Principles of Management

Contemporary issues in leadership are the new questions and challenges leaders face in modern organizations.

1. Managing power - leaders use legitimate, coercive, reward, expert and referent power; today they must empower employees and share authority rather than rely on position.
2. Developing trust - trust is the foundation of leadership; leaders build it through integrity, openness, fairness, consistency, competence and keeping promises. Trust is hard to rebuild once broken.
3. Empowering employees - giving workers authority, information and autonomy; this improves motivation and responsiveness, especially in IT and team-based work.
4. Leading across cultures - global organizations require leaders to adjust style to cultural values (GLOBE findings).
5. Gender and leadership - differences in style (women are often more participative) and the glass ceiling issue; fair opportunity for both.
6. Moral and ethical leadership - leaders must set an example, treat people with dignity and uphold ethical standards and social responsibility.
7. Online / virtual leadership - leading dispersed teams using technology, which requires clear communication and trust without physical presence.
8. Leader development and sustaining leadership - training, mentoring and succession planning to create future leaders.
9. Emotional intelligence - self-awareness, self-management, empathy and social skills improve leadership effectiveness.
10. Servant and authentic leadership - leaders who put followers' needs first and act in line with their true values.

These issues show that leadership today depends less on position and more on trust, ethics and the ability to inspire diverse people.

Decision-making style reflects how a person perceives information and processes it. Rowe and Mason classify it on two dimensions: way of thinking (rational vs intuitive) and tolerance for ambiguity (low vs high), giving four styles.

1. Directive style - low tolerance for ambiguity, rational thinking. Decisions are fast, efficient and based on little information and few alternatives; the manager is autocratic and short-term oriented.
2. Analytic style - high tolerance for ambiguity, rational thinking. The manager wants more information and considers many alternatives; he or she is careful and adapts well to new situations.
3. Conceptual style - high tolerance for ambiguity, intuitive thinking. The manager looks at many alternatives with a broad, long-term and creative view and is willing to take risks.
4. Behavioral style - low tolerance for ambiguity, intuitive thinking. The manager is concerned about the people affected, works well with others, accepts suggestions, avoids conflict and prefers meetings.

Most managers use a mix of styles, and a good manager chooses the style that suits the situation.

(a) Communication

Communication is the transfer and understanding of meaning between sender and receiver. The process has a sender, encoding, message, channel, decoding, receiver and feedback, with noise possible at any stage.

(b) Styles of men and women communication

Studies such as those of Deborah Tannen show that men and women often use different conversational styles, which can cause misunderstanding at work.

Implications for managers

1. Recognise that the differences are generalisations, not rules.
2. Avoid judging one style as better.
3. Listen actively and clarify meaning.
4. Adapt style to the receiver and give feedback.
5. Train employees in gender-sensitive communication to improve teamwork and reduce conflict.

Decision-making style is the way an individual perceives and processes information when deciding. According to Rowe and Mason, it is defined by two dimensions: way of thinking (logical or intuitive) and tolerance for ambiguity (low or high).

1. Directive - low tolerance for ambiguity and a rational way of thinking. Efficient, fast, uses little information and few alternatives, aims at control and short-term results.
2. Analytic - high tolerance for ambiguity, rational. Requires more information, examines many alternatives, careful and suited to unique situations.
3. Conceptual - high tolerance for ambiguity, intuitive. Broad outlook, considers many options, creative, long-term and willing to take risks.
4. Behavioral - low tolerance for ambiguity, intuitive. Cares about the people involved, receptive to suggestions, seeks acceptance, avoids conflict, prefers meetings and verbal communication.

Managers often combine styles, and the best choice depends on the situation, urgency and the people involved.

Communication is the process of exchanging information, ideas and understanding between a sender and a receiver so that the message is understood in the same way by both.

Communication styles of men and women (generalizations based on research such as Deborah Tannen's)

Implication: Differences can cause misunderstanding, so managers should be aware of them, listen actively, and treat the styles as complementary rather than right or wrong. These are tendencies and vary among individuals.

(a) Definition of management

Management is the process of planning, organizing, leading and controlling the efforts of organizational members and using all organizational resources to achieve stated goals efficiently and effectively. Efficiency means doing things right (least waste of inputs); effectiveness means doing the right things (attaining goals).

(b) Skills required of a successful IT manager

Robert Katz classified managerial skills into technical, human and conceptual skills, and modern managers also need several additional ones.

1. Technical skills - knowledge of and proficiency in specific tools and methods, such as programming, databases, networks, cloud, cyber security and software development methodologies. They help the IT manager guide, evaluate and support technical staff.
2. Human (interpersonal) skills - the ability to work with, understand, motivate and lead people: communication, listening, team building, conflict handling and delegation. IT work is team-based, so these skills are vital at every level.
3. Conceptual skills - the ability to see the organization as a whole, analyse complex situations and link IT strategy to business goals (e.g. enterprise architecture, choosing technology investments).
4. Communication skills - explaining technical matters in plain language to non-technical executives, clients and users, and writing clear proposals and reports.
5. Problem-solving and decision-making skills - diagnosing system failures, weighing alternatives and acting under time pressure and uncertainty.
6. Project management skills - planning schedules, budgets, risk and quality for IT projects (Agile, Scrum, PMBOK).
7. Business and financial acumen - understanding costs, ROI, vendor contracts and how IT creates value for the business.
8. Adaptability and continuous learning - technology changes rapidly, so the manager must learn new tools and manage change.
9. Political and ethical skills - building networks, negotiating for resources, and handling data privacy, security and professional ethics.

The relative importance changes with level: top managers need more conceptual skill, first-line IT managers more technical skill, while human skills matter equally at all levels.

(a) Meaning of environment

The environment of an organization is the set of all external and internal forces, institutions and conditions that lie outside or inside the organization and that affect its performance. The external environment has two parts: the general (macro) environment - economic, political-legal, socio-cultural, technological, demographic and global factors - and the specific (task) environment - customers, suppliers, competitors, regulators, pressure groups and distributors. The internal environment covers owners, employees, culture, structure and resources.

(b) Why it is essential to study environmental factors

1. Identifying opportunities and threats - e.g. growth of digital payments in Nepal is an opportunity, a new competitor is a threat (SWOT analysis).
2. Strategic planning - sound goals and strategies must fit the environment; planning without scanning it leads to failure.
3. Adapting to change - markets, technology and regulations change continuously; early awareness lets the firm adjust quickly.
4. Understanding stakeholders - customers' needs, suppliers' terms and competitors' moves shape pricing, products and quality.
5. Better decision making - managers decide with reliable information about risks and uncertainty.
6. Legal and social compliance - knowledge of laws, taxation, labour rules and social values prevents penalties and protects reputation.
7. Resource acquisition and use - the firm obtains capital, labour and materials from the environment, so it must know their availability and cost.
8. Survival and growth - organizations are open systems; those that ignore the environment lose competitiveness.
9. Competitive advantage - spotting trends such as AI or e-commerce before rivals produces first-mover benefits.

