The blueprint of the paper

Since 2069 Chaitra the paper walks the syllabus from front to back, so the question number tells you the chapter before you read it. The table counts papers: of the 22 papers in this layout, how many took each question from each chapter.

• Ten questions in 21 of these 22 papers, all to be answered; 2070 Ashad set 12 and asked for any ten.
• Chapters 4 and 5 close the paper: in 29 of the 31 questions that touch case studies or MIS, they sit in the last two questions or a short note.
• The older six question paper (14 papers) asked for any five of the six and put MIS third: Q3 was chapter 5 in 13, and Q6 was short notes in 14.

The six question paper, 2057 Chaitra to 2068 Chaitra

What to study first

These topics were asked in 12 or more of the 36 sittings. Learn them before anything else; each link opens its card.

1. Personnel management: getting, growing and keeping people TOP 21/36
2. What an organization is: people, a purpose and a structure TOP 20/36
3. Marketing: start from the customer, end with a satisfied one TOP 20/36
4. What moves people to work: motivation and human needs TOP 20/36
5. The right information to the right manager at the right time TOP 20/36
6. What management is: getting things done through people TOP 17/36
7. Taylor's scientific management: find the one best way TOP 15/36
8. Formal and informal organization: the chart and the grapevine TOP 15/36
9. Leadership: influence that people follow willingly TOP 15/36
10. What computers changed, and the systems they made possible TOP 15/36
11. The five functions: plan, organize, direct, coordinate, control TOP 14/36
12. Job analysis, job description and job specification TOP 14/36
13. Scientific selection: a funnel of hurdles TOP 14/36
14. Autocratic, democratic, laissez faire: who makes the decision TOP 14/36
15. Each level of management needs different information TOP 13/36
16. Principles of organization: dividing the work, ordering the authority TOP 12/36
17. Purchasing: the right goods, at the right price, at the right time TOP 12/36
18. Why organizations exist, and what they do for society and for their people TOP 12/36
19. Wages, salary and the pay structure TOP 12/36
20. Maslow's hierarchy of needs: five needs, climbed in order TOP 12/36
21. Four approaches: traits, behaviour, situation, and all three together TOP 12/36
22. Entrepreneurship: an idea, a risk and the will to build a business TOP 12/36

What an organization is: people, a purpose and a structure TOP 20/36

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Two senses of one word. "Organization" names an entity (a bank, Nepal Electricity Authority, a campus) and also a process: organizing, the management function that arranges work, authority and relationships. A full definition gives one sentence for each sense.

• Chester Barnard (1938): "a system of consciously coordinated activities or forces of two or more persons". The shortest definition, and the root of the idea of formal organization.
• Stephen Robbins: a consciously coordinated social unit of two or more people that works on a relatively continuous basis to achieve a common goal or set of goals.
• Louis Allen (the process sense): identifying and grouping the work, defining and delegating responsibility and authority, and establishing relationships so that people work together most effectively towards objectives.

Characteristics. Whatever its size or purpose, every organization shows the same features:

• A group of people: at least two, each playing a role.
• Common goals: the reason the group exists and the test of its success.
• Division of work: the total task is split into jobs so that people specialize.
• A structure of authority: positions arranged in a hierarchy, each with defined authority and responsibility.
• Coordination and communication: the separate jobs are tied back together towards the goal.
• Rules and procedures that make behaviour predictable.
• Continuity: it outlives any one member.
• Openness: it takes inputs from its environment and returns outputs to it (the organization as a system).

The elements of an organization

Elements are the building blocks that every organization is made of:

• People: the members, with their skills, needs and attitudes.
• Goals: the common purpose that directs every effort.
• Structure: division of work, positions, authority and reporting relationships, drawn as the organization chart.
• Tasks and technology: the work to be done and the tools, machines, methods and knowledge used to do it.
• Resources: money, materials, machines and information.
• Communication and coordination: the flows that tie the parts together.
• Environment: customers, competitors, suppliers, government and society, which supply the inputs and judge the outputs.

Barnard's three elements are the classic short answer: communication, willingness to serve (to cooperate) and a common purpose. Take away any one and the group falls apart. The course notes' four conditions for cooperation (why organizations exist) are the same idea.

Organization as a system, and as a social system

Three systems at once. The course notes describe every organization as three overlapping systems:

Organization as a social system means it is people interacting, not a machine of positions. Each member holds a role, groups form, norms and a culture grow, and behaviour is shaped by these relationships as much as by the chart or by pay.

The proof came from the Hawthorne studies (behavioral management), and it is why an informal organization grows inside every formal one (formal and informal organization).

