Although like medical and accounting, management, has not yet achieved professional status, yet the techniques, principles, and process of management are universal. Universality of management refers to the transferability of its principles, techniques, functions, and skills from one time, place, or job to another. All these management practices are equally practicable and applicable everywhere in the world irrespective of the nature of the job, differences in the customs, habits, and social laws. Managerial functions, techniques can be practiced in every organized effort. Whether it is a business, shop, industry, government office, educational, social, profitable or nonprofitable organization, management principles, functions and techniques are profitably and productively applied. A successful manager of a company or a field can be equally successful in the other. That is why a manager of a company can be safely transferred from one department, company, or area to another. A captain of a cricket team can be successful as a manager of the bank. A retired army general can successfully hold a position of chairman in a company or president of a country.
Arguments For Universality
Different experts have thrown light favorably on the universality of management whose points are as follows.
1. Apart from the nature of the job, management level, industry, company, or country, every manager performs the same functions. He has to plan, organize, lead, and control, no matter he is working in the capacity of a junior or senior manager, head of an organization, army general, or president of the country.
2. According to Fayol and Urwick, management has some principles, like unity of command or division of work which can be ignored nowhere.
3. Every organized effort has some basic principles, factors, and rules. Every business, educational, government or religious organization has common basic managerial principles. If there is a difference at all, it is that of a technical skill or nature of a job. Universality never means that one particular job should be performed by every manager. But it means that all jobs have principles in common that must be followed by every type of manager.
4. Universality of management can be judged from the fact that a hockey captain can become an efficient manager in a bank. An army general can effectively hold a position of a company or a country, although the nature of technical work is quite different in both the places; but the principles of performing the jobs are the same.
Arguments Against Universality
There are many management experts who oppose management principles as universal. Opposing arguments are as follows:
1. Though management functions, principles, techniques, and practices are equally acceptable in diversified environment and conditions, their practicability has some natural limitations. As far as human, analytical, managerial skills, and decision making abilities are concerned these are of course transferable. But if a job demands a particular technical skill, it can be performed only by its expert or specialist. Doctors and physicians cannot do engineer jobs. The pilot of an airplane cannot steer a ship. An accountant cannot as a production engineer. A manager of one culture, environment, or custom may not adapt to another.
2. Universality of management refers to transferability of its principles, techniques, functions, and skills from one time, place, or job to another. But in actual situation it is not practicable. An Army general who has acquired austere discipline and rigidity cannot become a successful head of a university. Applying this principle, experience and rigid discipline in the university will spoil the atmosphere of soft-disciplined university. Inversely, if the discipline of a university is applied in the army, what will happen? The army will be destroyed.
3. Objectives of every company are different. They may not be transferable. A manager, accustomed to a unique atmosphere in a charitable institution which has a liberal policy to distribute funds to the needy people, is sure to fail in a bank which has to be austere and rigid in advancing loans.
4. .Most management principles are based on personal experiences and have no scientific footing. Hence, they are conflictory or they have to be violated.
5. The principle of functional authority is actually a violation of the principle of unity of command. The first principle necessitates two bosses of a subordinate. The second principle, on the other hand, requires only one boss for a subordinate. Matrix organizations i also a violation of unity of command. Matrix allows a subordinates to have as many as five bosses over him.
Coordination is ever present at every level of management, and pervades all managerial functions. It has been defined as an orderly synchronization or unification of individual and group efforts. It facilitates harmonization of individual and group goals. the bigger the organization and the resulted complexity, the more essential becomes the coordination. Coordination is reconciling differences in approach, interpretation of plans, timing, efforts, and interests of individuals, subordinates, compeers, and superiors.
Principles of Coordination
Mary Parker Follett has great contribution in the development of coordination principles. These principles are:
1. Principle of Direct Contact
Direct contact plays a vital role in the accomplishment of coordination. direct contact may be top down, bottom-up, and horizontal. It facilitates face-to-face communication, understanding, exchange of ideas, and harmonized interpretation of plans, policies and procedures.
2. Principle of Achieving Coordination At Early Stages
Coordination is necessary to achieve at an early stage of planning. Unification of activities becomes difficult after plans are put to operation.
3. Principle of Reciprocity of All Factors
According to this principle all factors, affairs, matters, or problems are interrelated in a given situation. These factors are so much interwoven and correlated that they cannot be viewed and analyzed separately or they will mislead the manager.
4. Horizontal Coordination Is More Important Than Vertical
This principle states that vertical coordination is not so much difficult because of incessant, regular, and direct contact between the boss and his subordinates. The real test of coordination is at horizontal level. horizontal coordination is necessary to interchange information, interpret plans, implement schedules, accommodate the requirements of each other, and smooth the working of the company as a whole. All the heads and personnel of different departments should maintain links between themselves to exchange information, know changed situations and conditions, increase understanding, and make it sure that plans are going ahead as per schedules.
Techniques of Coordination
By the following techniques the manager can achieve coordination
1. Supervisor
Supervisors should teach their subordinates concept, principles and application of coordination. He should ensure that his subordinates and their work are related with other individuals and groups.
2. Organization
Good organization itself is a good device to accomplish coordination. Good organization means proper grouping of activities, clearly defined jobs and duties, clear-cut delegation of authority, distinct correlation between different divisions, and a well directed system of responsibilities.
3. Written Communication
Written communication is very useful and effective to achieve coordination. Written communication includes letters, memos, reports, bulletins, policies, procedures, programs, and other plans.
4. Group Meetings
Group meetings are conscious efforts to accomplish a high quality of coordination. Its purpose is to facilitating unification and relating the efforts of various groups and departments.
5. Liaison Officer
Like supervisor, liaison officer is a good medium for achieving coordination. A liaison officer is appointed to unify departmental and group activities. He keeps in touch with all departments and convey necessary information to them.
In this article i am going to tell you the functions of a manager. Every manger should follow and learn these functions:
1. Planning
It means selecting the objectives, formulating the policies, programs, and procedures to achieve these objectives. Objectives are grouped into those of individuals, departments, and the enterprise. Planning involves decision making and selecting a definite course of action from among various alternatives. The responsibility of planning goes on the shoulders of managers, whether they are at the top, middle or bottom of the organization structure. It is looking ahead and concerned with the future. Planning is what to do, when to do, how to do, who and why is to do. It provides yardstick against which actual performance is measured.
