B.

Com 1st semester PPM

Planning: An Introduction
A plan is a forecast for accomplishment. It is a predetermined
course of action. It is today‟s projection for tomorrow‟s activity. In
other words, to plan is to produce a scheme for future action, to
bring about specified results at a specified cost, in a specified period
of time. Management thinkers have defined the term, basically, in
two ways:
1. Based on futurity: “Planning is a trap laid down to capture the
future” (Allen). “Planning is deciding in advance what is to be done
in future” (Koontz). “Planning is informed anticipation of future”
(Haimann). “Planning is „anticipatory‟ decision-making” (R.L.
Ackoff).
2. As a thinking function: “Planning is a thinking process, an
organised foresight, a vision based on fact and experience that is
required for intelligent action” (Alford and Beatty) “Planning is
deciding in advance what to do, how to do it, when to do it and who
is to do it.” – Koontz and O‟Donnell
Types of Plans
Plans commit individuals, departments, organisations, and the
resources of each to specific actions for the future. Effectively designed
organisational goals fit into a hierarchy so that the achievement of goals
at low levels permits the attainment of high-level goals. This process is
called a means-ends chain because low-level goals lead to
accomplishment of high-level goals.
Three major types of plans can help managers achieve their
organisation‟s goals: strategic, tactical, and operational. Operational
plans lead to the achievement of tactical plans, which in turn lead to the
attainment of strategic plans. In addition to these three types of plans,
managers should also develop a contingency plan in case their original
plans fail.
1. Operational plans: The specific results expected from
departments, work groups, and individuals are the operational goals.
These goals are precise and measurable.
Examples: (a) Process 150 sales applications each week
(b) Publish 20 books this quarter
Thus an operational plan is one that a manager uses to accomplish
his or her job responsibilities. Supervisors, team leaders, and
facilitators develop operational plans to support tactical plans.
Operational plans can be a single-use plan or an ongoing plan.
2. Tactical plans: A tactical plan is concerned with what the lower level
units within each division must do, how they must do it, and who is in
charge at each level. Tactics are the means needed to activate a
strategy and make it work. Tactical plans are concerned with shorter
time frames and narrower scopes than are strategic plans. These plans
usually span one year or less because they are considered short-term
goals. Long-term goals, on the other hand, can take several years or
more to accomplish. Normally, it is the middle manager‟s
responsibility to take the broad strategic plan and identify specific
tactical actions.
3. Strategic plans: A strategic plan is an outline of steps designed
with the goals of the entire organisation as a whole in mind, rather
than with the goals of specific divisions or departments. Strategic
planning begins with an organisation‟s mission. Strategic plans look
ahead over the next two, three, five, or even more years to move the
organisation from where it currently is to where it wants to be.
Requiring multilevel involvement, these plans demand harmony
among all levels of management within the organisation. Top-level
management develops the directional objectives for the
entireorganisation, while lower levels of management develop
compatible objectives and plans to achieve them. Top
management‟s strategic plan for the entire organisation becomes the
framework and sets dimensions for the lower level planning.
4. Contingency plans: Intelligent and successful management depends
upon a constant pursuit Notes of adaptation, flexibility, and mastery of
changing conditions. Strong management requires a “keeping all
options open” approach at all times - that‟s where contingency planning
comes in. Contingency planning involves identifying alternative
courses of action that can be implemented if and when the original plan
proves inadequate because of changing circumstances. Keep in mind
that events beyond a manager‟s control may cause even the most
carefully prepared alternative future scenarios to go awry. Unexpected
problems and events frequently occur. When they do, managers may
need to change their plans. Anticipating change during the planning
process is best in case things don‟t go as expected. Management can
then develop alternatives to the existing plan and ready them for use
when and if circumstances make these alternatives appropriate.
Characteristics of Planning
Planning has a number of characteristics:
1. Planning is goal-oriented: All plans arise from objectives.
Objectives provide the basic guidelines for planning activities.
