organisations. Social work profession seeks to improve
of services. In most cases these services are provided
organisations. A social worker, therefore, is often
or her functions within such organisations.
attain higher positions in the organisation. Their
their role as a manager gain significance. However
efficiency. Social work values will form the base for
of service delivery.
administration has borrowed from management theory.
manager in an organisation.
with management theorists. Social workers have
welfare administrators. It was later felt that an
to the acronym and it became POSCoRBEF.
detail.
According to Terry and Franklin ‘Planning is selecting
information and making assumptions regarding the
future to formulate activities necessary to achieve
organisational objectives’.
Every organisation does some form of planning, as
they have to prepare for the future. In large
organisations, planning is done by a separate division
or department which generally reports to the Chief
executive. Planning, here, is a highly specialized
area, as a number of factors have to be taken into
consideration. The department includes experts from
diverse fields such as economics, statistics,
management, etc. When any organisation operates
in more than one region or country, the complexity
of the planning process increases. In smaller organisations, the task is entrusted to staff members,
who handle other work but have the competence
and knowledge to do the planning function; do
planning. Either way planning is an important activity
of the administrator.
Major Steps in Planning
1) Define the problem.
Understanding the problem and its various
dimensions is the first step in the planning process.
Many experts say that if the problem is adequately
defined half the problem is solved.
2) Collect all relevant data and information about
the activities involved.
The sources of information can be from within
the organisation and outside it. The organisation
can use outside sources of information like
government reports, policies, legislations, Planning
commission documents etc. Sources from within
the organisation include policy statements, agency
reports, evaluation reports, minutes of meetings,
documents etc.
3) Analyze the information.
An enormous amount of data may be collected
from various sources. But if they are not seen
from the organisational perspective then they
cannot be of much use. Every component has
to be seen as part of the larger whole. Cause
and effect relationships have to be established.
4) Establish planning criteria and standards.
Planning criteria are assumptions on which the
plan is to be formulated. The criteria will be
drawn from the organisation’s ideology, socioeconomic factors, information gathered and the
priorities of the decision-makers. These criteria will form the basis on which different action
plans will be judged.
5) Preparation of different action plans for achieving
the goal.
Most organisations formulate a number of tentative
plans. This enables the decision-makers to choose
among the alternatives available based on its
advantages and disadvantages.
6) Decide on one plan from the different alternative
plans.
The Plan should be workable and cost effective.
It should be realistic enough to be implemented.
Often it is said that the plan was good but its
improper implementation ruined it. A good planner,
therefore, will take into account these factors
that impede implementation. A planner should
also take into account strengths and weaknesses
of the implementing agency.
7) Arrange detailed sequence and timing for the
plan.
Decide what activities have to be carried out
and when. Time is an important but scarce resource
and maintaining the time schedule is therefore
important.
8) Provide channels for feedback.
Constant feedback and monitoring are necessary.
It will help identify shortcomings in the plan
and its implementation. Some part of the plan
may have to be modified if unforeseen factors
influence the implementation process.
9) Implement the Plan.
The success of any plan sets on its effective
implementation.10) Evaluate the plan performance.
The last step of planning profess in the evaluation
of its performance. At his stage only the success
or failure of a plan is judged.
Advantages of Planning
1) Planning brings direction and order into the
functioning of the organisation. When objectives
are set and various steps needed to achieve these
goals are clear, employees can make decisions
easily. All efforts will be focused towards the
desired results and unproductive work will be
minimized.
2) The planning process gives an idea about the
future. Any exercise in planning has to study
how different political, social, economic and
organisational factors will affect the functioning
of the organisation. Further, threats and
opportunities have to be studied and ways to
deal with them should be identified.
3) ‘What if’ questions are consequences of decisions
that the organisation will have to take in future
while dealing with specific situations which may
come up. Complex sets of variables have to be
studied and their relationship with the situation
understood if these questions have to be answered.