2. Organizing
The next function of the manager is organizing. It involves the establishment of definite structure of roles. It includes grouping of activities, assignment of these activities to organizational groups, the delegation of authority and co-ordination of the authority delegated. Since one man can not perform all the functions, the activity must be split off into buying, selling, producing, accounting to achieve business enterprise objectives. In organizing a business a full advantage of specialization is enjoyed. The organization must fit the task and not vice versa. The organization structure is not an end in itself but a means to an end.
3. Staffing
It includes hiring, selecting, placing, transferring, and firing. It is the function of a manager to define man power requirements for the job to be done, determine workman's compensation and train the workers. The objectives of staffing is to create such a team which is loyal to company and its objectives. Wage and salary administration, pension, bonus, gratuity, group insurance, provident fund, employees welfare, transfer, promotion, retirement, leave, medical come under the purview of personal administration. Personnel administration is the new term, used for staffing. Staffing starts even before hiring and continues even after firing.
4. Directing or Leading
It involves guiding, supervising of sub-ordinates. The superior manager must teach his subordinates the enterprise tradition, history, objectives and policies. Subordinates must learn the organization structure, interdepartmental relationship of activities and responsibilities. The should also know their duties and authorities.
Directing improves the performance of the workers. It motivates them to work them to work with zeal and confidence. The supervisor's leading, communicating, motivating, and persuading come under the function of directing. Now better term leading is used for directing.
5. Controlling
Controlling measures actual performance and corrects the weakness in the performance. It also ensures to accomplish plans. Control compel events to talk plays according to plan. Through controlling workers are made responsible for the errors they make and then they are corrected to improve the performance. controlling means to look back, while planning is to look ahead. There are three basic control processes.
Though the functions of banks are almost the same in every country, there are difference in the organizational set-up and the lending practices of banks in different countries. We can divide banking organization under two heads: (1). Branch Banking, (2). Unit Banking, depending upon the organization and scale of operations of the banks. Again, we can classify banking under two heads on the basis of the lending practices adopted by them: (1). Pure Banking, (2). Mixed Banking.
Branch Banking is that system under which a large bank carries on banking business through a large network of branches spread all over the country. The bank's huge financial resources enable it to carry on its activities on a large scale all over the country. Branch banking is popular in the U.K, Canada, Australia, India and Pakistan. In the beginning even the British Banks were developed as Unit Banks with only one office located in a town or a city. Later on, the small banks were amalgamated into a few big banking companies and opened their branches all over the country. At present, there are five major banks in the U.K. which have opened branches all over the Britain and even in foreign countries.
Advantages of Branch Banking
In the words of Prof. Sayers, "A comparison between Unit Banking and Branches Banking is essentially a comparison between small-scale and large-scale operations."Following are the main advantages.
1. Large-Scale Operations
A big bank possessing huge financial resources and having a number of branches, can enjoy certain advantages of large-scale operations. Its huge financial resources enable it to recruit skilled, qualified and experienced personnel to carry on its banking activities. It can also introduce the principle of division of labor in the field of management. The presence of an efficient managerial staff is always an asset with the bank. Moreover, a big bank with huge resources and a number of branches, comes to acquire public confidence an account of its standing among the people.
2. Geographical Spreading of Risks
The spreading of risks geographically is another importance advantage of the branch banking system. Since there is diversification of risks under branch banking there is no danger of failure to the bank concerned. Moreover, under branch banking, if certain losses are incurred in depressed areas they can be offset by earning profits in the prosperous areas. But in the case of a Unit Bank the danger of failure is ever present. If the unit bank suffers losses, they cannot be offset by profits earned elsewhere since there are no other branches of the unit bank.
3. Facilities Regarding Transfer of Funds
Since the branches of the ban, under branch banking, are spread all over the country, it is easier and cheaper for it to transfer funds from one place to another. But this advantage is not available to the unit bank.
4. Economy In Cash Reserves
Branch banking results in an economy of cash reserve. A huge bank, with a number of branches in different parts of the country, can afford to manage with a lower cash reserve ratio in each of its branches. A unit bank, on the other hand, is deprived of this advantage. It has to keep sufficient cash reserves to meet the requirements of its depositors. The keeping of large cash reserves naturally reduces the profitability of the unit bank.
5. Equality In Interest Rates
Branch banking has the additional advantage of bringing about equality in interest rates. If the demand for money goes up in a certain part of the country then, under branch banking, the funds can be transferred to it from another branches where there are excessive reserves. Thus, the rate of interest can be prevented form rising in the former place.
6. Proper Use of Capital
Under branch banking, the bank can make a proper use of its financial resources. If a branch of the bank happens to have a plenty of deposits, but no opportunities for investments, it can transfer its surplus funds to other branches which can make a profitable use of such funds for trade and industry.
7. Wider Scope For Selection of Securities
Branch Banking presents a wider scope for the selection of different types of securities and investments. This ensures a higher degree of safety and liquidity for the bank.
8. Increase In Banking Facilities
Under branch banking, the banking facilities can be made available to all cities, towns and even backward areas in the country. One the country, it is rather difficult to set up unit banks in smaller towns and underdeveloped areas in the country on economic grounds.
9. Greater Public Confidence
A bank, with huge financial resources and a number of branches spread all over the country, can command great public confidence than a small unit bank with limited resources and one or a few offices located in a particular area of the country.
10.More Effective Credit Control
Branch banking is conducive to a more effective implementation of credit controls by the central bank because, under branch banking, the Central Bank has to deal only with a few big banks controlling a large number of branches. It is always easier and more convenient to regulate and control the credit policies of a few big banks than to regulate and control activities of a large number of smaller unit banks.
11. Better Training To Staff
Since the banking were becomes more extensive under branch banking, the employees and the officers of the bank get better opportunities to acquire knowledge and experience about the various aspects of banking business in the country.
12. Contracts With The Whole Country
Under branch banking, the bank maintains continual contacts with all parts of the country. This helps it to acquire correct and reliable knowledge about economic conditions in various parts of the country. This knowledge enables the bank to make a proper and profitable investment of its surplus funds.