Hence environmental scanning is a continuous managerial task.

(a) Organizational structure

Organizational structure is the formal arrangement of jobs in an organization: how tasks are divided, grouped and coordinated, who reports to whom, and where decisions are made. It is shown by an organization chart and is defined by work specialization, departmentalization, chain of command, span of control, centralization/decentralization and formalization.

(b) Vertical and horizontal differentiation

Differentiation is the way an organization divides itself into parts.

• Horizontal differentiation is the division of work across the same level into specialised units - by function, product, customer or geography (e.g. marketing, finance, IT departments).
• Vertical differentiation is the number of hierarchical levels from top management to operatives; it creates the chain of command and the span of control.

Both must be balanced: more horizontal differentiation needs better integration, and more vertical levels increase cost and delay.

The omnipotent and symbolic views concern how much managers actually control organizational outcomes.

The omnipotent view holds that competent managers can make the organization succeed whatever the circumstances. The symbolic view argues that, because of external environment, organizational culture, limited resources and other constraints, the managers' effect is limited; they mainly symbolise leadership and set direction. In reality, managers are neither all-powerful nor powerless: their influence depends on the discretion allowed by the environment and organization.

Definition

Planning is the process of defining the organization's goals, establishing an overall strategy to achieve them, and developing a hierarchy of plans to integrate and coordinate activities. It answers what to do, how, when, where and by whom.

Purpose of planning

1. Provides direction - everyone knows where the organization is heading and what is expected, which coordinates effort.
2. Reduces uncertainty - forces managers to look ahead, anticipate change and prepare responses.
3. Minimises waste and redundancy - coordinated activities and clear means reduce overlap and idle resources.
4. Sets standards for controlling - goals and plans become the yardstick against which actual performance is measured.
5. Facilitates decision making - gives a framework for consistent decisions.
6. Encourages innovation and competitiveness - systematic thinking reveals opportunities and strengthens strategic position.
7. Motivates employees - clear, accepted goals give a sense of purpose.
8. Efficient use of resources - money, people and time are allocated to priorities.

Motivation is the willingness to exert high levels of effort toward organizational goals, conditioned by the effort's ability to satisfy individual needs. Common techniques are:

1. Financial incentives - pay, bonus, commission, profit sharing, stock options and piece-rate pay, linking rewards to performance.
2. Non-financial rewards - recognition, praise, awards and status symbols.
3. Job design - job enrichment (more responsibility and autonomy), job enlargement (more tasks), job rotation and flexible work schedules.
4. Management by objectives (MBO) - participation in setting clear, measurable goals with feedback.
5. Employee involvement - participative management, quality circles, suggestion systems and empowerment.
6. Goal setting and feedback - specific, challenging goals with timely feedback raise effort.
7. Career development and training - promotion opportunities, learning and growth.
8. Good working conditions and job security - safe environment, fair policies, benefits.
9. Skill-based and variable pay - pay for acquired skills or for results achieved.

An effective manager matches the technique to individual needs, since people are motivated by different things.

Contemporary leadership theories go beyond traits and behaviours of the traditional models. The main emerging approaches are:

1. Transformational leadership - leaders inspire followers to look beyond self-interest, using idealised influence, inspirational motivation, intellectual stimulation and individual consideration. It tends to raise commitment and performance, but can depend too heavily on a charismatic person and may lead to unethical manipulation.
2. Transactional leadership - exchanges rewards for performance and corrects deviations. Useful for routine goals, but weak for change and innovation.
3. Charismatic leadership - followers attribute heroic abilities to the leader because of vision, personality and risk-taking. It energises people but is risky, since the organization depends on one person and failure of the leader damages it.
4. Visionary leadership - the ability to create and articulate a realistic, attractive future vision. It gives direction, though a vision can be unrealistic.
5. Team leadership - leaders act as coaches and facilitators, managing team processes, conflicts and relations with outsiders.
6. Authentic, ethical and servant leadership - emphasise honesty, trust, values and serving followers' needs; they build trust but results may be slower.
7. Online (e-) leadership - leading dispersed teams through technology, where trust and communication must be built without face-to-face contact.

Critical evaluation: these approaches match modern conditions of change and knowledge work, and there is evidence they lift satisfaction and performance. However, they are hard to measure, often rely on perceptions of followers, may overlook situational factors, and some (charisma) can be misused. No single approach suits all situations.

Conflict is a perceived incompatibility of interests or views between individuals or groups. Techniques (styles) of managing it, based on the Thomas-Kilmann grid of assertiveness and cooperativeness, are:

1. Avoidance - withdrawing from or ignoring the conflict; suitable for trivial issues or to allow cooling down.
2. Accommodation - giving in to the other side's wishes to preserve harmony; useful when the issue matters more to them.
3. Competition (forcing) - pursuing one's own interests at the other's expense, using authority; suited to emergencies or unpopular necessary actions.
4. Compromise - each side gives up something to reach a middle position; practical when time is short or power is equal.
5. Collaboration (problem solving) - both parties work to satisfy everyone's concerns, a win-win solution; best for important issues needing commitment.

Other techniques include superordinate goals, expansion of resources, smoothing, authoritative command, altering the human variable (training, job rotation), altering structural variables (transfer, coordination) and using a third party (mediation or arbitration).

Abraham Maslow proposed that human behaviour is driven by a hierarchy of five need levels. A person moves to a higher need only when the lower need is reasonably satisfied; a satisfied need no longer motivates.

1. Physiological needs - food, water, shelter, sleep. Organizations meet them through adequate wages and rest breaks.
2. Safety (security) needs - protection from physical harm, economic insecurity and job loss; met by job security, insurance, pension and safe conditions.
3. Social (belonging) needs - affection, friendship and acceptance; met by teamwork, social events and good relations.
4. Esteem needs - self-respect, status, recognition and achievement; met by titles, awards, promotions and responsibility.
5. Self-actualization needs - realising one's full potential, growth and creativity; met by challenging work, autonomy and development opportunities.

The first two are lower-order needs, satisfied externally, and the last three are higher-order needs, satisfied internally.

Implications: managers should find out the dominant need of each employee and provide the matching incentive.

Criticism: the order is not rigid, needs vary across cultures and individuals, and empirical support is limited. Even so, the theory remains influential.