For example, the additional financial costs have
to be calculated, if the organisation has to function
in new areas.
4) Planning gives a basis for enforcing accountability
and control.
Accountability and control are important elements
in the organisation. Control of the organisational
functioning through planning can be internal as
well as external. When an organisation formulates
a plan and makes it public, it is making itself accountable to the society. The organisation’s
actual performance will be judged on the basis
of the plan objectives.
Within the organisation also, the plan fixes targets
and deadlines. The employees have to achieve
these targets or else, give reasons for their
failures. This condition imposes a sense of
responsibility on the organisation’s functionaries.
Further, the manager can check from time to
time whether the organisation is able to meet
its interim targets and is moving towards its
objectives.
5) Encourage Achievement
Well-established and achievable targets and time
schedules encourage employees to take efforts
to attain them. That improves the morale and
motivation of the employees.
6) Compels a view of the whole
Managers often become so involved in the affairs
of their own department that they lose sight of
the overall objectives of the organisation. Managers
also, have the tendency to give their attention
to the immediate, but routine tasks, which keep
coming up in any organisation. Long-term needs
of the organisation are sidelined and effectiveness
of the organisation is adversely affected. A plan
gives a vision to the employees helping them
focus on the broader and long-term view.
7) Increases the balanced utilization of resources
Resources are always limited and their prudent
use is important. Plans help effective use of
resources.
Disadvantages of Planning
The planning process has some disadvantages also.
Planning consumes too much of already scarce resources of the organisation. A lot of money, time
and human resources are spent when a plan has
to be formulated. At times there seems to be no
corresponding benefit. Secondly, planning often
demands changes in organisation’s functioning and
the roles of the employers. This threatens people
who are afraid of new work situations and loss of
their status. Thirdly, planning affects initiative of
lower level managers adversely. As emphasized earlier,
planning should only give broad direction to the
managers. But if the plan is too rigid and does not
give enough flexibility to the managers, planning
may restrict their initiative. Planning, in general,
tends to increase centralization of authority in the
hands of the top executive in the headquarters at
the cost of the lower level mangers operating in
the field. Fourthly, planning as managerial activity
is seen as having limited value. Sometimes planning
is too theoretical and cannot be related to real life
situations. Many factors that are found in real life
cannot be taken account of when the plan is being
formulated. Further the planner assumes that there
will be no change that is so big that the relationship
between the variables could change drastically. For
example, an NGO which makes its plan on the basis
that the donor agency will provide funds for a specific
period will face difficulty if the donor agency stops
its funding.
Types of Plans
Strategic Planning
Strategic planning (also called long-term planning)
has two important elements. It covers a long period
of time which may extend from five to twenty or
more years and secondly it covers mostly all the
activities within the organisation. In other words,
it is long-term and comprehensive planning.Operationalised Planning
Operationalised Planning is also called tactical planning
and it indicates the specific activities to be taken
so that specific goals are to be achieved. Compared
to strategic planning, operationalised planning is
short-term and deals with specific areas. These two
types of planning are not inclusive. Strategic planning
depends on the operationlised planning for achieving
its goals.
Organising
Organising means establishing effective behavioural
relationship among persons so that they may work
together efficiently and gain personal satisfaction
in doing selected tasks under given environmental
condition for the purpose of achieving some goal or
objective.
The need for an organisation emerges when one
individual cannot perform all the necessary tasks.
As number of individuals increase, they are further
divided into groups each of which are given a specific
set of tasks to perform. How and on what basis
these tasks are divided among individuals and group
is the role of ‘organising’ in management.
Need for Organising
1) Clear-cut lines of authority and responsibility
in an organisation are created which help in
controlling and leading the organisation.
2) There are lesser opportunities for organisation
conflicts if organisational responsibilities are clearly
defined.