Historical development of organization

1. Early groups: families, clans and tribes that hunted and farmed together were the first organizations, formed to survive.
2. Ancient states, armies and temples: the pyramids of Egypt, the Roman army and the Church needed hierarchy, division of work and a chain of command on a large scale. Chanakya's Arthashastra (about 300 BC) set out how to organize a state's departments.
3. Guilds of the middle ages: craftsmen and traders organized by trade, with masters, journeymen and apprentices.
4. The Industrial Revolution (Britain, from the late eighteenth century): the factory put hundreds of workers under one roof; Adam Smith (1776) explained the gain from division of labour; joint stock companies separated owners from managers.
5. Classical theory (about 1900 to 1930): Taylor, Fayol and Max Weber saw the organization as a rational machine of rules, specialization and hierarchy.
6. Human relations (1920s to 1950s): the Hawthorne studies found that the organization is also a social system, with informal groups.
7. Modern period (1960s onwards): the systems and contingency views treat it as an open system that must fit its environment; computers and the internet brought flatter, matrix, network and virtual organizations.

In Nepal the same path shows. The guthi of the Newar community is an old organization that runs temples, festivals and funerals collectively. Modern companies begin with Biratnagar Jute Mills (1936) and Nepal Bank Limited (1937), the first bank. Today a company is registered with the Office of the Company Registrar under the Companies Act 2063 (2006).

Why an organization must set goals

Goals are the results an organization commits itself to reach. Everything else is measured against them:

• Direction: every member knows what the organization is trying to do, so effort is not scattered.
• Basis of planning: plans, budgets and schedules are worked out backwards from the goals.
• Standard for control: actual results are compared with the goal and corrected.
• Motivation: clear, challenging goals raise effort; Edwin Locke's goal setting research found that specific hard goals beat "do your best".
• Coordination: departments pulling towards one goal pull together (unity of objective).
• Decisions and resources: the goal is the test for choosing between options and dividing the budget.
• Trust: owners, lenders and the public judge the organization by its stated goals.

Good goals are SMART: specific, measurable, achievable, relevant and time bound. "Grow" is a wish; "connect 20,000 new fibre customers in Pokhara this fiscal year" lets the network, sales and hiring teams each plan their share. The same logic drives management by objectives (appraisal) and the goal concentrated model (models of management).

Organization and management: the difference

In one line: management decides and drives; organization is the structure it builds and works through (what management is).

Why organizations exist, and what they do for society and for their people TOP 12/36

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Synergy is the word for it: the organized whole produces more than its members working separately. One person cannot build a hydropower plant, run a hospital or connect a country by phone; organized groups do all three.

Why we need organization: its importance

• Goals beyond one person: a power plant, a hospital or a telecom network needs thousands of coordinated people.
• Specialization: division of work lets each person do what he does best and get better at it.
• Optimum use of resources: men, money, materials and machines go where they add most, with less waste and duplication.
• Coordination: clear roles prevent overlapping work, gaps and conflict.
• Clear authority and responsibility: everyone knows who decides and who answers for what.
• Growth and adaptation: a sound structure can add products, branches and people, and change with technology.
• Continuity: the organization outlives its founders; Nepal Bank Limited has worked since 1937.
• Human satisfaction: it meets people's needs for income, security, belonging and recognition.

Four conditions make cooperation work (course notes): the objective must be common to the whole organization; rules and regulations must be organized so that conflict and confusion do not occur; people must be willing to cooperate; and there must be strong communication between members. They mirror Barnard's three elements (what an organization is).

Importance and impact of organizations in society

The goals organizations pursue ripple out into society, directly or indirectly. The impact is mostly positive, but an honest answer names the costs too:

Nepal example. Community forest user groups, formed by villagers to protect and use their local forest, helped turn bare hillsides green again while giving households fuel, fodder and income: ordinary people, organized, changing a landscape.

What an organization does for an employee's professional growth

• Training: induction, on the job training and courses build skills (training and development).
• Experience and exposure: real projects, clients, tools and technology that no classroom gives.
• Mentoring: seniors teach, review the work and pass on judgment.
• Feedback: performance appraisal shows strengths and gaps (appraisal).
• Career ladder: promotion from operating to supervisory to managerial posts (levels of management).
• Responsibility: delegated authority teaches decision making and leadership.
• Network and reputation: colleagues, clients and a known employer open later doors.
• Income and security: pay and benefits fund further study and a stable life.
• Professional standards: discipline, ethics and codes, such as registration with the Nepal Engineering Council.

Worked example. A fresh computer engineer joins a Kathmandu software company: a month of induction, code reviewed by a senior every day, a first appraisal after a year, a module to lead in the second year, a team to lead a few years on. Freelancing alone, the same person learns only what he can find for himself.

Life without organization

No, not above bare survival. A person alone might grow enough food to live, but everything that makes modern life (water supply, electricity, schools, hospitals, banks, roads, law and order) is organized cooperation. Even the family and the tole committee are organizations.

Without organization there would be duplication, conflict, no specialization and no continuity. The COVID-19 lockdown, when supply chains stalled, showed how quickly daily life suffers when organizations stop working.

Are people dominated by organizations rather than by individuals?

The meaning: in a modern society a person's life is shaped less by other individuals than by organizations and their rules. It is largely true:

• An organizational society: Amitai Etzioni (1964) observed that we are born in organizations, educated by them, work for them and spend much of our leisure in them.
• Decisions come from institutions: a bank's credit policy, a university's exam rules or the government's budget affect millions, and no single person can overturn them.
• Authority belongs to positions, not persons: a new chief takes over the same powers; Max Weber called this legal rational authority.
• Rules outlast people: members come and go, the organization and its culture continue.