Planning has no meaning unless it contributes in some positive
manner to the achievement of predetermined goals.
2. Planning is a primary function: Planning is the foundation of
management. It is a parent exercise in management process. It is a
preface to business activities.
3. Planning is all-pervasive: Planning is a function of all managers. It
is needed and practised at all managerial levels. Planning is inherent
in everything a manager does. Managers have to plan before
launching a new business.
4. Planning is a mental exercise: Planning is a mental process
involving imagination, foresight and sound judgment. Planning
compels managers to abandon guesswork and wishful thinking.
5. Planning is a continuous process: Planning is continuous. It is a
never-ending activity. Once plans for a specific period are prepared,
they are translated into action.
6. Planning involves choice: Planning essentially involves choice
among various alternative courses of action.
7. Planning is forward looking: Planning means looking ahead and
preparing for the future. It means peeping into the future, analysing it
and preparing for it.
8. Planning is flexible: Planning is based on a forecast of future
events. Since future is uncertain, plans should be reasonably flexible.
9. Planning is an integrated process: Plans are structured in a logical
way wherein every lower-level plan serves as a means to accomplish
higher level plans. They are highly interdependent and mutually
supportive.
10. Planning includes efficiency and effectiveness dimensions: Plans
aim at deploying resources economically and efficiently. They also try
to accomplish what has been actually targeted. The effectiveness of
plans is usually dependent on how much it can contribute to the
predetermined objectives.
Steps in the Planning Process
Planning is a vital managerial function. It is intellectually demanding.
It requires a lot of time and effort on the part of planners. They must
adopt a systematic approach so as to avoid pitfalls, errors and costly
mistakes which may upset the whole business later on. Such a
systematic approach may consist of the following steps:
1. Establishing objectives: The first step in the planning process is to
identify the goals of the organisation. The internal as well as external
conditions affecting the organisation must be thoroughly examined
before setting objectives. The objectives so derived must clearly
indicate what is to be achieved, where action should take place, who is
to perform it, how it is to be undertaken and when is it to be
accomplished. In other words, managers must provide clear guidelines
for organisational efforts, so that activities can be kept on the right
track.
2. Developing premises: After setting objectives, it is necessary to
outline planning premises. Premises are assumptions about the
environment in which plans are made and implemented. Thus,
assumptions about the likely impact of important environmental factors
such as market demand for goods, cost of raw materials, technology to
be used, population growth, government policy, etc. on the future plans
are made. The demand for fuel efficient vehicles in the late 1980s has
compelled virtually all automobile manufacturers in India to go in
search of collaborative agreements with foreign manufacturers from
Japan, Germany, USA, etc. Plans should be formulated by the
management, keeping the constraints imposed by internal as well as
external conditions in mind.
3. Evaluating alternatives and selection: After establishing the
objectives and planning premises, the alternative courses of action
have to be considered. Liberalisation of imports and the use of high
technology in recent times has encouraged manufacturers to
produce colour television sets, electronic sets, electronic
equipments, videos, computers, fuel- efficient vehicles, etc. Thus,
changes in government policy, technology, competition, etc. pose
several alternatives before manufacturers, from time to time,
regarding the product they should manufacture. Such alternatives
have to be carefully evaluated against factors like costs, associated
risks involved, benefits likely to arise, availability of spare capacity,
etc. The pros and cons as well as the consequences of each
alternative course of action must be examined thoroughly before a
choice is made.
4. Formulating derivative plans: After selecting the best course of
action, the management has to formulate the secondary plans to support
the basic plan. The plans derived for various departments, units,
activities, etc., in a detailed manner are known as „derivative plans‟. For
example, the basic production plan requires a number of things such as
availability of plant and machinery, training of employees, provision of
adequate finance, etc. To ensure the success of a basic plan, the
derivative plans must indicate the time schedule and sequence of
performing various tasks.