3) Organised groups and organisations are more
likely to give satisfaction to the employees and
thereby positive results for the organisation. Elements of Organising
There are four important elements in organising –
division of labour, degree of centralization and
decentralization, departmentalization and span of
control. Division of labour means that the total work
of the organisation is divided into smaller units
and distributed among the employees. Work is allotted
to person most suited to do it. It allows the employers
to attain proficiency in their work and thereby increase
the efficiency of the organisation.
Centralization and decentralization refers to the
degree to which authority is distributed among the
various levels of the organisation. If authority is
distributed in such a way that majority of the decisions
are taken by the top managers then the organisation
is called centralized. On the other hand, if the
lower levels of the organisations have authority to
make decision—without seeking approval from the
top level managers than the organisation is called
decentralized. Important decisions include those
related to financial matters, programme schedules,
administrative matters, staff problems, etc. The degree
of centralization and decentralization depends on
a number of factors like organisational history, level
of trust in the organisation, subordinate’s staff
competence, technology available etc. Excessive
centralization is likely to reduce employee’s motivation
and discourage initiative. It is also time consuming
when every decision has to be referred to the top
and approval obtained for the same. The quality of
decisions making may also suffer, as often it is the
lower level staff that know the local conditions better.
On the other hand, too much decentralization is
also harmful. Decentralization may result in declining
control of the top management. Consequently employees
at the lower levels may engage in empire building
at the cost of neglecting organisational objectives.
Coordination in the organisation may suffer as each part may chart its own course. Chaos and indiscipline
will be the result.
Departmentalization refers to the formal structure
of the organisation composed of various departmental
and managerial positions and their relationship to
each other. Departments are formed on the following
basis – function, product, territory, clients and process.
Some examples are provided here of departments
based on these factors.
Function based departments – Marketing
department, Personnel department. Planning
department, etc.
Product based departments – Micro-credit
department, water and sanitation department
etc.
Territory based departments – Northern Railways,
Southern Railways, Eastern Railways.
Client-based departments – Women and child
department, Welfare of SC/ST.
Process-based departments – Marketing, Planning,
administration etc.
There are at least three departments which will
almost inevitably be present in every organisation.
They are namely administration, accounts and services.
Most of the large organisations have departments
based on more than one factors.
Span of control refers to the number of subordinates
an individual can supervise and control. Control is
not to be seen as something narrow and negative.
It refers to the superior’s guidance, encouragement
and appreciation provided to the subordinates.
Management experts recommend that no superior
can control more than five or six subordinates without
decline in the quality of supervision. Staffing
Staffing is the management function that deals with
the recruitment, placement, training and development
of organisation members. Any organisation is as good
as it’s employees’ performance shows. Staff of the
organisation should be selected, retained and promoted
based on the needs of the organisation and their
performance.
Staffing Process
Human Resource Planning should take into
consideration the following internal and external
factors. The internal factors that need to be taken
into consideration are the present and future skill
needs, vacancies, areas of priorities of the organisation
and its financial condition. External factors include
the policies of government, donor agencies, collaborating
organisations, the labour market etc.
Recruitment: Recruitment is concerned with
developing a large pool of job for candidates in line
in view of the needs of the organisation. This can
be achieved by giving wide publicity to the position
available and attracting many as eligible candidates
as possible for the positions.
Selection: Selection involves evaluating and choosing
among the job candidates. A number of means like
interviews, group discussion, and skill tests are used
to select the candidates.
Induction and Orientation: After selection, the
newcomer has to be helped to fit into the organisation.
They are introduced to their colleagues, acquainted
with responsibilities and informed about organisation
policies and goals.Training and Development: The process of training
and development aims at increasing the knowledge
and skills of the employees along with attitudinal
changes. The overall aim is to increase organisation’s
productivity and employee’s level of job satisfaction.
Performance Appraisal: Performance appraisal aims
at judging the performance of the employee’s and
his/her contribution to the organisation. Performance
appraisal has to be done on the basis of objective
standards and not on the whims and fancies of the
superior officer. Further the employee should have
a clear job profile and should know on what basis
he or she is being judged. If performance is satisfactory,
the employee may be rewarded and if it is not,
corrective action is to be taken.