Disadvantages of Branch Banking
Following are the disadvantages of branch banking:-
1. Difficulties of Management Supervision/ Control
Since there are hundreds of branches of a bank under this system, this leads to a number of difficulties in the management, supervision and control of banking activities. The management of the bank automatically gets concentrated at the Head office.
2. Lack of Initiative
The branches of the bank under this system suffer from a complete lack of initiative on important banking problems confronting them. No branch of the bank can take decision on important problems without first consulting the head office. This makes the banking system rigid and inelastic in its functioning.
3. Possibility of Monopoly
Under branch banking, there is always the possibility of the emergence of monopoly in banking. The reason is that the activities of all the branches are controlled by the head office. A handful of high bank officials dominate the entire working of the bank.
4. Continuance of Non- Profitable Branches
Under branch banking, weak and non-profitable branches continues to be fed by the stronger and profitable branches of the bank. On the contrary, under unit banking, if a bank suffers losses, it shall cease to exist automatically after some time.
5. Unnecessary Competition
The great disadvantage of branch banking that there arises under it unhealthy type of competition among different banks. Under this system, the branches of different banks get concentrated at certain places, particularly in big towns and cities in the country. This gives rise to unhealthy competition among them.
6. Duplication of Banking Facilities
There is unnecessary duplication of banking facilities when the branches of different banks are opened at the same place.
7. Expensiveness
This system is much more expensive than the unit banking system. when a bank opens a number of branches at different places then there arises the problem of coordinating their activities with each other. It naturally adds to the expenditure which is not in the interests of the bank.
8. Saving of Smaller Places Invested In Bigger Towns
Under branch banking, the savings collected from the smaller places and backward areas are transferred for purposes of investment to bigger industrial and commercial centers in the country. This hinder the economic development of smaller places and backward areas which are thus deprived of the use of their legitimate savings.
9. Losses By Some Branches Affect Others
When some branches suffer losses due to certain reasons, this has its repercussions on other branches of the bank.
10. Difficulties In Foreign Countries
Under this system, a bank opening branches in foreign countries has to face a number of difficulties and problems. The reason is that the banking laws, trade conditions, monetary and credit policies are different in foreign countries. In addition, the bank has always to face the threat of nationalization of its branches by the governments of foreign countries.
Henri Fayol advanced the following fourteen principles of management which he considered as flexible and universal regardless of changing environment. 1. Division of Work When an organization come into existence work must be divided according to skill and specialization. Specialized activity when performed increases the efficiency of the organization. 2. Authority And Responsibility According to Fayol authority must be delegated to get the work done. Authority is the combination of official and personal factors. Official authority is the power which has been given by the company, and personal authority is the intelligence, experience, moral worth etc., which are personal. 3. Discipline Discipline is obedience and respect for obedient leading to company's goals. Without discipline there will be chaos and confusion, and company's goals will not be accomplished. Discipline requires good superiors at all levels. 4. Unity of Command According to Fayol, employees should receive orders from only one superior who is immediately above him in the line, otherwise there will be a clash of authority and activities owing to which the work will not be performed smoothly. 5. Unity of Direction According to it, each group of activities having the same objective must have one plan and one head. 6. Subordination of Individuals to General Interest When there is a clash between two employees the management must reconcile their differences, otherwise it would be difficult to reach company goals. 7. Remuneration Remuneration to the employees must be fair and based on equity. Salaries and fringe benefits must be enough to motivate workers. 8. Centralization By the principle of centralization Fayol means that how much authority should be delegated to the employees and retained by the super. The larger the organization the higher will be the degree of delegation of authority. Decentralization is the division of work and delegation of authority. 9. Scalar Chain There should be a chain of superiors down from the highest to the lowest echelon. Superfluous (excessive) levels should be avoided. 10. Order By order Fayol refers to material and social order. It means a place for every thing or everyone, and every thing or everyone in its or his place. 11. Equity Management must maintain equity among the employees. Equity will facilitate to draw maximum loyalty from employees. 12. Stability to Tenure Job security should be provided to the employees to get their maximum of output. High lobor turnover causes greater costs and involves many hazards. 13. Initiative It means thinking out and executing a plan. Those who are high achievers and have initiative should be encouraged. They get satisfaction only when there ideas are honored. 14. Esprit De Crops It refers to team work and collective force of employees which must be used in the best interest of the organization. Team spirit makes it possible to get maximum of output with a minimum of input.
Everything with which we are much familiar, is difficult to be defined. The paradox applies to the bank also. We are much familiar with banks in our day-to-day life, but when it comes to definition, one is bound to keep silent. Different people have defined bank in different forms. In simple and direct words, we think of bank as an institution which accepts deposits from public and lends money. People either for the sake of safety, or for the sake of income in the form of interest or for both, like to deposit their money with the banks. Banks accept their deposits on interest and lend it to other people on a higher rate of interest, thereby earning profit for themselves.
The primary business of bank is to receive deposits and give loans, yet some banks are specialized in one task while are others are in other tasks. On the basis of the specialization, the banks are classified under the following heads:-
1. Central Banks
The Central Banks is the principal bank in a country. It is the head of the banking system. Besides the fact that this is the principal bank of a country, its other functions and status are still more important. It acts as the banker's bank. It is the banker of the government. The deposits of the government are maintained with it. it lends money to the government and has the responsibility of adjusting all the responsibilities in monetary and financial matters which the government bestows upon it. In addition, this Central Bank has the sole authority of controlling the credit and money supply of the country. It controls the volume of currency by its sole right of issuing notes. It controls credit by controlling the lending business of the commercial banks through the various techniques such as discount rate, manipulations, open market operations, changes in the reserve ratio and the selective credit control.
2. Commercial Banks
These types of banks are most numerous in number and are also popular. Their functions are manifold and this is the reason that they are found in the greatest number and have gained much currency. The main functions of such banks are accepting deposits, lending money through overdraft, loans discounting of bills etc. working as a agent of its customers in the takes assigned by their customers and financing of trade and industry. But it must be noted that these banks lend money on short-term basis, not on long-term basis. Besides doing the function of commercial banking, they also deal in foreign exchange and may do some other banking functions also.
3. Industrial Banks
Industrial banks arrange long-term loans for industry. These banks accept long-term fixed deposits.mainly deal in the financing of industry for long periods. Such loans are also given for specific purposes which are productive and expected to yield return after the allowed time. In industry advanced countries these banks have a great role to play in industrial development.