5. Securing cooperation and participation: The successful
implementation of a plan depends, to a large extent, on the whole-
hearted cooperation of the employees. In view of this, management
should involve operations people in the planning activities.
Suggestions, complaints and criticisms from operating personnel help
management rectify the defects in plans and set things right in the
beginning itself. Involvement of subordinates in planning has the
unique advantage of getting a practical view of those closer to the
scene of operations. According to Koontz, „plans have to be set in an
atmosphere of close participation and a high degree of concurrence‟.
Participation enables employees to give their best to plans. They are
also motivated to carry out the plan to the best of their ability.
6. Providing for follow-up: Plans have to be reviewed continually to
ensure their relevance and effectiveness. In the course of implementing
plans, certain facts may come to light that were not even thought of
earlier. In the light of these changed conditions, plans have to be
revised. Without such a regular follow-up, plans may become out-of-
date and useless. Moreover, such a step ensures the implementation
plans along right lines. Management can notice shortcomings in time
and initiate suitable remedial steps. A continuous evaluation of plans
also helps to develop sound plans in future, avoiding mistakes that
have surfaced while implementing the previous plans.
 Decision Making
Introduction
Individuals in organisations make decisions. That is, they make
choices from among two or more alternatives. Decision-making is
almost universally defined as choosing between alternatives.
Decision-making is a critical activity in the lives of managers.
The decisions a manager faces can range from very simple, routine
matters for which the manager has an established decision rule
(programmed decisions) to new and complex decisions that require
creative solutions (non-programmed decisions).
The word "decision" is derived from the Latin words "de ciso"
which means, "cutting away" or to come to a conclusion. A decision is
the selection of a course of action.
According to Felex M Lopez, "a decision represents a judgement; a
final resolution of a conflict of needs, means or goals; and a
commitment to action made in the face of uncertainty, complexity or
even irrationality."
According to Philip Marvin, "decision-making may be viewed as the
process by which individuals select a course of action from among
alternatives to produce a desired result. It is a process made up of
four continuous interrelated phases: explorative, speculative,
evaluative and selective."
Thus, decision-making is the process by which the decision-maker
tries to jump over the obstacles placed between his current position
and the desired future position. Decision-making occurs as a
reaction to a problem.
A discrepancy exists between some current state of affairs and some
desired state, requiring consideration of alternative courses of
action. Moreover, every decision requires interpretations and
evaluation of information.
Data is typically received from multiple sources and it needs to be
screened, processed, and interpreted. What data is relevant to the
decision will depend on the perception of the decision-maker.
 Components of Decision-making
Decision-making involves certain components like:
1. Decision environment:
Every decision is made within a decision environment, which is
defined as the collection of information, alternatives, values, and
preferences available at the time of the decision. An ideal decision
environment would include all possible information, all of it
accurate, and every possible alternative. However, both information
and alternatives are constrained because the time and effort to gain
information or identify alternatives are limited.
The time constraint simply means that a decision must be made by
a certain time. The effort constraint reflects the limits of manpower,
money, and priorities. (You wouldn't want to spend three hours and
half a tank of gas trying to find the very best parking place at the
mall.) Since decisions must be made within this constrained
environment, we can say that the major challenge of decision-
making is uncertainty and a major goal of decision analysis is to
reduce uncertainty.
We can almost never have all information needed to make a
decision with certainty, so most decisions involve an
undeniable amount of risk. The fact that decisions must be
made within a limiting decision environment suggests two
things. First, it explains why hindsight is so much more
accurate and better at making decisions that foresight. As
time passes, the decision environment continues to grow
and expand. New information and new alternatives appear
even after the decision must be made.
 Armed with new information after the fact, the hindsighters
can many times look back and make a much better decision
than the original maker, because the decision environment
has continued to expand.