Financial control is the monitoring of an organization's financial resources to ensure they are used properly and goals are met. Common methods are:

1. Budgetary control - preparing budgets (sales, production, cash, capital) as standards and comparing actual results to find variances and take corrective action.
2. Financial statement analysis - examining the balance sheet, income statement and cash flow statement.
3. Ratio analysis - liquidity (current ratio), leverage (debt-equity), activity (inventory turnover) and profitability (net profit margin, ROI) ratios compared against past results and industry norms.
4. Break-even analysis - finding the sales volume at which total revenue equals total cost, $\text{BEP} = \dfrac{\text{Fixed cost}}{\text{Price per unit} - \text{Variable cost per unit}}$.
5. Standard costing and variance analysis - comparing actual cost with predetermined standards.
6. Audit - internal and external examination of accounts to verify accuracy and compliance.
7. Return on investment (ROI) control - measuring profit relative to capital employed in each division.
8. Cash management and cash flow control - forecasting inflows and outflows to ensure liquidity.

(a) Management by objectives (MBO)

MBO is a participative system, popularised by Peter Drucker, in which managers and employees jointly set specific, measurable goals, review them against progress and reward according to results. Its steps are: set organizational goals, allocate departmental objectives, agree individual objectives, monitor progress, and appraise and reward performance. Benefits: clear direction, motivation through participation, better planning and objective appraisal. Limitations: time-consuming paperwork, overemphasis on quantifiable goals, and failure without top-management support.

(b) Men and women communication style

Research (e.g. Deborah Tannen) shows differences in typical styles. Men tend to use communication to emphasise status and independence, talk directly, give solutions, and often interrupt. Women tend to use communication to build rapport and connection, listen empathetically, share feelings and ask questions, and seek consensus. These differences can cause misunderstanding; managers should recognise them, listen actively and adapt their style so that both groups are understood.

(a) Definition

Management is the process of planning, organizing, leading and controlling human and other resources to achieve organizational goals efficiently and effectively.

(b) Functions of an IT officer in managerial roles

An IT officer who manages a unit performs the four classical functions and Mintzberg's roles.

1. Planning - setting IT goals aligned with business goals; preparing IT budgets, project schedules, system upgrade and disaster recovery plans; selecting technology.
2. Organizing - designing the IT team structure, assigning tasks and authority, allocating hardware, software and staff, and coordinating with other departments.
3. Staffing - recruiting, training and evaluating technical staff.
4. Leading - motivating the team, communicating, resolving conflicts and guiding developers, network and support staff.
5. Controlling - monitoring system performance, security, service levels and project progress; comparing with standards and taking corrective action (audits, backups, access control).

Managerial roles (Mintzberg)

• Interpersonal: figurehead, leader, liaison with vendors and other units.
• Informational: monitor of technology trends, disseminator of information to staff, spokesperson to management and users.
• Decisional: entrepreneur (introducing new systems), disturbance handler (outages, breaches), resource allocator, negotiator (vendor contracts, service agreements).

Through these functions the IT officer ensures reliable, secure and cost-effective information systems that support the organization.

(a) Motivation

Motivation is the willingness to exert high levels of effort toward organizational goals, conditioned by the effort's ability to satisfy some individual need. It has three elements: intensity, direction and persistence.

(b) Contemporary approaches to motivation

1. Equity theory (Adams) - employees compare their input/outcome ratio with that of others: $\frac{O_a}{I_a} \text{ vs } \frac{O_b}{I_b}$ If they perceive inequity, they reduce effort, seek higher pay, distort perceptions, or leave. Managers must ensure fair rewards.
2. Expectancy theory (Vroom) - motivation depends on expectancy (effort leads to performance), instrumentality (performance leads to reward) and valence (value of the reward). Motivation = expectancy x instrumentality x valence.
3. Goal-setting theory (Locke) - specific and difficult goals, accepted by the employee and accompanied by feedback, give higher performance than vague "do your best" goals.
4. Reinforcement theory (Skinner) - behaviour is shaped by its consequences: positive reinforcement, negative reinforcement, punishment and extinction.
5. Job design / Job characteristics model (Hackman-Oldham) - skill variety, task identity, task significance, autonomy and feedback make jobs more meaningful; techniques include job enrichment, rotation and flexible schedules.
6. Cognitive evaluation theory - extrinsic rewards may reduce intrinsic motivation for enjoyable tasks.
7. Employee involvement programs - participative management, representative participation, quality circles and employee stock ownership.

Contemporary approaches focus on perceptions, fairness and the work itself, complementing the earlier needs-based theories.

A matrix organizational structure combines functional and project (or product) departmentalization. Employees report to two bosses: a functional manager (e.g. engineering, finance) and a project manager, so a dual chain of command exists.

Features: two-way authority, resources shared across projects, temporary project teams, and emphasis on coordination.

Advantages

• Efficient use of specialists across several projects.
• Better coordination and communication across departments.
• Flexibility in responding to change and complex projects.
• Develops both functional and general management skills.

Disadvantages

• Violates unity of command, causing confusion and role conflict.
• Power struggles between functional and project managers.
• Higher administrative cost and more meetings.
• Needs good interpersonal skills and clear policies.

It is common in software firms, construction, consulting and aerospace where several projects run at once.

Decisions are made under three conditions depending on how much is known about outcomes.

1. Certainty - the manager knows exactly the outcome of each alternative because the information is complete and reliable. Example: choosing between fixed deposits with stated interest rates. Few real decisions are of this type.
2. Risk - the decision maker can estimate the probability of each outcome, using past data or experience. Expected value helps: $EV = \sum p_i \times V_i$ Example: an expected profit of $0.6 \times 100000 + 0.4 \times (-20000) = \text{Rs } 52{,}000$. Most managerial decisions are of this type.
3. Uncertainty - neither the outcomes nor their probabilities are known, due to rapid change or lack of data. The decision depends on the manager's intuition, judgement and attitude: optimistic (maximax), pessimistic (maximin) or regret-based (minimax regret). Example: launching a completely new product in an unknown market.

As conditions move from certainty to uncertainty, difficulty and the possibility of error increase.

IT employees are knowledge workers who value challenge and growth, so motivating them requires attention to the following factors.

1. Competitive pay and benefits - salary, bonuses, stock options and performance-linked incentives, since skilled staff have many job offers.
2. Challenging and meaningful work - interesting projects, job enrichment and autonomy over how work is done.
3. Career growth and training - opportunities to learn new technologies, certifications and promotion paths.
4. Recognition and appreciation - praise, awards and visibility for achievement.
5. Work-life balance - flexible hours, remote work and reasonable workloads, avoiding burnout from deadlines.
6. Good working environment - modern tools, supportive team, and a culture of respect and trust.
7. Participation - involvement in decisions and goal setting (MBO).
8. Fair treatment - equitable pay and evaluation (equity theory).
9. Job security and good leadership - supportive, technically competent managers who give feedback.
10. Clear goals and feedback - specific targets and regular performance review.

Because individuals differ, managers should identify each person's needs and choose rewards accordingly.

Autocratic leaders concentrate power and expect obedience; democratic leaders consult followers and encourage participation. Effective managers choose according to the situation.

A successful IT manager needs a blend of the following skills.