4. Agricultural Banks
Agriculture has its own problems and hence there are separate banks to finance it. They may be divided into two sections: one for meeting the long term and the other for other for meeting the short-term needs. Long-term needed for making permanent improvements in land, buying more lands and introducing better methods and costlier implements. Short-term credit is meant to supply funds for day-to-day operations of the agriculturists. These include buying of seeds and manures, personal and labor expenses and payment of water rates and taxes etc. The nature of the securities offered by the agriculturists and the length of time for which capital is required, make it impossible for commercial bank, exchange banks and industrial banks to take up this finance. Hence we have got land-mortgage banks and cooperative banks, which render this service to the community, the former by catering for long-term needs and the latter by catering for short-term needs.
5. Land Mortgage Banks
These banks provide loans to cultivators by mortgaging their land whenever the cultivator has to do some permanent reforms in his land, viz, making boundary around the field, purchase of machine, digging of well or for any other work. He can borrow money form land mortgage bank by mortgaging his land such banks arrange, short medium and long-term loans.
6. Exchange Banks
These banks mainly deal in foreign exchange. They purchase foreign currencies and sell them to those people who have to make payments abroad. Though commercial banks deal in foreign exchange as their specific function, yet these banks are specific in the task. Exchange banks besides financing foreign trade, also finance the internal trade.
7. Cooperative Banks
These types of banks are nothing else then commercial banks but their organization is carried on cooperative lines. The principles of cooperation are different from all other forms of the joint stock organizations, has they are treated on different stand due to some peculiarities in regard to their fund and character.
8. Saving Banks
Though all the commercial banks have savings accounts with them, there may be some specialized banks which deal in the small amounts of the savings of the people.
9. Private Banks
While different kinds of banks described above are banks run on modern lines, there are some private bankers who combine trading and carry on their business in the most antiquated from. We have already studied of such bankers in England. Their number now is sufficiently large even in this country their number is increasing day by day. Almost the whole of the agricultural industry and a considerable portion of the internal trade is financed by them. They require to be reformed, but as has been aptly remarked by one of the writers on this subject, "they constitute and indispensable element in the country's financial system, and not only Pakistan but the world would be poorer by their extinction. "In fact, there are some such bankers in every country in the modern says also.
10. Miscellaneous Banks
There are certain other kinds of banks which have arisen in due course to meet the specialized needs of the peoples. In England and America, we got investment banks whose object is to control the distribution of capital into several uses. American trade Unions have also got labor banks where the savings of the laborers are pooled together. Some of the colleges in the country have started students banks to receive their deposit of the specialized student community. The merchant bankers or Accepting Houses of London perhaps represent another highly specialized development of the financial structure. In modern times trade depends on credit. But when a merchant sells goods on credit to foreign merchants he takes immense risks and sell goods on credit to foreign merchants he takes immense risks and must therefore set up a machinery for watching them in every country to which he sells. These merchant's bankers have taken up this job and in view of their close relations with the important importing agencies all over the world, they undertake to accept exporter's bills on their behalf.
Scientific management conducts a business or affairs by standards and norms established by facts, or truths inferred from systematic observations, experiences, or experiments. The following four management experts advocated scientific management:
1. Charles Babbage
2. Fredrick W. Taylor
3. Henry L. Gantt
1. Charles Babbage
Professor Charles Babbage was not only the pioneer scientific management but also the father of computer. In 1822 he invented difference machine which was a mechanical calculator. In 1833 he invented another device in the calculator which is still a basic element in the modern computers. He wrote many books in which "on the Economy of Machinery and Manufacturers" which he wrote in 1832 was the most popular.
Charles Babbage advanced the following principles of management:
1. Division of Labor
Labor should be divided according to specialization to increase efficiency.
2. Management And Production
Management activities should be separated from techniques of production. Scientific methods should be adopted in production.
3. Management Problems
Management should focus its attention on problems of production, employee relations, time-saving, time-study, control of waste, and use of by-products.
4. Marketing Management
Marketing management should be effective, Advertising, selling, product development, and reduction in unit price are necessary to capture market.
According to Charles Babbage the following are the advantages of the division of labor:
1. Since the worker learns only one skill learning and training time is reduced.
2. Shift from one trade or skill to another is possible in less time.
3. Because of repetition of work, the worker can gain proficiency and efficiency quickly.
4. Due to specification of each part of the job, the development of special equipment and tools are facilitated.
To evaluate its productivity and cost he developed the following questions:
1. What are the defects in the product made by the machine?
2. What are qualities in the product made by the machine?
3. What is the prime cost of the machine?
4. What is the maintenance and repairing cost of the machine?
5. What is the operating cost of the machine?
2. Frederick W. Taylor
Frederick W. Taylor is popularity known as the father of scientific management. In 1875 he started his career as apprentice. In 1878, he joined Midvale Steel Works, Philadelphia, as machine operator. During service he continued his studies in the evening and he obtained his degree in doctorate. Later he fetched the highest position in the same company. His contribution in management is great. He invented many implements and tools used in factory. His experience in laborer, apprentice, machine operator, foreman, head mechanic, and finally as chief engineer helped him understand the viewpoints, weakness, and strengths of not only workers but also the management. When he advance his theory of scientific management he had to face a great opposition not only from the laborers but also American congress. In 1912, he was called up by the Congress to clarify his position. the charge against him was that he wanted to overload the workers and wanted them to be unemployed. There he clarified his position, and said. "Scientific management is not a device of performance. It is not a new system to determine cost. It is not a wage payment scheme. It is not a bonus system. It is not a premium system. It is not a piece- rate wage system. It is not a time study or motion study."
"Scientific management is a mental revolution on the part of workers and management. It teaches the workers to know their duties, their co-workers and superiors. Management should also know its duties and responsibilities toward its workers."
3. Henry Gantt Henry L. Gantt is another pioneer of scientific management. As stated earlier that the main focus of scientific management is on the maximization of productivity ignoring human element, a more important aspects of management.
Henry Gantt was one of Taylor's colleagues. He, unlike Charles Babbage and Taylor., introduced human factor in his theory of scientific management. He gave due importance to self-respect, ego, and morale of the workers. He related morale of the worker with productivity. He introduced bonus payment system. He invented a chart known as Gantt Chart which is used even today. He put his particular attention on training to improve performance of workers. He was utterly against autocratic and incompetent management. He favored an action benefiting human cause , and opposed the one damaging it. He believed in democratic relations in business and industry.