The second thing suggested by the decision-within-an-
environment idea follows from the above point. Since the
decision environment continues to expand as time passes, it
is often advisable to put off making a decision until close to
the deadline.
2. Effects of Quantity on Decision-making:
Many decision-makers have a tendency to seek more information than
required to make a good decision. When too much information is
sought and obtained, one or more of several problems can arise.
A delay in the decision occurs because of the time required to obtain
and process the extra information. This delay could impair the
effectiveness of the decision or solution.
Information overload will occur. In this state, so much information is
available that decision-making ability actually declines because the
information in its entirety can no longer be managed or assessed
appropriately. Example: A manger spent a day at an information-
heavy seminar. At the end of the day, he was not only unable to
remember the first half of the seminar but he had also forgotten
where he parked his car that morning.
Selective use of the information will occur. That is, the decision-
maker will choose from among all the information available only
those facts which support a preconceived solution or position.
Mental fatigue occurs, which results in slower work or poor
quality work.
 Decision fatigue occurs, where the decision-maker tires of
making decisions. Often the result is fast, careless decisions or
even decision paralysis–no decisions are made at all.
3. Decision Streams: A common misconception about decision-
making is that decisions are made in isolation from each other: you
gather information, explore alternatives, and make a choice, without
regard to anything that has gone before. The fact is, decisions are
made in a context of other decisions. The typical metaphor used to
explain this is that of a stream. There is a stream of decisions
surrounding a given decision, many decisions made1 earlier have led
up to this decision and made it both possible and limited. Many
other decisions will follow from it.
 Decision-making Process
Managers have to make decisions, whether they are simple or
extremely complex. Making a good decision is a difficult exercise. It
is the product of deliberation, evaluation and thought. To make good
decisions, managers should invariably follow a sequential set of
steps. Decision- making is a process involving a series of steps as
shown below.
First Step: The first step is recognition of the problem. The manager
must become aware that a problem exists and that it is important
enough for managerial action. Identification of the real problem is
important; otherwise, the manager may be reacting to symptoms and
fire fighting rather than dealing with the root cause of the problem.
In order to monitor the problem situation (decision-making
environment), managers may have to look into management reports,
check progress against budgets, compare the results against industry
competitors, and assess factors contributing to employee efficiency
or inefficiency, etc. They have to use judgement and experience in
order to identify the exact nature of the problem. In other words, the
manager must determine what is to be accomplished by the decision.
Second Step: The second step in the decision-making process is
gathering information relevant to the problem. A successful manager
must have the ability to weed out the wheat from the chaff before
deciding on a specific course of action. Once aware of a problem, he
must state the real problem. He must try to solve the problem, not the
symptoms. The manager must pull together sufficient information
about why the problem occurred. This involves conducting a
thorough diagnosis of the situation and going on a fact-finding
mission.
Third Step: The third step is listing and evaluating alternative courses
of action. Developing alternative solutions (to the problem)
guarantees adequate focus and attention on the problem. It helps
managers to fully test the soundness of every proposal before it is
finally translated into action. During this step, a thorough "what if"
analysis should also be conducted to determine the various factors
that could influence the outcome. It is important to generate a wide
range of options and creative solutions in order to be able to move on
to the next step.
Therefore, managers should encourage people to develop different
solutions for the same problem. The ability to develop alternatives is
as important as making a right decision among alternatives. The
development of alternatives is a creative, innovative activity. It calls
for divergent thinking; it calls for "systems thinking". In other
words, managers should try to seek solutions outside the present
realm of their knowledge; they are forced to look into all the
relevant factors before coming up with a novel solution.
Fourth Step: Next, the manager selects the alternative that best
meets the decision objective. If the problem has been diagnosed
correctly and sufficient alternatives have been identified, this step is
much easier. Peter Drucker has offered the following four criteria
for making the right choice among available alternatives:
1. The manager has to weigh the risks of each course of action
against the expected gains.