1. Technical skills - knowledge of systems, software, networks, databases and security, to guide and evaluate technical staff.
2. Human skills - ability to communicate, motivate, lead teams and resolve conflicts.
3. Conceptual skills - viewing the organization as a whole and aligning IT strategy with business goals.
4. Communication skills - explaining technical matters clearly to non-technical people.
5. Project and time management - planning, budgeting, risk management and delivering on schedule.
6. Analytical and problem-solving skills - diagnosing issues and deciding under pressure.
7. Business and financial awareness - cost-benefit analysis, vendor and contract management.
8. Adaptability and learning - keeping up with fast-changing technology and handling change.
9. Ethical judgement - protecting privacy, data security and professional integrity.

The mix changes with managerial level: lower-level managers need more technical skill, top-level managers more conceptual skill.

Information control means managing information so that it is accurate, timely, secure and useful for managerial control. It has two parts: using information to control the organization, and controlling the information itself.

Methods

1. Management information systems (MIS) - provide managers with processed, relevant reports on performance for monitoring and decision making.
2. Data security and access control - passwords, authentication, user rights, encryption, firewalls and antivirus to protect against unauthorised access and loss.
3. Backup and recovery - regular copies and disaster recovery plans.
4. Audit trails and information system audits - recording transactions and periodically checking accuracy, compliance and controls.
5. Input, processing and output controls - validation of data entry, checks on processing (totals, reconciliation) and verification of reports.
6. Policies and procedures - rules on confidentiality, usage and retention of information.
7. Quality control of information - ensuring it is accurate, timely, complete, relevant and understandable.
8. Balanced scorecard and dashboards - tracking performance indicators across financial, customer, process and learning dimensions.

(a) Manager vs leader

A person can be both; effective managers also lead.

(b) Management by objectives (MBO)

MBO is a participative approach in which managers and subordinates jointly set specific, measurable objectives for a given period, periodically review progress and reward results. Steps: set organizational goals, cascade them to units and individuals, agree action plans, monitor and give feedback, and appraise. It clarifies direction and motivates through participation, but can be time-consuming and over-emphasise quantifiable targets.

(a) Organizational culture

Organizational culture is the system of shared values, beliefs, norms and assumptions that members hold in common and that distinguishes one organization from others. It shapes how people behave, make decisions and relate to outsiders. Its dimensions include innovation and risk taking, attention to detail, outcome orientation, people orientation, team orientation, aggressiveness and stability.

(b) How general environmental components affect an organization

The general (macro) environment includes conditions that affect all organizations in a society.

1. Economic - inflation, interest rates, income, exchange rates, unemployment and business cycles influence demand, costs, investment and pricing. For instance, high interest rates reduce borrowing and expansion.
2. Political-legal - government stability, laws, taxation, labour and trade regulations, licensing and policies. They decide what the organization may do and its compliance cost.
3. Socio-cultural - values, customs, lifestyle, education, attitudes to work and demographic change shape customer tastes, the labour force and product acceptance.
4. Technological - innovation such as AI, cloud and e-commerce changes products, processes and competition, and can make existing methods obsolete.
5. Demographic - age, population growth, gender, income distribution and migration determine market size and workforce supply.
6. Global - foreign competition, trade agreements, remittances and international markets create opportunity and threat.
7. Natural/ecological - climate, resources and environmental rules affect operations and costs.

Organizations should scan these factors continuously, adapt strategy and culture accordingly, and in turn their own culture determines how readily they respond to change.

(a) Decision making

Decision making is the process of choosing a course of action from among alternatives to solve a problem or exploit an opportunity. Managers make decisions in every function of management.

(b) Decision-making process

1. Identify the problem - recognise a discrepancy between the existing and the desired state (e.g. falling sales, server downtime).
2. Identify decision criteria - determine what is relevant: cost, quality, time, risk, customer satisfaction.
3. Allocate weights to the criteria - give priority to the more important criteria.
4. Develop alternatives - list the feasible options without evaluating them yet.
5. Analyse alternatives - evaluate each alternative against the weighted criteria, noting strengths and weaknesses.
6. Select an alternative - choose the one with the highest total weighted score.
7. Implement the alternative - communicate the decision to those affected and gain their commitment.
8. Evaluate decision effectiveness - compare results with the intended outcome; if the problem persists, return to earlier steps.

The process is assumed rational, but in practice managers face bounded rationality, limited information and time, and often satisfice rather than optimise.

Organization design is the process of developing or changing an organization's structure to fit its strategy, environment, technology and size. Its application is seen in the following ways.

1. Choosing the structure type - simple, functional, divisional, matrix, team-based, virtual or boundaryless structures are selected to suit the work.
2. Mechanistic vs organic design - stable environments and routine work suit a mechanistic design (rigid hierarchy, high formalization, centralisation); dynamic environments call for an organic design (flexible, decentralised, wide spans, cross-functional teams).
3. Contingency factors - design is applied by matching structure to strategy (innovation, cost minimisation, imitation), size (large organizations become more formal), technology (routine vs non-routine) and environmental uncertainty.
4. Work specialization and departmentalization - grouping jobs by function, product, customer, geography or process.
5. Chain of command and span of control - defining reporting lines and the number of subordinates each manager can supervise.
6. Centralisation and decentralisation - deciding where decisions are taken; delegation of authority.
7. Formalization - degree of rules and procedures.
8. Contemporary designs - team structures, matrix and project structures, network organizations, and flexible virtual designs for IT companies.
9. Restructuring and change - redesigning to cut costs, improve responsiveness or adopt new technology.

Proper design improves coordination, efficiency, communication and adaptability, while poor design causes conflict and confusion.

Group decision making is the process by which a group of people, rather than one individual, jointly analyse a problem and choose a solution.

Advantages

• More complete information and knowledge.
• Greater diversity of views and alternatives.
• Higher acceptance and commitment to the decision.
• Increased legitimacy.

Disadvantages

• Time-consuming and costly.
• Pressure to conform and possible domination by a few members.
• Ambiguous responsibility.
• Groupthink, where the desire for harmony overrides critical evaluation.

Techniques

• Brainstorming - spontaneous generation of ideas without criticism.
• Nominal group technique - members write ideas independently, then present, discuss and vote.
• Delphi technique - experts answer questionnaires repeatedly without meeting until consensus is reached.
• Electronic meetings - anonymous computer-based input.

Groups are better in accuracy and creativity, individuals in speed; the choice depends on the importance and complexity of the problem.

Organization structure is the formal framework of jobs and relationships: how tasks are divided, grouped and coordinated, who reports to whom, and where decisions are made. It is represented by an organization chart. Its elements are work specialization, departmentalization, chain of command, span of control, centralization/decentralization and formalization.

Organization design is the process of creating or changing an organization's structure so that it fits the strategy, size, technology and environment. It is the managerial activity, while structure is the result.

Thus structure is the arrangement, and design is the decision process that develops that arrangement; the design may be mechanistic (rigid and hierarchical) or organic (flexible and decentralised).