The other side: individuals still create and change organizations (founders, leaders, reformers), informal groups resist rules they dislike, and in Nepal personal connections (afno manchhe) still bend formal procedures.

Verdict: people are increasingly governed by organizations; good management makes the organization serve its people rather than dominate them.

Principles of organization: dividing the work, ordering the authority TOP 12/36

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Where they come from. The course notes list five and credit them to Fayol; they are also called principles of management. Four of the five are among Fayol's fourteen; span of control was formalized by V. A. Graicunas and Lyndall Urwick in the 1930s. Textbooks add a few more.

The five principles in the course notes

1. Division of work (division of labour): the total work is split into separate jobs, each given to the person best suited, so people specialize and become faster and better. Example: a software firm splits a project among analysts, developers and testers.
2. Authority and responsibility: authority is the right to decide and direct; responsibility is the obligation to do the work. The two must go together and be equal. Example: a site engineer held responsible for concrete quality must have the authority to reject a bad batch of cement.
3. Span of control: the number of people reporting directly to one superior. The notes' typical case is about 20 workers under a supervisor and 6 supervisors under a manager (explained below).
4. Scalar chain (chain of command): authority flows from top to bottom in an unbroken line, which makes clear who is above whom at every level. Example: in Nepal's civil service a section officer reports to an under secretary, then a joint secretary, then the secretary.
5. Unity of command: one subordinate, one superior; every worker takes orders from only one boss. Example: a lab assistant given clashing orders by two lecturers cannot satisfy both, and is blamed by one of them.

Adam Smith's pin factory (1776) is the classic proof of division of work: ten workers, each doing one step, made about 48,000 pins a day, where each working alone could hardly have made twenty.

• Why it pays (Smith's three reasons): each worker gains dexterity by repeating one task, no time is lost passing from one task to another, and simple repeated tasks invite machines to do them.
• What it costs: monotony and boredom, narrow skills, every job depending on the others, and more coordination to tie the pieces back together.

Fayol's gang plank softens the scalar chain: two people at the same level in different branches may deal directly, with their superiors' consent, when going up and down the chain would waste time.

Principles the textbooks add

• Unity of objective: every department and job serves the common goal.
• Coordination: the divided work is tied back together in time and effort.
• Balance: between centralization and decentralization, span and number of levels, line and staff.
• Flexibility: the structure absorbs growth and change without being torn up.
• Continuity: the organization provides for replacing people, so it outlives them.
• Exception: routine decisions are taken low down; only exceptional ones go up.
• Efficiency and simplicity: the goals are reached at least cost, with as few levels and rules as will do.

Span of control in depth

Span of control (span of management) is the number of subordinates a manager can supervise directly and effectively. It fixes the shape of the organization: a narrow span needs more managers and more levels (a tall structure); a wide span needs fewer (a flat structure).

Why it is limited: Graicunas (1933) showed that the relationships a manager must handle (direct, group and cross relationships) grow far faster than the number of subordinates $n$: $C=n(2^{n-1}+n-1)$. Four subordinates give 44 relationships, five give 100 and six give 222.

Urwick's rule follows: no superior can directly supervise more than five, at most six, subordinates whose work interlocks. Lower down, where work is routine and alike, spans are much wider, which is why the notes put 20 workers under one supervisor.

Factors that set the span:

• Nature of work: routine, similar jobs allow a wide span; complex, varied ones need a narrow one.
• Ability of the manager and training of the subordinates.
• Delegation and clear plans: subordinates who know what to do and may decide need less supervision.
• Communication tools: standard procedures and information systems widen the span.
• Physical dispersion: people spread over many sites are harder to supervise.
• Level: spans are narrow at the top and wide at the bottom.

Worked example. A factory has 720 workers. With the notes' spans (20 per supervisor, 6 per manager, 6 managers under the general manager) it needs 36 supervisors, 6 managers and 1 general manager: 43 managers on three levels.

With a span of 4 at every level it needs 180 supervisors, 45 section heads, 12 managers, 3 senior managers and 1 general manager: 241 managers on five levels, and every instruction passes through four intermediate managers instead of two.

Span of control in a line organization. A line organization has no staff specialists to share the load, so each superior personally instructs, supervises and decides for everyone below him. The workable span stays small, and as the firm grows the only way to add people is to add levels.

The result is a longer chain, slower messages and an overloaded top, the chief weakness of line organization.

Why the principles matter:

• A tested basis for designing a structure instead of trial and error.
• Clarity: everyone knows his duties, his authority and his boss.
• No duplication, conflict or confusion between people and departments.
• Faster communication and decisions along known channels.
• Growth without loss of control, and easier training of new managers.

Authority, responsibility, accountability and power HOT 9/36

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Accountability completes the triangle: the subordinate must answer to his superior for how he used the authority and carried out the responsibility. Authority flows down; responsibility and accountability flow up.