Henri Fayol suggested the following the qualities that a manager should posses:
1. Physical
The manager as a leader should be healthy and free of any chronic disease that could be hinder his work. He should have vigor and dynamism. He should have good communication skills both spoken and written. He should be skilled and tactful in handling situations. He should be able to discharge his duties untiringly. They are high-achievers, energetic and maverick.
2. Mental
Manager's mental quality refers to those related to the mind or intellect. His mental powers include his ability to understand and learn. He should be able to go deep down the problem and come up with many alternative solutions. In other words, he should be resourceful. The manager is quickly adaptable and can adjust himself to new or changing circumstances. Whenever necessary he accommodates himself to superiors, subordinates, and others. He acts in harmony with standards and principles set by the society or company. He has the ability to undergo a gradual change in behavior to conform to societal patterns. Emotional stability is an essential quality of managers. They deal with difficult situations tactfully.
3. Moral
Fayol is emphatic on moral quality of the manager. This quality calls for willingness to accept responsibility. Managers have initiative and take lead in doing things in the best interest of the organization. They are able to originate new ideas and methods, and think and act without being urged or forced. Managers moral quality also includes their firmness and fairness in dealing with others. Integrity is another element in the moral characteristic. In addition, safety of company assets is his responsibility.
4. Educational
Managers should have educational qualities that can be acquired by training and experience. They should have understanding and familiarity of other matters not directly related to his job. His general knowledge and common sense make his education more worthwhile and productive. For business managers B.Com, B.B.A, MBA, C.A., ACMA degrees have gained momentum in the modern business world.
5. Technical
Managers are expert in their fields. They have thorough knowledge of their work far better than their subordinates. Their approach towards the work is analytical, deep, result-oriented, logical, and least risky. Before making any decisions they conduct thorough research and investigation.
6. Experience
Experience enrich the managerial qualities. They work and learn and use experience in dealing with the routine and unexpected situations.
7. Business Qualities
Henri Fayol emphasizes other qualities which are business centered. ( i ). Managerial The manager is the person who can plan, organize, hire, train, lead, and control. He sets objectives, formulates, policies, and procedures, determines activities, delegates work, guides, communicates, provides feedback, and measures the performance against the predetermined standards. ( ii ). Financial The manager should posses financial knowledge and be able to determine the sources and uses of funds. He should know what and how much business needs be financed out of capital, loans, or/ and retained earnings. ( iii). Commercial Commercial knowledge includes production, marketing, banking, insurance, transportation, and storage know-how and proficiency, that a manager must posses. ( iv ). Accounting The manager should posses accounting know-how too-so that he could not be misguided by his subordinates involved in it. He should know accounting principles, controlling techniques, and able to make and understand financial analysis. ( v ). Security The manager is the trustee of company assets. He should see to it that they are properly used and not wasted. He is the safeguard of organization assets. He is also concerned with the physical and financial security of his subordinates.
Managerial Qualities According To Fulmer
Robert Fulmer describes the following qualities necessary for managers.
1. Psychologist
The manager is psychologist because he is capable to read the minds of his superiors, subordinates, and others, and acts accordingly. In this capacity he is many persons. He can read in between the lines and can go deep down the problem using his knowledge of psychologist. He behaves according to situations and can adopt to them.
2. Logician
Logic is the science of correct reasoning by establishing relationship among propositions in terms of implications, contradictions, and conversions. Since he establishes cause and effect relationship in his decision making, he is logicians.
3. Historian
The manager is historian because he applies his past experience in the present circumstances and planing for future.
4. Mathematician
As a mathematician, the manager calculates the past, present and future. He makes budgets, prepares reports on the soundness of the company in relation to finance, marketing, and other fields. He decides about liquidity, profitability, and viability of the organization.
What does it mean to be a manager? A manager is the person who draws plans, determines objectives and standards, and takes decisions. He is responsible for the work of others.
A manager is many person. He is able to peep into future. He guides, persuades, motivates, communicates, leads. The manager does not create problems, rather solves them. He receives authority from his superiors, some amount of which he delegates to his subordinates. He commands authority over them. The manager creates an environment conducive to the efficient working of the workers. He creates team spirit among them. His all activities are directed toward the accomplishment of the organization's goals. He is many person because he is logician, historian, mathematician. He is master of contingencies and situations. The manager is also a physiologist because he able to study the minds of his subordinates and superiors. He act also as social scientist since he has to study environments prevailing within and outside the company.
He is logician because he establishes cause and effect relationship, that is, he justifies his decision under a given problem situation. He is historian because he best uses his past experience in the present situation. He act also as mathematician for he determines liquidity, profitability, financial soundness, and future prospects of the organization.
Qualities of A Manager
The manager is a leader by virtue of his personal traits, authority, and the expertise. He will fail to influence his subordinates if he does not have the following qualities/traits.
1. Knowledge of Business/ Expertise
The knowledge of his field makes a person manager who by which virtues supervises his subordinates. He should have knowledge about his job, department, company, market, industry, and competition in addition to international affairs. This quality enables him to make decisions.
2. Drive
Drive refers to dynamism, energy, ambition, desire to grow, and perseverance. A manager without this characteristics cannot be successful.
3. Integrity
It includes honesty, credibility, protection of firm's assets, fairness in all kinds of dealings towards employees, superiors, the government, and customers. The manager having integrity, easily wins the trust of others making his jobs easy.
4. Self-Confidence
In difficult situations the manager should not lose heart. Perseverence, emotional stability, self control infuse him with confidence leading him to cross all hurdles on the way. Self-confidence leads to emotional stability, an important and required quality of the manager.
5. Organization
It refers to manager's orderly state of mind and ability to think logically. Maturity and ability to analyze situation fall in this quality. He is able to get to the point quickly.
6. Intelligence
The manager should have the ability to learn and understand from experience. He should be able to acquire knowledge and respond to duty to new or uncommon situations. he uses faculty of reason in handling problematic situations and directing accordingly. As physiologist suggest, a person's intelligence is the measured success in using knowledge, faculty of reason, and experience in performing his duties making intelligence also shows keenness, cleverness, shrewdness, wisdom, alertness, and calculatedness
7. Health
Good health makes a person energetic, hardworking, dynamic, and efficient. A healthy manager can focus his all attention towards his and organizational goals.
