied at several levels within a given
project from a single department working on a sub-system to multi-plant
operations within corporation.
Basic Terminology

Event: A event is specific instant of time which indicates the beginning or end
of the activity event is also known as a junction or node. It is represented by a
circle and the event number is written with in the circle.

Activity: Every project consists of number of job operations or tasks which are
called activity.

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Dummy activity: When two activities start at the same instant of time like A
and B the head event are jointed by dotted arrows and this is known as
dummy activity.

Critical Path: Critical path is that path which consumes the maximum amount
of time or resources. It is that path which has zero slack value.

Slack: Slack means the time taken to delay a particular event without affecting
the project completion time. If a path has zero slack that means it is the
critical path.
Slack = LFT – EFT
Earliest Start Time (EST): It is the earliest possible time at which an activity
can start, and is calculated by moving from first to last event in the network
diagram.

Earliest Finish Time (EFT): It is the earliest possible time at which an activity
can finish
EFT = EST + Duration of activity

Latest Start Time (LST): It is the latest possible time by which an activity can
start without delaying the date of completion of the project.

LST = LFT – Duration of the activity

Latest Finish Time (LFT): It is the latest time by which the activity must be
completed. So that the scheduled date for the completion of the project may
not be delayed. It is calculated by moving backwards.

Total float: It is the additional time which a non critical activity can consume
without increasing the project duration. However total float may affect the
floats in previous and subsequent activities.

Total float = LST – EST or LFT – EFT

Free float: Free float refers to the time by which an activity can expand without
affecting succeeding activities.

Free float = EST of Head Event – EST of Trail Event – Activity duration

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Independent float: This the time by which activity may be delayed or extended
without affecting the preceding or succeeding activities in any away.

Independent float = EST of Head event – LFT of Trail event – Activity duration.

Project crashing: the concepts of direct and indirect costs, the relationship
between project time and project cost, the concept of cost slope and how the
optimum cost and optimum duration are ensured for a given projects while
crashing.
Project costs:
a) Direct cost: These costs are those, which are directly proportional to the
number of activities involved in the project Ex: Raw material cost

b) Indirect cost: In direct cost are those costs that are determined per day.
Some of examples for indirect costs are supervisory personnel salary,
supplies, and rent, interest on borrowings, ads, depreciation. These costs
are directly proportional to the number of days of the duration of the
project. If the project duration is reduced the indirect cost also comes
down.
c) Normal cost (Nc): It is the lowest cost of completing an activity in the
minimum time, employing normal means i.e. not using overtime or other
special resource.
d) Normal time (NT): It is the minimum time required to achieve the
normal cost
e) Crash cost (CC): It is the least cost of completing an activity by
employing all possible means like overtime, additional machinery,
proper materials etc.
f) Crash time (CT): It is the absolute minimum time associated with the
crash cost.
g) Cost Slope: Cost Slope is the amount that has to be spent over and
above the normal direct cost for reducing the duration by one unit of
time (day, week etc.). Cost slope is defined as the additional cost for
reducing one unit of time, assuming a given rate of increase in direct
cost with a decrease in one unit of time.

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