People join organisations not merely for monetary
gains. They also look for satisfaction of their social
needs, self-esteem needs and emotional needs. In
any case, after a person has achieved financial security,
he or she will most probably seek other kinds of
fulfillments namely pride in the job, a sense of
achievement, satisfactory associations at work place,
autonomy to function independently, etc. It is up
to the organisation to provide employees with these
opportunities.
Directing
Directing is the managerial function of guiding,
supervising and leading people. According to Chandan
‘it is concerned with directing the human efforts
towards organisational goal achievement’. Sometimes
directing and leading are seen as one function.
Often it is the success or failure of this function
that will determine whether the organisation will
achieve its objectives. Leading also determines the
levels of satisfaction the employees of the organisation
experience. Some of the requirements for successful leadership
in an organisation are: clear-cut objectives which
should be known to all the managers and employees,
meaningful supervision by the superiors of the
subordinates, participatory managerial style, unity
of direction, and purposive and effective follow-up.
Leadership
Leadership is defined as the relationship in which
the one person influences others to work together
willingly on related tasks to attain goals devised
by the leader and the group. Leaders can be formal
or informal. Formal leaders are found in formal
institutions like bureaucratic organisations, political
parties, and military. Here the organisational
functioning is governed by written and formal rules.
They determine how the leader is selected/elected
and what his/her powers are and how they are to
be exercised. On the other hand, informal leadership
depends on the personal qualities of the leader such
as the charm, intelligence, skills etc. French and
Rawen mention five sources of power that a leader
draws from (1) coercive, (2) reward, (3) legitimate,
(4) expert, and (5) referent. The first three sources
– coercive, reward and legitimate are primarily found
in formal organisations while the latter are found
in informal settings.
Leadership Theories
A brief overview of the various theories of leadership
is presented below.
Trait theories: Trait theories advocate that there
are a set of traits that help an individual to become
a leader. Some of the traits are listed as selfconfidence, courage and integrity, will power,
emotional stability, intelligence, enthusiasm, energy,
charisma etc. Trait theory has been criticized on
some counts. It focuses too much on the leader and not on the leadership process, the nature of followers
and the situation in which the leadership is provided.
It oversimplifies the leadership process and reduces
it to traits of the leader. Whereas it is a known
fact that different situations require different types
of leadership qualities. Also it does not explain how
leaders who were successful in the past fail and
vice-versa.
Behavioural theories: This perspective explains
leadership by looking at leaders in terms of what
they do. Many theories within the category see
leadership as comprising of two important factors:
Employees-centred dimension and production-centred
dimension. Employee-centred dimension stresses on
creating a work environment in which employees
can have satisfying work experience. Their main
concerns are employees’ welfare and happiness rather
than attaining organisational objectives. Production
centred dimension gives importance to attaining
organisational objectives rather be concerned about
employee welfare. In different situations these
dimensions have to balanced and a good leader is
one who can balance these two requirements
successfully.
Situational theories: These theories emerged when
management thinkers realized that the context in
which leadership is exercised influences the
leadership process. Earlier theories had failed to
take into account this important aspect. Most
situational theories support the view that there is
a relationship between organisational situation and
the leadership style. Some of the factors that influence
the process is the nature of work of the organisation,
the organisation’s past experience, the value system
of the leader and the followers, resources available
and the overall political–economic situation. Leadership Styles
Autocratic Leaders
Autocratic leaders are those who assume all authority
to themselves. Subordinates are discouraged to offer
suggestions or participate in decision making process.