8. Appearance and Manner
The manager's stature, grooming, dress, neatness, poise, courtesy, tact, and diplomacy make him successful and efficient.
9. Communication Skills
Managers cannot be successful until they can express themselves well. Communication skills, voice and expression make them prominent and efficient. They should be good both at writing and speaking with clarity, diction, and accentuation.
10. Sense of Humor
Modern management scientists give heavy weight to the sense of humor of managers. This quality makes them popular, averts monotony of the work, freshens up the listeners, revitalizes working atmosphere and stimulates and cheers up the workers. Humor can make the manager convincing to others. It should only be used at right time.
The word "Bank" has been derived from the word "Bancus" or "Banque" which means a bench. In the early days, Jews in Lombardy transacted the business of money exchange on benches in the market place. The word "bankrupt" has been used to denote the failure of a business.
Some people are of the view that the word "Bank" has been derived from the German word "Back" which means "joint stock fund". Later on, when the Germans occupied Italy, the word "Back" was Italianized into "Bank". Existence of banking operations have been found during the period of Babylonian Empire by temples and great land-owners. In Greece, the temples of Ephesus and Delphi were the biggest banks of their times. Romans also regulated the conduct of private banks in such a way that utmost confidence of the people was created in them.
If we look into Banking in the modern times, we find great Britain as the pioneer and the Lombard Street as the place where banking was formally started in the fourteenth century. These Lombardy merchants were so forceful that even kings had to depend on them for loans. The business of changing money was so lucrative that king Edward III established the office of Royal Exchanger for changing foreign money at a profit for the benefit of the Crown. The goldsmiths discovered that large sums of money were left in their custody for long periods; therefore, they started the use of this cash to advance loans to other persons for a fixed period of time and at a considerably high rate of interest. Thus began the "issue" and "deposit" banking of modern times. In the year 1672, English banking faced a great crisis when Charles II borrowed huge sums of money from the goldsmiths and later refused to pay them back. Therefore, a number of goldsmiths bankers formed themselves into a corporation in 1695, known as the Bank of England. By the year 1700, the Bank of England was not only issuing Notes but also conducting accounts for customers. Modern Banking
Modern banking has developed both in England and America. Limited liability concept has considerably expanded banking industry. In the succeeding year, Joint Stock Banks became very common either by absorption of private banks or amalgamation amongst Joint Stock Banks themselves. Thus in 1918 came into being eleven Clearing Banks today. The development of large and financially strong banks gave a sense of security to the depositors in England; but at the same time it was felt that if the process of amalgamation was carried on still further there would be a danger of financial monopoly. Therefore, in 1918 Treasury and the Board of Trade set up a committee to consider the matter of further amalgamations and absorption among the banks.
America has also been a center of banking development. Although the first bank in that country was established in 1780, the banking system in that country was established in 1780, the banking system in that country has been without a central bank up to 1940. During the Colonial period, the development of banking in America was linked with the exigencies of financing a new and developing country. Therefore, very little was done in the field of modern banking. Since there was lack of public confidence, the earliest banks were generally State Monopolies run in the interest of the merchants who organized and managed them. These banks were mainly transacting the business of short term commercial loans, yet due to their poor management they went bankrupt very easily and created financial panic from time to time.
Banks were also established in various countries of the world. In 1401 a German Public Bank was established. In the 16th century, banks were also established in Venice, Milan, Amsterdam, Hamburg and Nuremberg. Banko di Rialto was formed in Genoa in the year 1587. Bank of Amsterdam was founded in 1609. Bank of Hamburg came into existence in the 1960. This Bank rendered great service to the merchants as well as the countries it dealt with until 1873, when it was merged with the Reichbank..
Banking In The Sub-Continent
Banking has existed in the subcontinent since time immemorial. In the Hindu book of Vedic Epic, giving and taking of credit has been stated. Later on, Manu in his "Sammurti " clearly mentioned these transactions by saying: "A sensible man should deposit his money with a person of good family, of good conduct, well acquainted with the law, viracious, having many relatives wealthy and honorable." Manu has also prescribed the rules to govern the policy of loans and rates of interest. In the fifth century people were accustomed to use hundies. The ancient Indian bankers were also transferring the funds of their customers from one place to another with the help of hundies. These bankers were charging high rates of interest on the money lent to farmers against the mortgage of the standing crops; and sometimes at the rate was as high as 40 to 60 per cent per annum.
During Muslim period also banking received considerable impetus. Muslim rulers provided considerable encouragement to the farmers by giving them interest- free loans and grants in cash. Industrial development was not ignored at all. During this period, substantial qualities of textile, calico-printing and dyeing, pottery, china-ware, indigo, opium metal-work, paper, leather and sugar etc.were exported. Muslim historians of the 12th century have also mentioned some bankers known as "Multani" and "Shroffs" who were acting as agents to the government to collect revenue. Though the Muslim rulers did not establish "Bank" as such, yet they revolutionized the entire financial and monetary structure in India wherein the old "Sahokars" and "Mahajans" were eliminated.
Public Banks were not established in India till 1809 when the bank of Bengal was established. The bank was authorized to charge the maximum of 12% interest per annum, the power to issue Notes was not given to the bank till 1823 ; and the bank was allowed to open more branches in 1839. The year 1840 saw the establishment of the Bank of Bombay, followed by the Bank of Madras in 1843 with a Government subscription of Rs. 3 lacs each in their share capital. With the acceptance of limited liability concept, many joint stock banks were established. During the boom period of 1906 to 13, a number of joint stock Indian banks were established . With the passage of Imperial Bank of India Act in 1920, Peoples of Bank of India Limited, the Central Bank of India Limited, and the Bank of Baroda Limited were amalgamated into the Imperial Bank of India in 1921. With the passage of an act in the assembly, Reserve Bank of India started functioning in April 1935 as the Central Bank of India.