Conflict management skills are abilities that managers use to resolve disagreements constructively and keep them functional.

1. Communication and active listening - allowing each side to express views, clarifying meaning and showing understanding.
2. Problem-solving (collaboration) - focusing on interests, not positions, to reach a win-win outcome.
3. Negotiation - bargaining to agree on a mutually acceptable result.
4. Emotional intelligence and self-control - controlling emotions and responding calmly.
5. Empathy - seeing the issue from the other party's perspective.
6. Mediation - using a neutral third party to facilitate agreement.
7. Diagnostic skill - identifying the real cause (goals, resources, personality, communication).
8. Flexibility in choosing styles - using avoidance, accommodation, competition, compromise or collaboration as the situation demands.
9. Setting superordinate goals and fairness - uniting parties around a common aim and applying rules impartially.
10. Stimulating functional conflict - encouraging healthy disagreement to promote innovation when there is complacency.

Control is the process of monitoring activities, comparing actual performance with planned standards, and correcting significant deviations. It is closely linked to planning, since plans give the goals and standards.

Foundations (process) of control

1. Setting standards - the targets, derived from objectives, against which performance is measured (quantity, quality, time, cost).
2. Measuring actual performance - using personal observation, statistical reports, oral and written reports.
3. Comparing performance with standards - determining the variation and deciding which is acceptable (range of variation).
4. Taking managerial action - do nothing, correct the actual performance, or revise the standard.

Types by timing: feedforward (before), concurrent (during) and feedback (after the activity).

Characteristics of effective control: accuracy, timeliness, economy, flexibility, understandability, reasonable criteria, strategic placement and emphasis on exceptions, with corrective action.

Importance: it helps to achieve planned goals, detect errors early, adapt to change, add to quality and support delegation.

Information control means ensuring that the information managers use for decisions is accurate, timely, secure and relevant, and using information to monitor the organization.

1. Information as a control tool

• MIS supplies managers with processed data for monitoring performance.
• Dashboards and reports show key indicators for comparison with standards.
• Balanced scorecard tracks financial, customer, internal process and learning measures.

2. Controlling the information itself

• Security controls - passwords, access rights, encryption, firewalls, antivirus.
• Data integrity controls - validation at input, reconciliation and checks in processing, and output verification.
• Backup and recovery - regular copies and disaster recovery plans.
• Audit - audit trails and IS audit to detect misuse and errors.
• Policies - rules for confidentiality, privacy, retention and acceptable use.

Qualities of good information: accurate, timely, complete, relevant, understandable and cost effective.

Proper information control reduces fraud and errors, protects confidential data and supports better decisions.

Henry Mintzberg identified ten managerial roles in three groups.

1. Interpersonal roles

• Figurehead - performs ceremonial and symbolic duties.
• Leader - motivates, directs and staffs.
• Liaison - maintains a network of contacts outside the unit.

2. Informational roles

• Monitor - collects information from inside and outside.
• Disseminator - passes information to subordinates.
• Spokesperson - transmits information to outsiders on behalf of the organization.

3. Decisional roles

• Entrepreneur - initiates change and improvement projects.
• Disturbance handler - deals with crises and unexpected problems.
• Resource allocator - decides who gets money, people and time.
• Negotiator - bargains with unions, suppliers and others.

The relative importance of the roles varies with the manager's level and function.

The foundations of planning are the basic elements and concepts on which planning rests.

1. Goals (objectives) - the desired outcomes for individuals, groups or the whole organization. They give direction and standards for measurement; types include stated and real goals, and financial and strategic goals.
2. Plans - documents outlining how goals will be met, including resource allocation, schedules and actions. Types: strategic vs operational, short-term vs long-term, specific vs directional, single-use (programs, projects, budgets) vs standing (policies, procedures, rules).
3. Planning process - analyse the environment, identify opportunities, set goals, develop alternatives, evaluate, select, implement and review.
4. Premises (assumptions) - forecasts and assumptions about future conditions on which plans are based.
5. Planning hierarchy - mission, objectives, strategies, policies, procedures, rules, programs and budgets, from broad to specific.
6. Approaches - traditional top-down vs management by objectives, which involves employees.
7. Contingency factors - the manager's level, degree of environmental uncertainty and length of future commitments.
8. Planning tools - forecasting, budgeting, scheduling (Gantt, PERT/CPM), break-even analysis and scenarios.

Contemporary issues in motivation are the challenges managers face in motivating a modern, diverse workforce.

1. Motivating a diverse workforce - differences in culture, gender, age and needs mean flexible rewards, schedules and benefits should be offered instead of one approach.
2. Motivating professionals - professionals (e.g. IT specialists) are motivated by the work itself, challenge, continuing learning and recognition from peers more than by pay.
3. Motivating contingent (temporary) workers - they need opportunities for permanent employment, training and equitable treatment.
4. Motivating low-skilled, minimum-wage employees - through recognition, employee involvement, flexible schedules and fair wages.
5. Pay-for-performance programs - piece rates, bonuses, profit sharing, skill-based pay; risk is overemphasis on measurable outputs.
6. Open-book management - sharing financial information so employees understand the effect of their work.
7. Employee recognition and engagement - praise, awards and involvement.
8. Cross-cultural differences - theories such as Maslow's reflect Western values, so motivation must be adapted.
9. Work-life balance and flexible work - remote work, telecommuting and compressed workweeks.

Emerging approaches to leadership go beyond the trait, behavioural and contingency theories.

1. Transformational leadership - leaders inspire followers to transcend self-interest through vision, charisma (idealised influence), intellectual stimulation and individual attention. It produces higher commitment and performance than transactional leadership alone.
2. Transactional leadership - guides followers by clarifying role and task requirements and exchanging rewards for performance.
3. Charismatic leadership - followers see extraordinary abilities in the leader because of self-confidence, vision and willingness to take risks.
4. Visionary leadership - ability to create and express a realistic, credible and attractive vision of the future that improves on the present.
5. Team leadership - the leader acts as coach and facilitator, managing the team's external relations, conflicts and processes.
6. Authentic, ethical and servant leadership - leaders who are honest, values-driven and focus on serving followers' growth.
7. Online leadership - leading virtual teams requires trust building and clear electronic communication.
8. Emotional intelligence - leaders who manage their own emotions and understand others are more effective.

These approaches suit modern conditions of rapid change, diversity and knowledge work.

The business environment consists of all external and internal forces that affect a firm's operations. The statement is true for the following reasons.

1. Identify opportunities and threats. Scanning the environment reveals opportunities (new markets, falling tariffs, digital adoption) and threats (new competitors, regulations, recession), as in SWOT analysis.

2. Strategic planning and decision making. Strategies must fit the environment. Reliable information on economic, political, social and technological trends reduces uncertainty and improves decisions.