Autocratic leadership has some advantages and are
useful in certain situations. In this style, firstly
decision making is quick and in emergencies it can
be advantageous. Secondly, decisions will reflect
the leader’s priorities and will not be diluted. Thirdly,
if subordinates are inexperienced or are not qualified,
then autocratic leadership is better. Autocratic
leadership has many disadvantages also. As autocratic
leaders do not take into account opinions of others,
it may result in bad decisions. Secondly, the lack
of consultation may adversely affect subordinate’s
motivation and alienate them. It will increase
resentment towards the leader and the organisation
as a whole.
Participative or Democratic Decision-making
In the democratic or participative decision making
process the subordinates are consulted. Their opinions
are actively sought and a consensus arrived at before
decisions are taken. The decisions thus taken may
or may not reflect the opinion of the leader.
The major advantages of this type of decisions making
are that maximum possible information is collected
and different view points are to be considered.
Participation of many individuals mean that decisions
taken will have a better chance of being accepted
by others. As a result, confidence and loyalty among
the workers will increase.
However, success of democrats decision making
depends on certain conditions. A pre-condition for
democratic decision making is that individuals are
motivated to contribute to the decision making process.Absence of this motivation will lower the quality of
decisions made. There should also be trust between
the leaders and the members. If there are vested
interests or if the organisation has something to
hide from the employees then the decision making
process will be flawed. Further, there should also
be a spirit of give and take as no one can get totally
satisfactory decisions.
Laissez-faire or Free-rein Leadership
The leader gives the organisation maximum freedom
to make decisions. The leader is in most cases a
figure head and at other times a coordinator between
the various members. It gives maximum autonomy
to the members leading to creativity and freedom
of expression. The major disadvantages are that in
under-motivated organisations this type of leadership
will result in chaos.
Autocratic leadership style, democratic leadership
style and laissez-faire leadership style are models
of leadership which may not be found in the real
world. Leadership characteristics of all these models
are found in different leaders in difference situations
and at different times.
Another point to be noted is that in different
organisations the nature of work and tradition makes
the leader adopt one or other leadership styles.
The leaders adopt the laissez-faire method in situation
where encouraging creativity is the aim – for example,
in universities or laboratories. On the other hand,
in family run business houses where control is
considered as important, leadership styles adopted
are closer to the autocratic leadership style.
Coordinating
Coordination is the process of integrating the objectives
and activities of two or more units (departments or functional areas) of an organisation in order to achieve
organisational goals efficiently. In the organising
function, we have seen the need for division of work
among the various units of the organisation. Efficiency
increases with specialization of activity and grouping
of related work. But the division of work brings
about its own problems. Departments become so
involved in their work that they forget the
organisational objectives. Departmental interests are
placed above organisational interests.
Ways to Achieve Coordination
Hierarchy is an important method to achieve
coordination. People who are high in the hierarchy
have more authority and responsibility. Hierarchy
in fact channels and regulates the exercise of
authority, work allocation and flow of communication.
Problems between departments if and when they
arise can be sorted out by the superior officer.
Another important method of coordination is rules
and regulations. Rules and regulations make
organisational work predictable. Rules and regulations
standardize routine work which saves the time of
the managers. Everyone in the organisation will
know what behaviour is expected from him/her and
from others. Tasks will be performed accordingly.
The identification of objectives and formulation of
plans also improve coordination. This gives the
organisation a unity of purpose and a unity of direction.
They help the various units with different
responsibilities to direct their efforts toward achieving
their targets.
Larger organisations often use committees to improve
coordination. These committees consist of members
of different departments of the organisations.
Committee meetings help them exchange information,
understand each others viewpoints and problems
and resolve conflicts.Vertical and horizontal communication system are
used in all organisations to share information. Intra
organisational official communications in the form
of departmental notes, memos, official letters etc.,
help improve coordination between the various sections.
Nowadays, with the rise of information technology,
IT enabled Management Information Systems are
used to transmit data up and down the levels of
the organisation. This system enables quick reporting,
processing, storing and retrieval of information as
and when required.