2. 2. The alternative that will give the greatest output for the least
inputs in terms of material and human resources is obviously
the best one to be selected.
3. If the situation has great urgency, the best alternative is one that
dramatizes the decision
and serves notice on the organisation that something important is
happening. On the other hand, if consistent effort is needed, a slow start
that gathers momentum may be preferable.
4. Physical, financial and human resources impose a limitation on the
choice of selection. Of these, the most important resources whose
limitations have to be considered are the human beings who will carry
out the decision.
Final Step: Finally, the solution is implemented. The manager must seek
feedback regarding the effectiveness of the implanted solutions.
Feedback allows managers to become aware of the recent problems
associated with the solution. It permits managers to monitor the effects
of their acts to gauge their success. They can evaluate their own
decision-making abilities. Consistent monitoring and periodic feedback
is an essential part of the follow-up process.
 Management by Objectives
Introduction
We all know that good management is characterised usually by the
accomplishment of desired objectives. Management by Objectives or
MBO is a technique which helps a manager to achieve his objectives
in an efficient manner. MBO insists that a manager be very clear
about his objectives before he starts a task. If a manager is not sure
about his destination, he is unlikely to arrive, and in all probability he
may not even know whether he is on the right road or not, or if he has
arrived or not. MBO is as old as management itself. In fact,
management has to be always with and by objectives. Unfortunately,
however, most managers are really not sure about their objectives.
They are usually not clear as to what their organisation, department or
section should achieve within a particular period of time. If properly
implemented MBO can provide the dynamism, purpose and trust that
are essential characteristics of effective management. It is like
inflating back to shape a tube which has become somewhat flat.
Core Concepts of MBO
Management by Objectives (MBO) was first outlined by Peter
Drucker in 1954 in his book „The
Practice of Management‟. It is a systematic and organised approach
that allows management to focus on achievable goals and to attain
the best possible results from available resources. MBO aims to
increase organisational performance by aligning goals and
subordinate objectives throughout the organisation. It managers
focus on the result, not the activity. They delegate tasks by
“negotiating a contract of goals” with their subordinates without
dictating a detailed roadmap for implementation. Management by
Objectives (MBO) is about setting yourself objectives and then
breaking these down into more specific goals or key results. Ideally,
employees get strong input to identify their objectives, time lines for
completion, etc. MBO includes ongoing tracking and feedback in
the process to reach objectives.
According to Drucker managers should “avoid the activity trap”,
getting so involved in their day to day activities that they forget
their main purpose or objective. Instead of just a few top managers,
all managers should:
1. Participate in the strategic planning process, in order to improve
the implement ability of the plan, and
2. Implement a range of performance systems, designed to help the
organisation stay on the right track.
Characteristics of Management by Objectives Notes
Management by Objectives has following characteristics.
1. MBO emphasises participation in setting goals that are tangible,
verifiable and measurable.
2. MBO focuses attention on what must be accomplished (goals) rather
than how it is to be accomplished (methods).
3. MBO, by concentrating on key result areas translates the abstract
philosophy of management into concrete phraseology. The technique
can be put to general use (non-specialist technique). Further, it is „a
dynamic system which seeks to integrate the company‟s need to achieve
its profit and sales growth with the manager‟s need to clarify and
achieve its profit and sales growth with the manager‟s need to
contribute and develop himself.
4. MBO is a systematic and rational technique that allows management
to attain maximum results from available resources by focusing on
achievable goals. It allows the subordinate with plenty of room to make
creative decisions by himself.
 Process of MBO
1. Defining the Goal
Any MBO programme must start with an absolute enthusiastic
support of top management. It must be consistent with the philosophy
of the management. The long-term goals of the organisation must be
outlined initially, like: What is the basic purpose of the organisation?