Banking facilities were well provided in those areas which constituted Pakistan. There were about 500 offices of scheduled banks in the territories now constituting Pakistan. Since Pakistan at that time was not in a position to establish her own banking system, It was arranged that the Reserve Bank of India should continue to function in Pakistan until 30th September 1948, so that the problems of time and demand liability, coinage, exchange etc. be settled between India and Pakistan. Unfortunately due to non-cooperation of Indian authorities., it was decided to establish our own central bank. The foreign expert advised that due to acute shortage of qualified staff the establishment of a Central Bank was not practicable. In spite of this state of affairs, the Govt of Pakistan decided to establish a full fledged Central Bank. Consequently the Governor General of Pakistan and the Father of the Nation, Quaid-i-Azam Mohammad Ali Jinnah inaugurated the State Bank of Pakistan on July 1948. Thus a landmark has been achieved with the establishment of our own Central Bank. In addition to 19 non-India foreign banks, thee were only two Pakistani banks i.e., Habib Bank and the Australasia Bank. In order to expand banking facilities in the country, the State Bank recommended expansion of Habib Bank and also establishment of a new bank which could serve as an agent of the State Bank. As a result, The National Bank of Pakistan came into being in 1949.
Although separation of East Pakistan has considerably disrupted the banking system of the country, yet the development of banking continued unabated. The network of branches now covers a very large semen of national economy. Besides increase in the number of bank branches, specialized credit and financial institutions have also developed over the years. Such institutions like National Investment Trust (N.I.T.), Investment Corporation of Pakistan (I.C.P.) and Small Business Finance Corporation etc. have been established which are catering to the financial needs of specific sectors.
Nationalization of banking sector has opened a new era of development of banking in the country. Considerable expansion has taken place in the banking sector and network of branches have considerably increased. Now the process of denationalization and privatization has started. Already Muslim Commercial, Allied Bank and United Bank have been privatized. Habib Bank Ltd., the largest commercial bank of the country is also in the process of denationalization. A much larger number of Private Banks have been established and these banks are providing valuable and competitive services to their customers. The contribution of these private banks is most valuable for the country.
Many authors define management as "the challenge of creating environment where people work together to achieve a common objective"
"Fayol" defines management as "the concept, techniques and process that enable goals to be achieved efficiently and effectively."
According To Koontz And O'Donnell:
It is the basic task of all managers at all levels and in all kinds of enterprises to design and maintain an environment in which individuals, working together in groups, can accomplish selected missions and objectives. In other words, managers are charged with responsibility of taking actions that will make their best contributions to group objectives.
According To Bateman and Snell:
Management is the process of working with people and resources to accomplish organizational goals. Good managers do those things both effectively and efficiently. To be effective is to achieve organizational goals. To be efficient is to achieve goals with minimum waste of resources, that is, to make the best possible use of money, time, materials, and people."
According To Ivancevich, Donnelly And Gibson:
Management is the process undertaken by one or more persons to coordinate the activities of other persons to achieve results not attainable by any one person acting alone.
According To Peter Drucker:
A management philosopher defines management as the sum of three major tasks:
( i ). To decide the purpose and mission of the institutor.
( ii ). To make the work productive, and
( iii). To manage social impacts and responsibilities.
According To Samuel C.Certo:
Management is the process of reaching organizational goals by working with and through people and other organizational resources.
All the above definitions put emphasis on three basic and common features of management, which are mentioned below:
1. Management as a process.
2. Achieving organizational goals.
3. Working with and through human and other assets.
According To Some Other Experts:
Management is the function of executive leadership any where.
Others say that:
Management is a technique by means of which the purpose and objectives of a particular human group are determined, classified and effectuated.
According To D.S. Cambell:
Management embraces all duties and functions that pertain to the initiation of an enterprise.
According To Terry:
Management is a process used for accomplishment of desired objective. Management signifies the process of putting human aims, knowledge, and skill in the effective actions. It is a decisive and productive action that leads to successful accomplishment.
The objectives of an organization are achieved by managing the use of resources i.e. money, material e.t.c. effectively and efficiently.
An audit is similar to any other research project, it consists of gathering of a considerable amount of information and then evaluating that information fairly and impersonally.
Audit technique may be used to describe the basic method of collecting evidence used by auditor. The technique in itself is not evidence, it supplies the evidence required by the auditor to inform him sufficiently on the subject that he can give a professional opinion.
Types of Techniques
Following are the basic techniques or methods of securing information:
1. Physical examination.
2. Confirmation.
3. Examination of original documents.
4. Re-computation.
5. Re-tracking book keeping procedures.
6. Scanning.
7. Inquiry.
8. Examination of subsidiary records.
9. Correlation with related information.
1. Physical Examination
The auditor examines the particular thing to assure himself of its existence. Physical examination requires identification of the item. One must be convinced that he was examined the specific thing which he is supposed to be verifying. Physical examination implies count, identification, verification of genuineness and quality. The applicability of this technique is restricted to those assets which are either material or some tangible evidence of existence, such as cash, inventories, fixed property etc.
2. Confirmation
It consists of obtaining a written statement from some one outside the enterprise on a fact which that person is qualified to affirm. It can be used to verify such various facts as the amounts owed to the company. amounts owed to the company, amounts on deposit in banks, the existence of inventory stored in a public warehouse.
The requirements for confirmation are:
( i ). that a reliable independent party be informed on the matter of interest to the auditor.
( ii ). that the statement of the informed party be obtained directly by the accountant with no possibility for influence or change by the company under examination.
3. Examinations of Original Documents
Examination of original documents included in this idea of documentary evidence for transactions are purchase and sales invoices, checks, remittance advices, insurance policies, contracts, stock certificates, purchase orders, receiving reports and a host of specialized papers. Examination of original documents implied that:
( i ). At least reasonable insurance of the authenticity of the document is obtained.
( ii ). The property of the transactions as being one appropriate to the particular company should be established.
( iii ). Approval of the transaction as evidence by appropriate signatures or supporting documents must be ascertained.
( iv ). Proper recording of the transaction must be established.
"Resonance of the documentary evidence can be had in two different ways"
1. All entries of a certain type for a given test period may be verified by reference to the appropriate business papers.
2. Individual transactions and entries in accounts may require substantiation, in which case the auditor calls for the specific documents which evidence those transactions.
4. Re-computation
Re-computation is one of the most widely used techniques as it is necessary at a great variety of points in the accounting process. Footing of books of original entry, ledger account balances, inventory extensions, depreciation and patents, and any other similar simple calculations require verification. The rule "never accept a client's tape" is a very practical one and should never be broken without a recognition of the risk which follows. The finality of a total on an adding machine tape is very impressive and necessary.