Features of authority:

• Legitimate: granted by the organization and backed by ownership and law.
• Attached to the position, not the person: a new manager has it on the first day.
• Flows downward along the scalar chain.
• Can be delegated in part to subordinates.
• Limited by law, company policy, higher authority, budgets and social norms.

Where authority comes from, three views:

• Formal (legal) theory: it flows from ownership and law: shareholders elect the board, the board appoints the chief executive, who delegates down the line.
• Acceptance theory (Chester Barnard): an order carries authority only if the subordinate accepts it; orders within his "zone of indifference" are obeyed without question.
• Competence theory: people obey someone for his knowledge or skill, whatever his position.

Kinds of authority: line authority to command, staff authority only to advise, and functional authority over one specialized function in other departments (line and staff, functional organization).

Features of responsibility:

• Arises from the superior and subordinate relationship when a duty is assigned.
• Flows upward: the subordinate is responsible to his superior.
• Cannot be delegated away: a manager may pass on the work, but stays finally responsible to his own superior for it.
• Must equal authority (parity): too much authority invites misuse; responsibility without authority breeds frustration and failure.

Delegation ties the three together through three elements: assignment of duties, grant of authority and creation of accountability.

Worked example. A project manager tells a site engineer to buy the cement for the next floor (duty), lets him sign purchase orders up to a set limit (authority), and asks for a weekly report on stock and spending (accountability). If the cement fails, the project manager still answers to the client.

Power, and how it differs from authority

Authority is one kind of power: the legitimate power the organization attaches to a position. Power is wider: it can come from outside the chart and flow in any direction.

Example. In a government office the section officer has the authority to forward a file, but a senior assistant who knows every rule and controls where the file goes often has more practical power. Good managers join the two.

Sources of power in the organization

French and Raven (1959) named five bases of power, the standard answer:

• Legitimate power: from the position itself; people accept that the post holder may give orders. This is authority.
• Reward power: control over what people want: pay rises, promotion, good assignments, leave.
• Coercive power: the ability to punish: warnings, transfers, demotion, dismissal.
• Expert power: knowledge or skill that others need, like the only engineer who can repair the plant's control system.
• Referent power: admiration and personal liking; people follow someone they identify with.

Positional and personal: the first three go with the post, the last two with the person. Raven later added information power.

Organizational sources add to these: control of scarce resources and budgets, a central place in the workflow, access to top management, and collective strength such as a trade union. A leader's power over followers is the same set seen from the other side (leadership).

Formal and informal organization: the chart and the grapevine TOP 15/36

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How the informal side grows (course notes): inside every formal organization, people who share a language, culture, attitudes, tastes, a hometown or a hobby drift into groups through tea breaks, lunches, festivals and social functions.

It exists to satisfy social needs, not organizational ones, yet it strongly shapes how people work. Management that understands it can use it to raise productivity.

The rows serve both questions: read down one column for the characteristics of each, across the rows for the differences.

Role and need of informal organization in management

Do we need it? Yes, and it cannot be abolished anyway: management can only choose to work with it or against it. Used well, it does what the formal structure cannot:

• Satisfies social needs: friendship, belonging and recognition raise morale and cut turnover.
• Fast communication: the grapevine carries news in hours that memos take days to spread.
• Fills the gaps: people help each other with jobs no rule foresaw.
• Teamwork and support: groups cover for absent colleagues and teach newcomers the ropes.
• Safety valve: members let off frustration among friends instead of against the organization.
• Lighter supervision: a group that accepts a goal polices itself.
• Feedback: through it managers learn what employees really think.

Its problems: rumours on the grapevine, resistance to change, and pressure to conform; the Hawthorne bank wiring group punished members who produced too much or too little (behavioral management). Loyalty to the group can clash with loyalty to the organization, and an informal leader may work against management.

How a manager uses it: accept it, find the informal leaders and consult them, feed accurate information into the grapevine, keep group interests in line with the organization's goals, and never threaten a group needlessly.

The informal leader emerges through seniority, skill, helpfulness or personality, not appointment. The notes stress that he can hold more real influence over getting things done than the formal leader: when the senior technician says the new schedule will not work, the crew believes him, not the manager.

Winning him over is often the quickest way to win the group (leadership).

Can a family hold an informal organization?

Yes. Informal organization grows wherever people interact over time, whatever the formal setting. A family is mostly an informal, primary group, but it has a formal side: a recognized head (in a Nepali joint family, usually the eldest), assigned household duties, and rules of property and inheritance set by custom and law.

In a family business the formal side is sharper: family members hold posts such as chairman and managing director, with a chart and written rules like any company.

Within that frame the informal organization appears: cousins who side together, daughters-in-law who cook and confide together, grandparents allied with grandchildren, a family grapevine that spreads news before the head announces it, and an informal leader (the aunt whose word settles a wedding date) whose influence can exceed the formal head's.

The point: informal organization depends on people and their relationships, not on the kind of formal organization around them.

What management is: getting things done through people TOP 17/36

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The brain of the organization. The course notes call management the brain that coordinates human, material and technological resources. It is as old as civilization: Sun Tzu's The Art of War (6th century BC) and Chanakya's Arthashastra (about 300 BC) are early manuals of it.