Till now we have discussed the formal means of
improving coordination. But it is now realized that
informal relationships between employees are as
important as the formal means of coordination. Personal
relationships between the various members improve
overall coordination within the organisation. In
organisations where proper understanding and trust
between employees exists, the need for formal means
of coordination, which are time consuming and
cumbersome, will be less. This will contribute to
a better work environment and improve efficiency
of the organisation.
Reporting
Reporting means keeping the superiors informed
about the various aspects of work including progress
of the various programmes, problems in implementation
and problems related in staff. Reporting is done at
every level.
The Annual Report of the organisation is its statement
of achievement and shortcomings to the general
body of the organisation and to the society at large.
Within the organisation, the Chief Executive Officer
reports to the Board of Management or the governing
body. Subordinates of the executive officer will report
to him/her and so on down to the lowest level of
the organisation.
Need for Effective Reporting
1) Reporting keeps the management informed about
the organisation’s performance.
2) Reporting allows the management to take
corrective actions when things go wrong.
3) Reporting inculcates a sense of responsibility
among employees as they have to report the
programme activities to the higher authorities.
Reporting Process
1) Establish means by which reporting is done.
2) Keep a time period within which the report is
done.
3) It should be decided as to whom the report should
go and in what form.
4) Reporting also includes action to be taken on
the report.
Budgeting
The word ‘budget’ originally meant a bag, pouch or
pocket attached to a person. But in the modern
sense, a budget is a complete statement regarding
the organisation’s income and expenditure of the
past financial year and provides an estimate of the
same for the coming financial year. The organisation’s
budget is usually approved by the highest controlling
body, the Board of Management or the Governing
Council.
Once the budget is approved, the allocation of funds
to various sections/departments of the organisation
takes place. The concerned heads of departments
have to function within the funds allocated to them.
Sometimes due to changes in environment or inside
the organisation, a revised budget is formulated after a period of time which may increase or decrease
the funds allocated to a particular department.
Budgeting is a specialized activity and persons involved
should possess considerable knowledge in accounts,
economics, costing etc. to prepare a proper budget.
Any organisation which is developing a budget for
the first time does a lot of guess estimates as available
information may not be enough to prepare a budget.
Subsequent budgets can be made on the information
collected from the previous experiences. A budget
is very much like a plan in the sense that it is
forward looking and aims at making things happen.
A budget contains the expenditure, income and
outcome planned for a specific period of time. Usually
budgets are made for a year, that is, annually. Through
the budget, the manager controls the activities of
the organisation. Therefore budgeting refers to the
controlling of the organisation based on a budget.
Need for Budgeting
1) Finance is the fuel on which the organisation
runs. One of the most effective ways of directing
and controlling the organisation is by controlling
the financial part of the organisation.
2) Budgeting helps to control the excessive
expenditure. Sometimes managers tend to over
spend with justifications and sometimes without
justifications. Well prepared budget with clear
allocations to various heads prevents this costly
practice.
3) Budgeting also helps in preventing administrative
and financial malpractices. At times, unscrupulous
employees try a variety of means to earn money
at the cost of the organisation. But budgetary
allocation prevents this practice to a great extent.after a period of time which may increase or decrease
the funds allocated to a particular department.
Budgeting is a specialized activity and persons involved
should possess considerable knowledge in accounts,
economics, costing etc. to prepare a proper budget.
Any organisation which is developing a budget for
the first time does a lot of guess estimates as available
information may not be enough to prepare a budget.
Subsequent budgets can be made on the information
collected from the previous experiences. A budget
is very much like a plan in the sense that it is
forward looking and aims at making things happen.
A budget contains the expenditure, income and
outcome planned for a specific period of time. Usually
budgets are made for a year, that is, annually. Through
the budget, the manager controls the activities of
the organisation. Therefore budgeting refers to the
controlling of the organisation based on a budget.
Need for Budgeting
1) Finance is the fuel on which the organisation
runs. One of the most effective ways of directing
and controlling the organisation is by controlling
the financial part of the organisation.