3. Adaptation to change. Customer preferences, technology and laws keep changing. A manager who studies the environment can respond quickly and avoid being outdated (e.g. firms that failed to adopt e-commerce lost ground).

4. Understanding stakeholders. The specific environment - customers, suppliers, competitors, regulators, pressure groups - determines demand, input cost and competitive pressure.

5. Securing resources. Capital, labour, materials and technology come from the environment, so availability and cost must be monitored.

6. Legal and social compliance. Awareness of tax, labour and environmental laws and of social expectations avoids penalties, protects reputation and supports corporate social responsibility.

7. Competitive advantage. Early identification of trends gives first-mover benefits, and benchmarking helps the firm improve.

8. Image and public relations. Responding to social concerns builds goodwill.

9. Survival and growth. An organization is an open system dependent on its environment; sustainable growth requires continuous scanning, forecasting and adjustment.

Hence environmental analysis is a continuing managerial responsibility and central to long-term success.

(a) Planning

Planning is the process of defining goals, establishing a strategy to achieve them, and developing plans to integrate and coordinate activities. It is the first management function and bridges the gap between where the organization is and where it wants to be. It provides direction, reduces uncertainty, minimises waste and sets standards for control.

(b) Steps of the planning process

1. Be aware of opportunities - scan the environment and the organization (SWOT) to see what may be achieved.
2. Establish objectives - set specific, measurable, time-bound goals for the organization and each unit.
3. Develop planning premises - forecast and make assumptions about the future (market, technology, laws).
4. Identify alternatives - search for different ways to achieve the objectives.
5. Evaluate alternatives - compare them with respect to cost, benefit, risk and fit with goals.
6. Select the best alternative - choose the course of action, possibly adopting more than one.
7. Formulate supporting (derivative) plans - prepare budgets, schedules, policies, programs and procedures.
8. Implement the plan - communicate it, allocate resources and assign responsibility.
9. Monitor and control - compare progress with plan, take corrective action and revise.

Planning is continuous: feedback from control flows back to earlier steps.

Henry Mintzberg described ten roles of a manager, grouped into three categories.

Interpersonal roles

1. Figurehead - performs ceremonial duties such as receiving visitors and signing documents.
2. Leader - motivates, trains and directs subordinates.
3. Liaison - builds contacts outside the unit to obtain information and support.

Informational roles 4. Monitor - seeks and receives information about internal operations and the environment. 5. Disseminator - passes information to subordinates. 6. Spokesperson - gives information to outsiders such as press, government and customers.

Decisional roles 7. Entrepreneur - initiates and designs improvement projects. 8. Disturbance handler - responds to crises and unexpected events. 9. Resource allocator - decides how money, people and time are used. 10. Negotiator - represents the organization in negotiations with unions, suppliers and others.

The emphasis on each role varies by managerial level and type of organization.

Decision-making conditions describe how much a manager knows about the outcomes of alternatives.

1. Certainty - the manager can make an accurate decision because the outcome of every alternative is known. Example: choosing the bank deposit offering the highest guaranteed rate. Such situations are rare in management.
2. Risk - the manager can estimate the probability of each outcome from past data or experience, though the result is not guaranteed. The expected value is $EV = \sum p_i V_i$ For example, with a 70% chance of Rs 200,000 profit and a 30% chance of Rs 50,000 loss, $EV = 0.7(200000) + 0.3(-50000) = \text{Rs } 125{,}000$. Most managerial decisions occur under risk.
3. Uncertainty - neither the outcomes nor their probabilities are known because information is limited or the environment is changing. The decision depends on the manager's judgement, intuition, creativity and attitude to risk (optimistic, pessimistic, or minimising regret). Example: entering an untested foreign market.

Managers can reduce uncertainty by gathering information, using forecasting and scenarios, and involving groups.

Vertical and horizontal dimensions describe how an organization is structured in terms of levels of authority and the division of work.

Vertical dimension (hierarchy)

• It concerns the levels of authority from top management down to operating employees.
• It shows the chain of command, scalar chain, span of control and the number of levels (tall or flat).
• It deals with authority, responsibility, delegation, centralization or decentralization.
• Communication flows up and down (orders downward, reports upward).

Horizontal dimension (departmentalization)

• It concerns the grouping of jobs and activities into departments at the same level, such as marketing, finance, production and HR.
• It shows work specialization and coordination between units.
• It deals with cooperation, teams, committees and liaison roles.
• Communication flows laterally among peers.

Both dimensions together form the complete organization structure.

Motivation is the process that arouses, directs and sustains behaviour towards achieving goals. Managers use the following main techniques.

1. Financial incentives

• Salary and wages, bonus, profit sharing, commission, stock options, allowances and fringe benefits. These satisfy basic and security needs.

2. Non-financial incentives

• Recognition, praise, awards, status and titles, and a good working environment.

3. Job design

• Job enrichment (more responsibility, autonomy and challenge), job enlargement (more tasks) and job rotation (variety) reduce boredom.

4. Management by objectives (MBO)

• Managers and employees set clear, measurable goals together, with feedback and rewards on achievement. This is based on goal-setting theory.

5. Participation and empowerment

• Involving employees in decisions and giving them authority raises commitment and ownership.

6. Flexible work arrangements

• Flexi-time, compressed weeks, job sharing and telecommuting improve work-life balance.

7. Career development and training

• Promotion opportunities, training and growth meet esteem and self-actualization needs.

8. Fair treatment and feedback

• Equity in pay and promotion, reinforcement of desired behaviour (praise or reward) and regular performance feedback.

A good manager uses a mix of these, matched to individual needs.

Charismatic leadership is a style in which followers attribute heroic or extraordinary abilities to the leader and are inspired by personal magnetism and vision. Its main characteristics are:

1. Vision and articulation: The leader presents a clear, attractive vision of the future and explains it in terms followers understand.
2. Personal risk: The leader is willing to take personal risk, incur costs and make sacrifices to reach the vision.
3. Sensitivity to the environment: The leader assesses the environment realistically and adapts to the needs of followers and to changing constraints.
4. Sensitivity to followers' needs: The leader understands followers' abilities, needs and feelings and responds to them.
5. Unconventional behaviour: The leader acts in novel, counter-normative ways that surprise and inspire followers.
6. Self-confidence and conviction: The leader shows strong belief in his or her own judgement and cause.
7. Strong communication and emotional appeal: The leader inspires enthusiasm, trust and loyalty and creates an emotional bond.
8. Change orientation: The leader acts as a change agent who challenges the status quo.

Examples include Mahatma Gandhi and Martin Luther King Jr.