• Mary Parker Follett: "the art of getting things done through people".
• F. W. Taylor: knowing exactly what you want men to do, and then seeing that they do it in the best and cheapest way.
• Henri Fayol: to manage is to forecast and plan, to organize, to command, to coordinate and to control.
• Koontz and Weihrich: the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims.

Effective and efficient differ: effectiveness is reaching the right goal (doing the right things), efficiency is reaching it with the least waste (doing things right), in Peter Drucker's phrasing. Management needs both.

Characteristics of management:

• Goal oriented: it exists to reach definite objectives.
• Universal: needed in a firm, a hospital, a government office, a club, in every country.
• A continuous process of planning, organizing, directing, coordinating and controlling.
• A group activity that works through others rather than doing the work itself.
• Intangible: it cannot be seen; only its results can.
• Multidisciplinary: it draws on economics, psychology, sociology, engineering and statistics.
• Dynamic: it adapts to a changing environment.
• A system of authority running down the levels of management.
• Both a science and an art, and a developing profession.

Management as a science and an art

A science is a systematic body of knowledge whose principles come from observation and experiment and hold generally. Management has this: Taylor's time and motion studies measured the best way to do a job, and techniques such as the economic order quantity give answers any trained manager can reproduce.

But an inexact science, because people do not respond like materials: its principles are guides, not laws.

An art is the personal skill of applying knowledge to get a desired result, improved by practice and marked by creativity and style. Management has this too: two managers who know the same principles handle a strike, a demoralized team or a difficult client with very different results.

Verdict: both, and they complement each other. The science is the knowledge; the art is using it well in a particular situation. Medicine is the usual comparison: a science to learn, an art to practise. Management is also becoming a profession (formal study, codes of conduct), though unlike engineering it needs no licence.

Importance of management

The course notes give four reasons: proper planning (deciding what is to be achieved), proper organizing (allocating resources and setting up the means), proper influence (motivating and leading people towards the goal) and controlling (comparing results with the goals). The textbooks add:

• Achieves group goals that individuals cannot.
• Optimum use of resources: less waste of men, money, materials and machines.
• Sound organization: clear roles, authority and coordination.
• Adapts to change and brings innovation.
• Develops people and creates employment.
• Drives national development: a country is often held back more by poor management than by poor resources.

Same resources, different management. The end of daily load-shedding in Nepal in the late 2010s is widely credited to better management at Nepal Electricity Authority (tighter control of leakage and of favoured supply, and better planned imports) as much as to new power plants.

Qualities of a good manager

Fayol's six are the classic list: physical (health, vigour), mental (judgment, ability to learn, adaptability), moral (energy, firmness, initiative, loyalty, tact, willingness to accept responsibility), general education, special knowledge of the function managed, and experience. In today's terms:

• Leadership and vision: sets direction and makes people want to follow.
• Communication: listens, explains and persuades.
• Decision making: decides on time, even with incomplete information.
• Integrity and fairness: the team can trust him.
• Human relations: understands, motivates and develops people.
• Delegation: trusts others with authority.
• Technical competence in his field, and adaptability to change.
• Discipline and time management.

Roles a manager plays

Henry Mintzberg (1973) watched managers at work and found ten roles in three groups. The course notes list the three groups as interpersonal, informational and decisional "skills"; in the textbooks they are roles, while Katz's skills are technical, human and conceptual (managerial skills).

The policy group and the executive group

Two groups run every sizeable organization. The policy group (administration) decides what the organization will do: its objectives, policies, major plans and budget. It is the board of directors elected by the shareholders, with the chairman and managing director.

The executive group (management) carries those policies out: the general manager, the departmental heads and the supervisors. Oliver Sheldon (1923) put it as administration determining policy and management executing it within the limits administration sets.

Nepal example. In a public company the board of directors elected at the annual general meeting approves policy and budget; the chief executive and department heads run the business. In government the Council of Ministers sets policy and the civil service executes it.

In practice the line blurs, since top managers also execute, and many writers (Koontz among them) use administration and management as one idea. How management differs from organization is on the organization card.

The five functions: plan, organize, direct, coordinate, control TOP 14/36

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Where the list comes from. Fayol (1916) named five elements of management: to plan, organize, command, coordinate and control. Luther Gulick (1937) stretched them to seven, POSDCORB: planning, organizing, staffing, directing, coordinating, reporting and budgeting.

Koontz uses planning, organizing, staffing, leading and controlling, and treats coordination as the essence of all of them. The notes' PODCC is Fayol's list with command renamed directing.

Running example: a Kathmandu software company has won a contract to build a hospital's billing system in six months.