5. Re-tracing Book Keeping Procedures
Re-tracing book keeping procedures to discover any errors which may have been made in such book-keeping procedures as posting from books of original entry to the ledger, or in taking trial balances, it is necessary for the auditor to repeat that particular procedure. Thus it is necessary to trace a certain number of postings and to repeat the taking of a trial balance both of the general and the subsidiary ledgers.
6. Scanning
To scan means to scrutinize or to examine point by point. In auditing it refers to the critical study of an account, a book of original entry, or any other record or summary of information. In scanning a journal entry one should question the propriety of that journal entry for the particular concern, the reason for debits and credits of that particular type and finally the propriety of the entry itself as an application of generally accepted accounting principles.
7. Inquiry
It consists of asking questions and of obtaining satisfactory answers to those questions. The answers range from formal statements in writing to casual conversational comments. By a careful use of the questioning procedure one can learn a great deal about matters which might otherwise be obscure.
8. Examination of Subsidiary Records
Subsidiary records do constitute some evidence of the authenticity of the data in the records or report which they support. An auditor must be alert to the possibility of forged records. He must compare the controlling and subsidiary records carefully for any inconsistencies which might indicate a lack of the real relationship which is supposed to be there. When there is any reason to suspect that the subsidiary record is of recent and improper origin he can request evidence of the regular re-conciliation with or adjustment to the controlling account at regular intervals in the past.
9. Correlation With Related Information
Correlation with related information within the double entry system of accounting, there is a great tendency for items in one place to relate to those in another. The expression reconciliation is used to describe the process of relating one ledger account balance or other piece of Information to another. For example, the interest expense account is reconciled to the notes outstanding during the period, and the Insurance expense is reconciled with the changed in the balance of the prepaid Insurance Account.
1. There is no danger of any essential part of the work being overlooked or omitted.
2. Clerks engaged on an audit may be changed with the minimum of dislocation and waste of time.
3. The auditor is enabled more effectively to control the progress of several audits simultaneously.
4. The clerk responsible for a particular section of the work can be identified, and the responsibility for any errors passed can be fixed.
5. The program will furnish satisfactory evidence of the thoroughness of the audit in the event of the auditor being changed with negligence in the performance of his duties.
Disadvantages of An Audit Program
Following are the disadvantages of an audit program:
1.The work of the audit may tend to become mechanical, and initiative on the part of clerks engaged on the audit may be discouraged.
2. Unless the program is reviewed frequently in the light of experience, the audit may not be conducted according to the changes in the nature of the business or in the book- keeping system.
These disadvantages are not serious at all and can be easily removed if it is impressed on the audit clerks that the program is merely a guide and a minimum statement of the work to be done, if the are encouraged to make suggestions for its improvement, and if it periodically revised.
Accounting situation vary considerably from one from one enterprise to another. The nature of the problems to be dealt with, variations in size of the enterprise, the extent of the internal control in existence, and extent of auditor's assignment involve various types of verification problems. Because of such variations, an audit program to specify what work is to be done becomes a necessity in order to provide and peculiarities of the specific situation and to avoid waste of time on such matters which are not pertinent to the engagement..Therefore, it is advisable to prepare an audit program before commencing any verification problem. An audit program is a planned procedure of examination. It is the list of the verification steps to be applied set out in such a way that interrelationships of one procedure to another are clearly shown.
Purpose of An Audit Program
An audit program is prepared with the following purposes:
1. That it serves as a plan of attack on the particular verification problem at hand.
2. That it contains instructions to assistants engaged in the audit.
3. That it serves as a record of the work done during the verification process. Such record is required:
(a). as a basis for review by a superior of the work done.
(b). as evidence of the extent of the verification.
(c). as proof that the work was actually done if such proof ever becomes necessary.
Construction of An Audit Program
An audit program consists of a series of verification procedures to be applied to the financial statements and accounts of an enterprise for the purpose of obtaining best evidence so that auditor can give his opinion about the accuracy or inaccuracy of them. Construction of audit program consists of selecting and putting together the specific audit techniques to be used in a given case.
Construction of Various Factors
While preparing the audit program, an auditor must give consideration to the following factors:
1. Scope and limitation of assignment.
2. Obtaining best evidence possible.
3. Using procedures applicable in the circumstances.
4. Covering all possibilities of errors.
5. Coordinating group related items.
1. Scoping And Limitation of Assignment
An auditor can do no more than he is permitted to do by the terms of his assignment. The scope of the assignment is a matter of agreement between the auditor and the enterprise whose records are to be examined. The agreement may call for any thing from a detailed verification of every transaction to a review of a limited number of transactions.
2. Obtaining Best Evidence Possible
Obtaining best evidence possible in selecting the procedures to be applied. the auditor should attempt to get the best evidence possible in every case. He must supplement the results with tests until he is certain that the facts are as stated.
3. Using Procedures Applicable In The Circumstances
The auditor must know what records the enterprise maintains, who maintains them, and what controls are in existence to eliminate or reduce the possibilities of errors. The review of internal control and the construction of audit program go hand in hand and must be closely related.
4. Covering All Possibilities of Errors
An audit program should provide procedure aimed at detecting any error that may fall withing the scope of the examination agreement. This requires a sound knowledge of types and possibilities of error, plus considerable skill in weaving together the various audit steps.
5. Coordinating Group Related Items
The auditor should group alike procedure in the most natural manner possible, for example, to verify two groups of asset and expense items, it seems logical to assign them both to the same member of the audit staff.
Types of Audit Program
Some auditors use printed programs which cover special sections of the work such as cash, cash transactions and the detailed or general work. Such pre- established programs require modification to make them applicable to specific situations.
Others use their own program for each situation relying on their own knowledge of auditing techniques and experience.
Stages of Audit Program
Broadly speaking, the audit program of a trading concern can be divided in to the following stages:
1. Vouching of the receipts and payments.
2. Checking of postings of all receipts and payments to proper ledger accounts.
3. Verification of the opening balances, and closing balances of all books including the Bank Pass Book and Cash Book.
4. Verification of the valuation of assets.
5. Verification of outstanding liabilities.
6. Examination of the rate of depreciation on assets and reserves.
