first series marks

decision making process

Decision making

Definition

It is defined as selection based on some criteria of one alternative from 2 or more possible alternatives.

Example: To fill up vacancy in an organization

3 alternatives

Promote from within

Recruit from outside

Appoint a relative of previous employee

Managers takes the decision(select an alternative) based on experience, experimentation,

Effective decision

An effective decision is one which is action oriented, goal directed and provides efficiency in implementation.

Guidelines for effective decision

1.     Define the goals

2.     Ensure that decision contributes to goal

3.     Involve subordinates in the decision making process

4.     Ensure successful implementation of the decision

5.     Evaluate the results

6.     Be flexible and revise the decisions which do not produce the desired results

Rationality in Decision making

Rationality means the ability to follow a systematical, logical and thorough approach in decision making.

Decision taken after thorough analysis and reasoning is called rational or objective decision.

Principles of rationality

1.     The decision maker has complete access to information and knowledge on all elements of his decision environment.

2.     He has a clear sequential scheme.

3.     He knows his problem thoroughly

4.     He has a wide range of alternatives from which he can pick and choose on basis of their outcomes.

5.     Manager has the full freedom and ability to make the choice

Significance of decision making

Decision making needed for all management functions.

Characteristics of decision making

It should achieve the goals

Analytical study of the alternatives - Process of choosing a course of action from   among alternatives

It is a human process involving application of intellectual abilities.

It should be flexible – change the decision to win the cooperation of entire group.

Take sufficient time for effective decision.

Study of impact of decision- it precedes the decision making

Proper communication system

Means to an end

Types of decisions

Programmed and Non-programmed (routine/repetitive and non routine/non repetitive)

Major and Minor (to buy 10 lakh Rs. machine/stationary item)

Policy and Operating (promotion policy/preparing salary bill)

Organizational and Personal (official capacity/individual capacity)

Individual and Group (sanction of leave to worker/modify design of product)

Departmental, interdepartmental and Enterprise

Routine and Strategic (sending samples of a product to Govt test house/lowering the price of product)

Simon’s Decision making process

Identifying the problem( Intelligence phase)

The decision-making process begins when a manager identifies the real problem.

A problem identified and defined is a problem half solved.

What is Symptom?

Symptom indicate that something is wrong with an organization, but they don't identify root causes. 

What is Diagnosis?

Diagnosis is the process of identifying a disease from its symptoms.

Here we identify the root cause or real problem from the symptoms.

TABLE 1

Symptoms and Their Real Causes

Symptoms	Underlying Problem
Low profits and/or declining sales	Poor market research
High costs	Poor design process; poorly trained employees
Low morale	Lack of communication between management and subordinates
High employee turnover	Rate of pay too low; job design not suitable
High rate of absenteeism	Employees believe that they are not valued

While  diagnosing the real problem the manager should consider causes and find out whether they are controllable or uncontrollable.

Analyzing the Problem: Design phase

After defining the problem, the next step in the decision-making process is to analyze the problem in depth. This is necessary to classify the problem in order to know

Who must take the decision and

Who must be informed about the decision taken,

What information is needed and

From  where the information is available.

Developing alternate solutions or courses of action - Design phase

Reason for Developing alternate solutions is to make the best decision.

Example : if the management wants to fill up vacancy , alternatives are

Promote from within

Recruit from outside

Appoint a relative of previous employee

Selecting the best solution- Choice Phase

Selection is based on parameters like experience, experimentation and detailed investigation.

Consider the merits and demerits of each alternative solution and costs involved in each.

Converting the decision in to effective action – Implementation phase

Implement the decision.

We need co operation of subordinates

They should be convinced that decision is correct.

Follow up the decision

A decision is said to be good if it also holds good in the same situation at another time and place.

Manager should introduce a system of follow up.

Characteristics of decision-making:

1.    It is a process of choosing a course of action from among the alternative courses of action.

2.    It is a human process involving to a great extent the application of intellectual abilities.

3.    It is the end process preceded by deliberation and reasoning.

4.    It is always related to the environment. A manager may take one decision in a particular set of circumstances and another in a different set of circumstances.

5.    It involves a time dimension and a time lag.

6.    It always has a purpose. Keeping this in view, there may just be a decision not to decide.

7.    It involves all actions like defining the problem and probing and analyzing the various alternatives, which take place before a final choice is made.

motivation

Motivation

Organizations objectives

Activities to achieve the objectives

Managers should try hard to make the employee do the activities to achieve the objectives.

Performance = Ability X Motivation

Motive is defined as needs, wants, drives, impulse etc within the individual.

Definition of motivation

Motivation means a process of stimulating/energizing people to accomplish the desired goals.