1. Planning, thinking before doing: deciding in advance what to do, how, when and by whom; setting objectives, forecasting, and preparing policies, programmes, budgets and schedules. It is the primary function, since every other one serves a plan. Example: fix the features, three releases in six months, a budget and a team of eight.
2. Organizing, building the framework: identifying and grouping the activities, assigning them to people, delegating authority and fixing who reports to whom, so that personnel, work and resources are related. Example: backend, frontend and testing teams under one project manager, with the test lead able to stop a release.
3. Staffing (separate in POSDCORB and in Koontz, part of organizing in the notes): filling the posts through manpower planning, recruitment, selection, training and pay, the whole of chapter 2. Example: hiring two testers and training them in hospital billing rules.
4. Directing, leading people to act: guiding, instructing, motivating, communicating with and supervising people so that they work willingly towards the objectives; it needs leadership (chapter 3). Example: a daily stand-up meeting, clearing blockers, praising the team after the first release.
5. Coordinating, making the parts work as one: harmonizing the efforts of individuals and departments in timing and direction, through communication, so that all work towards the same goal. Example: getting the frontend and backend teams to agree the interfaces, and keeping the hospital's accounts staff in step.
6. Controlling, checking and correcting: setting standards, measuring performance, comparing it with the plan and correcting deviations. Example: the weekly review shows release one two weeks late, so a developer is added and a minor report is postponed.

The functions form a cycle, not a queue. Control results feed the next plan, and in a real week a manager plans, organizes, directs, coordinates and controls all at once.

Planning and controlling are twins: a plan without control is a wish, and control without a plan has nothing to measure against.

The two principal functions

Planning and controlling is the strongest pair to defend:

• Planning comes first: it sets the goals and standards that organizing, staffing and directing then serve; badly planned work cannot be rescued later.
• Controlling closes the loop: it shows whether the plan is being met and forces correction before small slips become failures.
• Together they make management self-correcting: plan, measure, correct, plan again.
• Nepal shows the cost of neglecting them: Kathmandu's Melamchi water project, delivered more than a decade behind its first schedule, is the familiar case of weak planning and control over time and contractors.

A defensible alternative is planning and directing, because directing is where work actually gets done through people, the very definition of management. Either pair stands if the reasons are given.

Why the functions matter: together they turn goals into results, keep resources from being wasted, keep departments pulling together, and let the organization notice change and adjust. How the same functions look at the top, middle and bottom is on levels of management.

Three levels of management: top, middle and lower HOT 7/36

82 Bh · 80 Bh · 78 Bh · 75 Ash · 72 Ch · 69 Ch · 63 Ash3+2+34+42+6

The number and shape of the levels depend on the organization's size, complexity and nature (course notes): a tea shop has one, a bank or a hydropower company three or more.

Why there are levels at all

• Limited span of control: no one can supervise hundreds of people directly, so supervisors are needed, then managers over them (span of control).
• Division of managerial work: long range strategy, departmental coordination and daily supervision need different knowledge, time horizons and skills.
• Delegation: the top can concentrate on policy only if others handle execution.
• A clear chain of command: everyone knows whom he reports to and who answers for what.
• Coordination: each level links the one above with the one below.
• A career path: levels give a ladder for promotion and a pool of successors.

The functions of management at each level

The pattern: going up, planning reaches further ahead and takes more of the day, and directing is done through policy rather than by instruction; going down, directing and controlling become daily and hands-on.

Worked example: a commercial bank in Nepal. The board and the chief executive decide to open twenty branches and launch a mobile banking app (top). The province heads and the heads of credit, IT and operations plan the branches and build the app (middle). Branch supervisors run the counters and the cash every day (lower).

Each level needs a different mix of skills (managerial skills) and different information (MIS and the levels of management).

Managerial skills: technical, human and conceptual HOT 7/36

82 Ba · 81 Bh · 81 Ba · 78 Bh · 76 Ch · 72 Ch · 71 Shr4+41+3+41+4+3

• Technical skill: knowledge of, and proficiency in, the methods, processes, procedures and tools of a specialized field. Example: a site engineer reading structural drawings and testing concrete; a supervisor who can run the machine he supervises.
• Human skill: the ability to work with and through people: to understand, motivate, communicate with and lead them, and to build a cooperative team. Example: a foreman settling a quarrel between two masons before it stops the work.
• Conceptual skill: the ability to see the organization as a whole, how its parts depend on each other and on the environment, and to analyse complex situations and plan ahead. Example: a bank's chief executive seeing how a new digital wallet will affect branches, IT, staff and profit together.

The degree of each skill at each level

Moving up, conceptual skill grows and technical skill shrinks; human skill is needed equally at every level. Lower managers work directly with operators, machines and procedures, so they must know the technique. Top managers deal with the whole organization, the long run and the environment, so they must think in concepts. Everyone manages people.

Worked example: one engineer's career at Nepal Electricity Authority. At a substation he lives on technical skill (protection relays, maintenance schedules) and needs human skill to lead the linemen. Heading a regional office, he spends his days coordinating stations, budgets and people: human skill, with more conceptual.

As managing director he weighs tariffs, imports and investment for the whole country: conceptual skill above all, with others supplying the technique.

Skills later writers add: design skill (Koontz: solving problems in ways that work for the enterprise, not only spotting them), diagnostic and analytical skill, decision making, communication and time management.