2) Budgeting helps to control the excessive
expenditure. Sometimes managers tend to over
spend with justifications and sometimes without
justifications. Well prepared budget with clear
allocations to various heads prevents this costly
practice.
3) Budgeting also helps in preventing administrative
and financial malpractices. At times, unscrupulous
employees try a variety of means to earn money
at the cost of the organisation. But budgetary
allocation prevents this practice to a great extent.after a period of time which may increase or decrease
the funds allocated to a particular department.
Budgeting is a specialized activity and persons involved
should possess considerable knowledge in accounts,
economics, costing etc. to prepare a proper budget.
Any organisation which is developing a budget for
the first time does a lot of guess estimates as available
information may not be enough to prepare a budget.
Subsequent budgets can be made on the information
collected from the previous experiences. A budget
is very much like a plan in the sense that it is
forward looking and aims at making things happen.
A budget contains the expenditure, income and
outcome planned for a specific period of time. Usually
budgets are made for a year, that is, annually. Through
the budget, the manager controls the activities of
the organisation. Therefore budgeting refers to the
controlling of the organisation based on a budget.
Need for Budgeting
1) Finance is the fuel on which the organisation
runs. One of the most effective ways of directing
and controlling the organisation is by controlling
the financial part of the organisation.
2) Budgeting helps to control the excessive
expenditure. Sometimes managers tend to over
spend with justifications and sometimes without
justifications. Well prepared budget with clear
allocations to various heads prevents this costly
practice.
3) Budgeting also helps in preventing administrative
and financial malpractices. At times, unscrupulous
employees try a variety of means to earn money
at the cost of the organisation. But budgetary
allocation prevents this practice to a great extent.after a period of time which may increase or decrease
the funds allocated to a particular department.
Budgeting is a specialized activity and persons involved
should possess considerable knowledge in accounts,
economics, costing etc. to prepare a proper budget.
Any organisation which is developing a budget for
the first time does a lot of guess estimates as available
information may not be enough to prepare a budget.
Subsequent budgets can be made on the information
collected from the previous experiences. A budget
is very much like a plan in the sense that it is
forward looking and aims at making things happen.
A budget contains the expenditure, income and
outcome planned for a specific period of time. Usually
budgets are made for a year, that is, annually. Through
the budget, the manager controls the activities of
the organisation. Therefore budgeting refers to the
controlling of the organisation based on a budget.
Need for Budgeting
1) Finance is the fuel on which the organisation
runs. One of the most effective ways of directing
and controlling the organisation is by controlling
the financial part of the organisation.
2) Budgeting helps to control the excessive
expenditure. Sometimes managers tend to over
spend with justifications and sometimes without
justifications. Well prepared budget with clear
allocations to various heads prevents this costly
practice.
3) Budgeting also helps in preventing administrative
and financial malpractices. At times, unscrupulous
employees try a variety of means to earn money
at the cost of the organisation. But budgetary
allocation prevents this practice to a great extent. At the end of the year audit is done in which
budgetary allocations are compared with actual
expenditure incurred. Discrepancies if any have
to be explained. This ensures that there is a
check and balance.
4) Budgeting improves the coordination in the
organisation. Proper appropriation to different
overheads within the organisation helps prevent
conflict and overlapping.
5) Budgeting also helps in measuring the performance
of the organisation. The actual performance of
the organisation can be seen in relation to
objectives set forth in the budget.
6) Budgets are also a source of information. Budgetary
allocations to various activities of the organisation
reveal the priorities of the organisation. This is
useful to people outside the organisation as well
as its employees and supporters.
7) Lastly, the very process of budget preparation
is an educative exercise. Managers review the
existing situation, discuss the needs of the
organisation in the coming year, and keeping in
view the priorities of the organisation, prepare
the budget. Thus the budgeting process makes
the managers aware of the objectives of the
organisation, its resource base and anticipate/
forecast trends and changes in the external
environment.