A good controlling system helps ensure that actual performance matches plans. Its main qualities are:

1. Accuracy: Data and information must be correct, since wrong data leads to wrong decisions.
2. Timeliness: Deviations must be reported quickly enough for corrective action to be taken.
3. Economy: The benefits of control should exceed its cost.
4. Flexibility: The system should adapt to changed plans and circumstances.
5. Understandability: Standards and reports must be clear and simple for the people who use them.
6. Reasonable standards: Standards should be challenging but attainable and objective.
7. Strategic placement: Control should focus on critical points, where deviations matter most.
8. Emphasis on exceptions: Managers' attention should go only to significant deviations (management by exception).
9. Multiple criteria: More than one measure should be used so that employees cannot manipulate a single one.
10. Corrective action: The system should show what should be done to correct problems, not merely detect them.
11. Acceptability: Employees should accept the system and take part in setting standards.

Organizational culture is the shared set of values, beliefs, norms and practices that shapes how members behave and how things are done in an organization.

Importance

1. Identity and belonging: It gives members a sense of identity and unity.
2. Guides behaviour: It acts as an informal guide to what is acceptable, reducing the need for close supervision and rules.
3. Commitment and loyalty: A strong culture raises commitment to goals beyond individual interests and lowers turnover.
4. Stability and social glue: It holds the organization together through shared standards.
5. Sense-making and control: It guides decisions and shapes employee attitudes.
6. Competitive advantage: A distinctive culture that is hard to copy supports performance, innovation and customer service.
7. Attracts talent: People with matching values join and stay.
8. Supports strategy and change: A culture aligned with strategy eases implementation, while a poor one resists change.
9. Coordination: Shared understanding improves communication and teamwork.

Financial control uses financial information to check whether an organization's resources are used efficiently and in line with plans. The main tools are:

1. Budgetary control: Budgets (sales, production, cash, capital) set targets in financial terms, and actual results are compared with them to find variances. Types include fixed, flexible and zero-base budgets.
2. Financial statements and ratio analysis: The balance sheet, income statement and cash flow statement are analysed through ratios.

• Liquidity: current ratio, quick ratio.
• Leverage: debt-equity ratio.
• Activity: inventory turnover.
• Profitability: net profit margin, return on investment, return on equity.

3. Break-even analysis: It finds the sales volume at which total revenue equals total cost, which helps in pricing and volume decisions. $\text{Break-even units} = \frac{\text{Fixed cost}}{\text{Price per unit} - \text{Variable cost per unit}}$
4. Financial audit: An internal audit is carried out by the organization's own staff, and an external audit by independent auditors who verify the accuracy of accounts.
5. Return on investment (ROI): It measures profit relative to the investment made.
6. Cost control and standard costing: Actual costs are compared with standard costs.
7. Cash management and cash flow control: It ensures enough liquidity for operations.

Definition

Management is the process of planning, organizing, leading and controlling the efforts of organizational members and the use of resources to achieve stated goals efficiently and effectively. Stoner defines it as "the process of planning, organizing, leading and controlling the work of organization members and of using all available organizational resources to reach stated organizational goals."

Taylor's principles of scientific management

F.W. Taylor (the father of scientific management) aimed at raising productivity through scientific methods. In The Principles of Scientific Management (1911) he proposed four principles:

1. Develop a science for each element of work: Replace rule-of-thumb methods by time and motion study to find the one best way of doing each task.
2. Scientific selection and training of workers: Choose workers on the basis of ability, then train and develop them, instead of letting workers train themselves.
3. Cooperation between management and workers: Management should cooperate with workers so that work is done according to the scientific method.
4. Equal division of work and responsibility: Managers take responsibility for planning and supervision, and workers for performing the tasks.

Related techniques

• Differential piece-rate system: higher pay for those who exceed the standard.
• Functional foremanship: eight specialist foremen.
• Time and motion study, standardization of tools and methods, fatigue study and the "mental revolution" in attitude of both sides.

Evaluation: It increased efficiency and productivity, but has been criticized for treating workers as machines, ignoring social needs and causing monotony.

Can motivation be taught?

Motivation is not a purely inherent trait. Some people have a stronger natural drive (for example a high need for achievement), but motivation is largely a state that depends on the person and the situation. It can be developed through:

• Training and coaching. McClelland showed that the need for achievement can be learned.
• Goal setting, feedback and recognition.
• Job design and a supportive environment.
• Role models and a positive culture.

So motivation is both: individual disposition plus situation, and managers can influence it.

Contemporary issues in motivation

1. Motivating a diverse workforce: Differences in age, gender, culture and family situation require flexible rewards such as flexible schedules, job sharing and family-friendly benefits.
2. Cross-cultural challenges: Theories such as Maslow's and Herzberg's are largely Western, and needs and preferred rewards vary across cultures.
3. Motivating professionals: Professionals value challenging work, autonomy and recognition more than pay.
4. Motivating low-skilled, minimum-wage workers: Fair pay, praise, recognition, training and employee involvement matter here.
5. Motivating contingent (temporary and part-time) workers: They need opportunities for permanent jobs, training and equitable treatment.
6. Open-book management: Sharing financial information so employees see how their work affects results.
7. Employee recognition, pay-for-performance and employee involvement programs: For example stock options, gain-sharing and participative management.
8. Remote work and work-life balance: Motivation for virtual teams and a good balance between work and personal life.
9. Employee engagement: Enthusiasm, commitment and involvement in the work.

Introduction

Control is the managerial function of monitoring activities and comparing actual performance with planned standards, then taking corrective action for any significant deviation, so that goals are achieved. Planning sets the targets and control ensures they are met. Control also protects the organization, keeps costs in check and provides feedback for future planning.

Process of controlling

1. Establishing standards: Set measurable performance criteria (quantity, quality, cost, time) derived from the plans, for example sales targets or defect rates.
2. Measuring actual performance: Collect data through personal observation, statistical reports, oral and written reports, and compare like with like. Measurement should be accurate and timely.
3. Comparing performance with standards: Find the variance (range of variation) between actual and standard, and decide whether it is acceptable.
4. Taking managerial action: If performance meets the standard, no action is needed. If not, then:

• Correct the deviation, for example by training, motivation, or better supervision.
• Revise the standard if it was unrealistic.
• Do nothing if the variation is within the acceptable range.

After this step the cycle continues with feedback, so control is continuous.

Types of control: feedforward (preventive, before work), concurrent (during work) and feedback (after work).

The specific (task) environment is the part of the external environment that directly affects an organization's operations and achievement of goals. It is specific to each organization and changes with its needs. Its main factors are:

1. Customers: The people or organizations that buy the products. Their tastes, demand and buying power determine sales, and organizations must satisfy them.
2. Suppliers: Those who provide inputs such as raw materials, equipment, finance and labour. Price, quality and reliability affect operations.
3. Competitors: Rival firms offering the same or substitute products. Their pricing, quality and strategies influence the organization's market share.
4. Government and regulatory agencies: They regulate through laws, taxes, licences and standards that affect business operations.
5. Pressure groups: Consumer groups, environmental groups, trade unions and media can influence the organization's actions.
6. Financial institutions and investors: Banks and shareholders provide capital.
7. Labour market and trade unions: They supply skilled workers and affect wages and industrial relations.
8. Distributors and intermediaries: They carry products to the market.