What business are we in and why? What are the long-term prospects
in other areas? After these long-term goals are established,
management must be concerned with determining specific objectives
to be achieved within a given time capsule. Goal setting is a powerful
way of motivating people. Goals provide a clear idea of what we are
trying to achieve. Goals allow us to measure our progress. We are able
to plan what we need to do to achieve these goals through people,
time, resources etc. Keeping all this in mind companies should set
SMART goals. S - Specific, M - Measurable, A - Achievable, R -
Realistic and T - Time-base
2 Action Plan
The action plan is the means by which an objective is achieved. The
action plan gives direction
and ensures unity of purpose to organisational activities. It will state in
detail, exactly what is to be done, how the subordinate will proceed,
what steps will be taken, and what activities will be engaged in as the
subordinate progresses. It provides a specific answer to the question:
„What is to be done?‟ Questions like who is responsible for each activity,
what resources are needed, what the time requirements are would also be
answered. Example: Nitin Albert and his sales manager might agree
upon the following standards of performance for Nitin: . increase sales
of mobile phones in the Southern region by 10 percent by the end of the
current year; reduce travelling expenses during the above period.
There are two ways of developing specific action plans: They may be
developed by both manager and subordinate or by the subordinate
alone. To ensure success, the superior must be willing to sit with
each subordinate and review the action plan (such as the above one),
once it has been developed. The periodic review process helps the
superior to monitor progress towards goal achievement. It helps in
finding out better and more efficient methods of accomplishing
goals, in finding out the feasibility of implementing the earlier goals
uncovering barriers to accomplishment etc. If the subordinate does
not appear to be on the right course, the performance objective can
be modified or the subordinate can be redirected into more
productive behaviours. The emphasis in periodic review sessions
should be on checking the progress toward goal achievement. If the
performance is not satisfactory, the superior must try to isolate the
causes of lack of progress without criticising the subordinate and
indicate specific steps, as to how to proceed in future so as to achieve
the goals. The emphasis should be on improving performance rather
than degrading subordinates.
3 Final Review
This is the last phase of the MBO programme. In this step, the actual
results are measured against predetermined standards. Mutually agreed-on
objectives provide basis for reviewing the progress. While appraising the
performance of subordinates, the manager should sit with his subordinates
and find out the problems encountered while accomplishing the goals.
The subordinate, as in the periodic sessions, should not be criticised for
failure to make sufficient progress; the atmosphere should not be hostile
or threatening. A give-and-take atmosphere should prevail and the
appraisal should be based on mutual trust and confidence
betweenmanagers and subordinates. In actual practice, this type of give-
and-take session is extremely difficult to achieve and rarely reaches its
potential value, unless managers are gifted with necessary interpersonal
skills. Often, appraisal takes place for the purpose of determining rewards
and punishments; judging the personal worth of subordinates and not the
job performance. As a result, appraisal sessions become awkward and
uncomfortable to the participants and intensify the pressure on
subordinates while giving them a limited choice of objectives. Insecure
subordinates may come to „dread‟ the sessions and they may not feel free
to communicate honestly and openly, without fear of retaliation.
Appraisals can be really useful, if the person being evaluated knows and
accepts in advance the grounds upon which he is being appraised.
 Organising
Introduction
Organising as a function of management involves division of work
among people whose efforts must be co-ordinated to achieve specific
objectives and to implement pre-determined strategies. Organisation is
the foundation upon which the whole structure of management is built.
It is the backbone of management. After the objectives of an enterprise
are determined and the plan is prepared, the next step in the
management process is to organise the activities of the enterprise to
execute the plan and to attain the objectives of the enterprise. The term
organisation is given a variety of interpretations. In any case, there are
two broad ways in which the term is used. In the first sense,
organisation is understood as a dynamic process and a managerial
activity which is necessary for bringing people together and tying them
together in the pursuit of common objectives. When used in the other
sense, organisation refers to the structure of relationships among
positions and jobs which is built up for the realisation of common
objectives.