Motivation refers to the way in which drives, desires, aspiration, and strivings and needs direct, control or explain the behavior of human beings.

Motivation is an instrument in the hands of managers for inspiring and creating confidence in the workforce that they are capable of achieving good results.

Example for motivator: Money, Job security, Responsibility, Recognition, Possibility of Growth and Development, Suggestion scheme

Importance of Motivation

Helps in realizing organizational goals

Helps in increasing productivity

Helps in Reducing employees turnover and absenteeism

Helps in maintaining good industrial relations

Helps in getting right personnel

Helps in reducing employee grievances

Motivation theories

1. Abraham Maslow’s Hierarchy of Needs Theory

1.      Physiological needs

Basic needs for sustaining human life.

Food , shelter, water, sleep etc.

Basic needs motivate people to do the job

2.      Security of Safety needs

Fear of losing job, physical danger, pension

3.      Affiliation or Acceptance needs

As a social being, people want to be accepted by others in the society.

4.      Esteem needs

Power, prestige, status, self – confidence

5.      Need for self-actualization

Highest need in hierarchy.

Desire to become what one is capable of becoming.

To maximize one’s potential and to accomplish something.

2.      Herzberg two-factor theory - Motivation-hygiene approach to motivation

dissatisfiers /maintenance /hygiene factors

The presence will not motivate you, but the absence will dissatisfy you.

Eg: Salary, job security, working condition, company policy,  administration, status, interpersonal relationships

motivator/satisfier- the presence will satisfy/ motivate you

Eg: Achievement, recognition, challenging work, advancement, growth in job.

Comparison of Maslow’s need hierarchy and Herzberg’s 2 factor theory

Figure:

3.      Equity theory(compare/equate himself with others based on fairness of reward relative to inputs)

Individual’s judgment about the fairness of reward he got relative to inputs in comparison with reward of other.

Inputs are effort, education, and experience

Outcomes by a person/inputs by a person ==  Outcomes by a person/inputs by another person

If people feel they are inequitably (irregular, disproportionate) rewarded, they may be dissatisfied and reduce the quantity / quality of output/or may leave the organization., ask for a greater reward.

If people If people feel they are equitably (fairly) rewarded, they will continue at same level of output.

If people feel that the rewards are greater than equitable, they may work harder.

                                                                                                                

4. McClelland Needs theory of motivation

Need for power

               Power is needed for exercising influence and control over others

Need for affiliation

As a social being, people want to be accepted by others in the society/no one should reject them.

Need for Achievement

Intense desire for success and intense fear of failure.

They set difficult goals , assume personal responsibility for getting a job done, restless, like to work long hours

5.      McGregors Theory X and Theory Y

Assumptions about humans 2 predict the behavior of employees.

Theory X - Authoritarian Style

Theory Y - Participative management style

6.      Vroom’s Expectancy theory

Force=valence*expectancy

Force- strength of a person motivation

Valence- value they place on the outcome of their effort./ chance he sees of achieving that goal.

types of Organization Structures(except Line Organization structure)

1. Line Organization structure
2. Line and Staff Organization Structure

3.      Functional Organization structure

4.      Divisional Organization Structure

5.      Project Organization Structure

6.      Matrix Organization Structure

Line and Staff Organization Structure

What?

A pattern in which staff specialists advice line managers to perform their duties.

Why?

When the work of an executive(line manager) increases, its performance requires services of specialists in an area.

What staff can do?

Right to recommend ,advice ( IT Advisor, Economic Advisor, National Security Advisor)

Figure:

Merits

·        Planned specialization

                              Principle of specialization

Line manager responsible for operations which will achieve organizations objectives

Staff people provide expert advice on their field

·        Quality Decisions

Because managers takes decision after discussing with expert staff

·        Prospect for personnel growth

Opportunity for staff to concentrate in his area.

·        Training ground for personnel

Staff person do the job in which he is specialized.

Line manager observes how staff he is doing the job.

Demerits            

Lack of well defined authority

Line and staff conflicts

Suitability

Suitable for large organizations where specialization of activities is required.

Its success depends on harmony between Line and Staff people, clarity in Line of Authority, interpersonal contact of executives.

Functional Organization structure

It is created by grouping activities on basis of functions required for achieving the objective.

All functions are classified into basic, secondary etc.

Example: Production, Marketing, Finance, Personnel.

Marketing department can be sub divided in to Market Research, Advertising, and Sales

etc.

Characteristics

Whole activities of Organization are divided in to various functions based on type of work – Specialization by function.

Each functional area is put under one executive or specialist.

To take a decision related to particular function, consult the functional specialists.

Specialists have independence.