Skills a modern manager needs

• Digital and data literacy: reading dashboards, using ERP and information systems, judging data (MIS).
• Communication in person and online, with remote and hybrid teams.
• Emotional intelligence: managing his own emotions and reading others'.
• Change management and adaptability: technology and markets shift every year.
• Innovation and an entrepreneurial eye for opportunities.
• Ethical judgment and social responsibility.
• Cross-cultural awareness: foreign clients, international partners, a workforce from many places.
• Negotiation and conflict resolution.

The course notes' three skills

The notes list three different skills: interpersonal (dealing well with people inside and outside the organization), informational (gathering information relevant to its goals and operations) and decisional (using that information to make decisions that benefit it).

These are Henry Mintzberg's three groups of managerial roles, not Katz's skills (roles a manager plays). A full answer gives Katz's three with the degree at each level, then adds the notes' three under the name the course uses: interpersonal draws on human skill, decisional on conceptual skill.

Six models of management HOT 6/36

81 Bh · 80 Bh · 76 Ash · 70 Ch · 64 Ka · 61 Ba4+43+54

1. Hierarchical model. Managers receive authority from their superiors and use it to command resources and the actions of subordinates, while responding to requests from above. Order and accountability are clear, but decisions are slow and initiative low.

Example: in Nepal's civil service an order passes from the secretary to the joint secretary, the under secretary and the section officer.

2. Task oriented model. Management is five major tasks (planning, organizing, directing, coordinating, controlling), each with its own tools (schedules, charts, budgets, reports), done in sequence or in parallel. It is systematic and easy to teach, but can neglect people.

Example: a contractor runs a school building project from a bar chart of tasks, checking every week which task is behind.

3. Allocational model. The manager's job is handling the organization's resources (money, manpower, physical objects): obtaining them, allocating them, sharing them between units, monitoring their use and returning them. It suits resource-heavy operations.

Example: a hospital administrator divides beds, nursing rosters and the medicine budget between wards; a software firm moves developers between projects.

4. Team effort model. Managers and subordinates work together as a team, stressing cooperation, leadership and coordination; the notes call it more effective, and more value adding, than individual work. Detail below.

5. Knowledge oriented model. Managers gain knowledge through experience and pass it on by teaching, guiding and training, which the organization needs to adapt to a changing environment.

Example: senior engineers in a software company run code reviews and training sessions, so that knowledge stays when people leave.

6. Goal concentrated model. The organization focuses squarely on its goals, and management supplies the tools (targets, budgets, progress reviews) that keep it on the established path.

Example: management by objectives (appraisal); the Visit Nepal 2020 campaign, which organized the tourism bodies around a target of two million visitors.

The team effort model in detail

The idea: the manager is a coach inside the team rather than a commander above it; the team shares the goal, the work and the credit.

• Features: a shared goal; collective responsibility; members join in decisions; open communication; trust and mutual support; complementary skills; a manager who facilitates.
• Advantages: better decisions from pooled knowledge; higher motivation and morale; flexibility; creativity; members learn from each other; synergy.
• Limitations: slower decisions; groupthink; free riders who hide in the team; conflict; blurred individual accountability; it needs skilled, trusting members.

Worked example: an Everest expedition. The leader, the Sherpa climbing team who fix ropes and carry loads, the base camp manager, the cook and the doctor all work to one goal; no climber reaches the summit on individual effort alone.

In offices the same model appears as Rensis Likert's linking pin (each manager leads the team below and is a member of the team above) and as the 9,9 team management of the managerial grid.

The transactional management model

The older papers' name for managing by exchange. The manager sets clear tasks and standards, then trades rewards (pay, bonus, promotion) for tasks done and penalties for failure, stepping in only when results stray from standard (management by exception).

Its roots are the transactional leadership of James MacGregor Burns (1978) and Bernard Bass (1985), set against transformational leadership, which inspires people beyond the deal. The notes' task oriented model is its nearest relative: both run the organization as defined tasks to be completed.

• Strengths: clear expectations, easy measurement, efficient in stable routine work.
• Weaknesses: little creativity or loyalty, only extrinsic motivation, weak in times of change.
• Example: a garment factory paying piece rates against daily targets; a call centre with call quotas.

Taylor's scientific management: find the one best way TOP 15/36

82 Bh · 81 Bh · 81 Ba · 80 Bh · 79 Ba · 75 Ch · 75 Ash · 72 Ch · 71 Ch · 68 Ch · 68 Ba · 65 Ka · 65 Shr · 64 Ka · 64 Jth4+45+34

The problem it solved. Late nineteenth century factories ran on rule of thumb: nobody knew how long a task should take, and workers held output down on purpose (Taylor called it soldiering) for fear of losing jobs or piece rates. Taylor set out to replace opinion with measurement.

The principles. Taylor summed up his system in five phrases, which the textbooks give as its principles:

• Science, not rule of thumb: each element of a job is studied, and a standard method, time and tool are fixed for it.
• Harmony, not discord: managers and workers stop fighting over how to divide the surplus and work together to enlarge it. Taylor called this change of attitude on both sides a mental revolution.
• Co-operation, not individualism: management plans and workers carry out, each helping the other.
• Maximum output, in place of restricted output: soldiering ends because more output earns more pay.
• Development of each worker to his greatest efficiency and prosperity: choose the right person scientifically, then train him in the standard method.