Organising – The Process
Organisation is the process of establishing relationship among the
members of the enterprise. The relationships are created in terms of
authority and responsibility. To organise is to harmonise, coordinate or
arrange in a logical and orderly manner. Each member in the
organisation is assigned a specific responsibility or duty to perform and
is granted the corresponding authority to perform his duty. The
managerial function of organising consists in making a rational division
of work into groups of activities and tying together the positions
representing grouping of activities so as to achieve a rational, well
coordinated and orderly structure for the accomplishment of work.
According to Louis A Allen, "Organising involves identification and
grouping the activities to be performed and dividing them among the
individuals and creating authority and responsibility relationships
among them for the accomplishment of organisational objectives." The
various steps involved in this process are:
1. Determination of Objectives: It is the first step in building up an
organisation. Organisation is always related to certain objectives.
Therefore, it is essential for the management to identify the objectives
before starting any activity. Organisation structure is built on the basis
of the objectives of the enterprise. That means, the structure of the
organisation can be determined by the management only after knowing
the objectives to be accomplished through the organisation. This step
helps the management not only in framing the organisation structure but
also in achieving the enterprise objectives with minimum cost and
efforts. Determination of objectives will consist in deciding as to why
the proposed organisation is to be set up and, therefore, what will be the
nature of the work to be accomplished through the organisation
2. Enumeration of Objectives: If the members of the group are to pool
their efforts effectively, there must be proper division of the major
activities. The first step in organising group effort is the division of the
total job into essential activities. Each job should be properly classified
and grouped. This will enable the people to know what is expected of
them as members of the group and will help in avoiding duplication of
efforts. For example, the work of an industrial concern may be divided
into the following major functions – production, financing, personnel,
sales, purchase, etc.
3. Classification of Activities: The next step will be to classify activities
according to similarities and common purposes and functions and taking
the human and material resources into account. Then, closely related
and similar activities are grouped into divisions and departments and the
departmental activities are further divided into sections.
4. Assignment of Duties: Here, specific job assignments are made to
different subordinates for ensuring a certainty of work performance. Each
individual should be given a specific job to do according to his ability and
made responsible for that. He should also be given the adequate authority to
do the job assigned to him. In the words of Kimball and Kimball,
"Organisation embraces the duties of designating the departments and the
personnel that are to carry on the work, defining their functions and
specifying the relations that are to exist between department and
individuals."
5. Delegation of Authority: Since so many individuals work in the same
organisation, it is the responsibility of management to lay down structure of
relationship in the organisation. Authority without responsibility is a
dangerous thing and similarly responsibility without authority is an empty
vessel. Everybody should clearly know to whom he is accountable;
corresponding to the responsibility authority is delegated to the
subordinates for enabling them to show work performance. This will help
in the smooth working of the enterprise by facilitating delegation of
responsibility and authority.
Organisation Structure
An organisation structure shows the authority and responsibility
relationships between the various positions in the organisation by
showing who reports to whom. Organisation involves establishing an
appropriate structure for the goal seeking activities. It is an established
pattern of relationship among the components of the organisation.
March and Simon have stated that-
"Organisation structure consists simply of those aspects of pattern of
behaviour in the organisation that are relatively stable and change only
slowly." The structure of an organisation is generally shown on an
organisation chart. It shows the authority and responsibility
relationships between various positions in the organisation while
designing the organisation structure, due attention should be given to
the principles of sound organisation.
Significance of Organisation Structure
1. Properly designed organisation can help improve teamwork and
productivity by providing a framework within which the people can
work together most effectively.
2. Organisation structure determines the location of decision-making in
the organisation.
3. Sound organisation structure stimulates creative thinking and
initiative among organisational members by providing well defined
patterns of authority.
4. A sound organisation structure facilitates growth of enterprise by
increasing its capacity to handle increased level of authority.
5. Organisation structure provides the pattern of communication and
coordination.
6. The organisation structure helps a member to know what his role is
and how it relates to other roles.