Advantages

Ensure division of labor and specialization

Quick decision making (consult functional head)

Limitation of one man control under line organization is removed

High degree of control and coordination of functions because all work of one kind is under one manager.

Promotes professional achievement as a person is restricted to his own area of specialization

Bring order and clarity in organization by prescribing what is expected from each subordinate.

Disadvantages

Responsibility for ultimate product

Here each department focuses on contribution on their area not on complete product.

Slow decision making- consult each department head

Line and staff and interdepartmental conflict

Divisional Organization Structure

Organization is divided into different autonomous units. Each unit is self contained and it has separate resources/ functional units to operate independent of others. Ie. Each unit has its own manufacturing; marketing etc. each unit is headed by a manager.

Basis of Departmentation

Product divisionalization

Product structure groups employees together based upon specific products produced by the company. An example of this would be a company that produces three distinct products, "product a", "product b", and "product c". This company would have a separate division for each product.

Example: Reliance Industries Limited has no of product divisions. : textiles,chemical ,oil and gas,polymers.

Territorial divisionalization

Here each organization may have regional offices operating in different areas. They may be established as separate units. Each regional office has its own set of functional departments.

Project Organization Structure

Here divisions or units are based on projects. There will be separate units for each project. When a project is completed, that unit/division may disappear.

Difference between Divisional and Project structure

In divisional various units are created on permanent basis, but in project structure units are created on temporary basis, ie: depend on life time of the project.

There will be a project manager for each project. He prescribes “what is to be done, when it is to be done, how much resources are required”.

The functional personnel are taken from various departments and functional managers decide who will perform the task and how it will be done.

 Project  manager has the responsibility for completing the project.

He doesn’t have the vertical authority on personnel from various functional departments.

Matrix Organization structure

Combination of functional and product structure

 A matrix organization frequently uses teams of employees to accomplish work, in order to take advantage of the strengths, as well as make up for the weaknesses.

An example would be a company that produces two products, "product a" and "product b". Using the matrix structure, this company would organize functions within the company as follows: "product a" sales department, "product a" customer service department, "product a" accounting, "product b" sales department, "product b" customer service department, "product b" accounting department

Factors affecting Organization structure

Organization structure

Definition

§  Formal relationships among various tasks, activities and people in the organization.

§  Framework  in which an organization arranges its authority , responsibility

Factors affecting Organization structure

1. Size

Small organization

                        Its structure can be simple/ no formal organization structure.

                        No specified job functions.

                         Individuals simply perform tasks based on their likes, dislikes, ability.

                        Rules and guidelines are not established

                        Small organizations are very often organic(respond to environment change) systems.

Large organizations

                        More complicated its structure.

                        More formal work assignments.

Some delegation of authority. 

Tasks are highly specialized.

Detailed rules and guidelines dictate work procedures. 

Superior subordinate relationship communication occurs through Authority, Responsibility

2.    Strategy

How an organization is going to position itself in the market in terms of its product is considered its strategy

2 Strategies  

a)    Differentiation  strategy

Always the first on the market with the newest and best product

b)    Cost -leadership strategy

Produce a product already on the market more efficiently and more cost effectively

3.    Environment

a)    Stable environment

The customers' desires are well understood and probably will remain consistent for a relatively long time.

Examples include manufacturers of items such as detergent, cleaning supplies, and paper products.

Here mechanistic structures would be advantageous.

b)    Dynamic environment

The customers’ desires are continuously changing.

Example of an industry functioning in a dynamic environment is electronics.

Technology changes, so do the desires of consumers.

Here organic structures would be advantageous.

4.    Technology

Types of technology involved in production

a)    Unit production

It refers to production of individual items tailored to a customers specifications.

Example: custom-made garments.

b)    Mass production

It refers to a large number of uniform goods in an assembly-line system. Workers are highly dependent on one another, as the product passes from stage to stage until completion.

Example: manufacturing of machine parts

c)     Process production

It refers to the production of materials that are sold by weight or volume.

                                    Example: chemicals

                                    Manpower increases from unit to mass production, span of management increases.

But if information technology is to be used, manpower requirement may decrease bcz of the work done by the computer. 

Authority and Responsibility

Difference between Authority and Responsibility

Basis	Authority	Responsibility
Meaning	It is the right of the manager to command his subordinates.	It is the obligation of the subordinate to complete the assigned work.
Origin	It arises due to the position of superior.	It arises due to superior-subordinate relationship.
Flow	It flows from top to bottom.	It flows from bottom to top.
Period	It has longer period as compared to responsibility.	It gets completed with the completion of the task so has the shorter period.
Nature	Authority is power.	Responsibility is the duty.
Delegation	Authority can be delegated to others.	Responsibility cannot be delegated.