Group decision making is the process in which a group of people jointly make a choice. Its significance is as follows:

1. More information and knowledge: Combining the experience and expertise of several people gives a wider view of the problem.
2. More alternatives: Different perspectives produce more and more creative solutions.
3. Better quality decisions: Errors are checked and weak ideas are screened out, so decisions are usually more accurate.
4. Greater acceptance: Participants understand and support a decision they helped to make, which eases implementation.
5. Increased legitimacy: The process is seen as democratic and fair.
6. Motivation and morale: Participation increases commitment, team spirit and a sense of ownership.
7. Training and development: Members learn from each other, and junior managers gain experience.
8. Reduced risk and bias: Responsibility is shared and individual bias is balanced.

Its limitations are that it is slow and costly, and it may suffer from conformity, groupthink and domination by a few.

A plan is a blueprint of future action to achieve objectives. Plans are classified as follows.

1. By scope or level

• Strategic plans: Long-term, organization-wide plans made by top management that set overall goals and position in the environment.
• Tactical plans: Medium-term plans made by middle management to implement strategy within each department.
• Operational plans: Short-term, detailed plans for daily activities made by lower management.

2. By time frame

• Long-term plans: Usually more than 5 years.
• Intermediate plans: 1 to 5 years.
• Short-term plans: Up to one year.

3. By specificity

• Specific plans: Clearly defined with no ambiguity.
• Directional (flexible) plans: They give general guidelines and allow adaptation.

4. By frequency of use

• Single-use plans: Programs, projects and budgets made for a one-time situation.
• Standing plans: Policies, procedures and rules used repeatedly.

Components: Mission and objectives, strategies, policies, procedures, rules, programs, projects and budgets.

Vertical dimension: It relates to the hierarchy of authority, that is, the levels of management from top to bottom, the chain of command, span of control and delegation.

Horizontal dimension: It relates to the grouping of jobs into departments at the same level (departmentalization) and the specialization and coordination of work.

Both are complementary parts of organization structure.

Communication is the process of transmitting information and understanding from one person to another through a common medium, so that the meaning is shared.

Elements (components) of the communication process

1. Sender (source): The person who originates the message and decides what to communicate.
2. Message: The information, idea or feeling to be conveyed.
3. Encoding: Converting the message into symbols such as words, signs or gestures.
4. Channel (medium): The means of transmission, such as face-to-face, telephone, email or written memo.
5. Receiver: The person to whom the message is directed.
6. Decoding: The receiver interprets the symbols into meaning.
7. Feedback: The receiver's response, which confirms the message has been understood and completes the loop.
8. Noise: Any barrier that distorts the message, such as language differences, physical disturbance, or prejudice.
9. Context: The physical, social and cultural setting of the communication.

Flow: sender, encoding, message through the channel, decoding by the receiver, then feedback to the sender, with noise possible at any stage.

An effective control system should have the following qualities.

1. Accuracy: It must provide correct and reliable data, since decisions rest on it.
2. Timeliness: Information should arrive in time for corrective action before damage occurs.
3. Economy: Control costs must be less than the benefits.
4. Flexibility: It should adapt to changes in plans and the environment.
5. Simplicity and understandability: Standards and methods must be clear to those who use them.
6. Reasonable and objective standards: Targets should be achievable and measurable.
7. Focus on critical points: Control should be placed on key areas.
8. Exception principle: Only significant deviations are brought to the manager's attention.
9. Positive and corrective: It should suggest remedies, not only blame, and encourage self-control.
10. Acceptance by employees: Participation in setting standards gains cooperation.
11. Integration with planning and organization structure: Control should fit the plans and the responsibility of each person.

Leadership is the ability to influence people to willingly work towards organizational goals. The traits generally required of a successful leader are:

1. Intelligence and knowledge: Good judgement, job knowledge and problem-solving ability.
2. Self-confidence: Belief in one's own abilities, which inspires followers.
3. Vision and drive: A clear picture of the future, ambition, energy and initiative.
4. Integrity and honesty: Consistent ethical behaviour that builds trust.
5. Communication skills: Clear expression and good listening.
6. Emotional stability and maturity: Self-control under stress and sensitivity to others' feelings.
7. Decisiveness: Ability to make timely and sound decisions and take responsibility.
8. Social skills and empathy: Understanding people, motivating them and building relationships.
9. Flexibility and adaptability: Openness to change and new ideas.
10. Courage and willingness to take risks.
11. Responsibility and dependability.
12. Ability to develop and delegate: Developing subordinates and sharing power.

Modern views hold that leadership also depends on the situation, so traits alone do not guarantee success.

Employee motivation is the process of stimulating employees to work willingly towards organizational goals. The main techniques are:

1. Financial techniques

• Pay and salary, bonus, profit sharing, commissions, stock options, allowances, pension and other benefits.

2. Non-financial techniques

• Recognition and praise, awards, status, a good working environment and job security.

3. Job-related techniques

• Job enrichment, job enlargement and job rotation to add variety, responsibility and challenge.

4. Management by objectives: Participative goal-setting with feedback.

5. Employee participation and empowerment: Involvement in decisions, suggestion schemes and quality circles.

6. Career development: Training, promotion and growth opportunities.

7. Flexible work arrangements: Flexi-time, job sharing and work from home.

8. Positive reinforcement and fair treatment: Reward good performance, give feedback, and treat people equitably.

9. Good leadership and team spirit: Supportive supervision and good interpersonal relations.

(a) Omnipotent versus symbolic management view

These are two views on how much managers influence organizational success.

• Omnipotent view: Managers are directly responsible for the success or failure of an organization. A good manager can foresee change, make the right decisions and control outcomes, so the organization's performance is explained by managerial quality. Managers are therefore credited for success and blamed for failure. This is the traditional view of management.
• Symbolic view: A large part of the organization's results is outside managers' control, because of external factors such as the economy, customers, government policy, competitors and past decisions. Managers have limited effect and only symbolize control, by developing plans, making decisions and managing meanings. Success or failure is therefore largely due to forces beyond their influence.

In reality, managers' influence lies between the two extremes, limited by external constraints (environment, culture) and internal constraints (organization's culture, nature of employees).

(b) Tools of financial control

• Budgets: Financial targets for revenues and costs, compared with actual results to find variances.
• Ratio analysis: Liquidity (current ratio), leverage (debt-equity), activity (inventory turnover) and profitability (return on investment, profit margin) ratios.
• Break-even analysis: Finds the sales volume at which revenue equals total cost. $\text{Break-even units} = \frac{\text{Fixed cost}}{\text{Price} - \text{Variable cost per unit}}$
• Financial audit: Internal and external verification of accounts.
• Return on investment and cost control: Assess profitability and the efficiency of resource use.