Taylor's four duties of management, which is how the course notes put it: find the one best way for each task by scientific study; select the best suited workers and train them properly; co-operate with them in a friendly way; and divide the work clearly, managers planning and workers doing.

The experiments behind it

Four ways to raise efficiency. From his work at Bethlehem Steel, Taylor named four levers, each resting on a kind of study:

• Motion study (an improved method): record every movement in a task and remove the needless ones, so the job takes the fewest and easiest motions.
• Fatigue study (prescribed rest): fix how often and how long to rest, because a tired worker loses more output than the rest costs.
• Time study (a standard of output): split the task into elements, time each with a stopwatch on a first class worker using the best method, and add allowances for rest and delays. The total is the standard time, which defines a fair day's work.
• Incentive wages (payment by the unit of output): pay for work done against the standard, so that effort is rewarded.

Pig iron handling, the famous case:

• Before: a gang of 75 labourers carried pigs of iron of about 42 kg up a plank into railway wagons, averaging 12.7 tons per man per day, for $1.14 a day.
• The change: Taylor picked a strong, willing worker (he called him Schmidt), taught him the studied way to lift and walk, and told him exactly when to work and when to rest.
• After: 48.8 tons a day for $1.85, nearly four times the output for about 60 percent more pay. The rest of the gang were then selected and trained one by one.

Shovelling. Labourers used one shovel for everything, from heavy ore to light coal. Trials showed a man moved most in a day with loads of about 21 pounds (about 9.5 kg), so Taylor issued a different shovel for each material to keep every load near that weight. The yard needed far fewer men, each earned more, and handling cost per ton fell sharply.

Metal cutting. Years of experiments on the speed, feed and depth of cut of machine tools, begun at Midvale, fixed standard cutting conditions and gave (with Maunsel White) high speed tool steel.

Techniques

• Separation of planning from doing: a planning department decides what, how and when; the workers carry it out.
• Functional foremanship: the single foreman gives way to eight specialists, four in the planning room (route clerk, instruction card clerk, time and cost clerk, shop disciplinarian) and four on the floor (gang boss, speed boss, repair boss, inspector). It is the origin of the functional organization, and it breaks unity of command.
• Differential piece rate: a higher rate per piece for a worker who reaches the standard, a lower one for a worker below it. With a standard of 10 pieces a day and rates of Rs 50 and Rs 40, a worker making 10 earns Rs 500 but one making 9 earns only Rs 360 (round numbers, for illustration). See incentive plans.
• Standardisation of tools, machines, materials, methods and conditions, so that a standard time holds everywhere.
• Scientific selection and training: fit the worker to the job, then teach the best method; the root of scientific selection.
• Instruction cards and management by exception: written orders for each day's task, while managers attend only to significant departures from the standard.

Its features, in short: scientific study of work in place of rule of thumb; standard methods, tools and times; scientific selection and training; planning separated from doing; functional foremanship; incentive pay by output; co-operation between managers and workers.

Contributions, limitations and rationale

The rationale, or why an organization needs a scientific approach:

• Facts over guesses: decisions rest on measurement, not on a foreman's opinion.
• Less waste: standard methods cut wasted time, motion and material, so the cost per unit falls.
• Planning becomes possible: standard times let production be scheduled, costed and controlled, which is why Taylor's principles matter most in production processes.
• Right person, right job: selection and training raise output and earnings together.
• Industrial peace: a fair day's work for a fair day's pay removes the main quarrel between employer and workers.

Today, and in an HR manager's hands

Is it still applicable? Yes in its techniques, no in its view of people.

• Still alive: standard operating procedures, work study and lean production; fast food kitchens and courier firms such as UPS that time every step; call centres that measure handling time; piece rates in Nepal's garment and carpet factories and brick kilns; standard labour norms for estimating construction work.
• Dropped or softened: eight bosses for one worker, money as the only motivator, and workers with no say. Educated workers expect participation, so the techniques now come with behavioral practice (see comparing the approaches).

How an HR manager would implement it, step by step:

1. Study the jobs: job analysis with time and motion study fixes the standard method, time and output.
2. Standardise tools, materials and conditions, with the production department.
3. Select scientifically: tests matched to the job specification.
4. Train every worker in the standard method, and retrain when it changes.
5. Pay for performance: an incentive or differential piece rate tied to the standard.
6. Plan rest: scheduled breaks, set by a fatigue study.
7. Win co-operation: explain the standards, involve the union, share the gains and keep a grievance channel open, so the change is accepted, not resisted.
8. Review: compare actual output with the standard, and revise it as methods change.

Scientific management versus management science. Similar names, different eras: management science is the quantitative approach born in the operations research teams of the Second World War.

Fayol's administrative management: the manager's job in 14 principles HOT 6/36

82 Bh · 79 Bh · 72 Ka · 71 Shr · 70 Ch · 70 Asa84+4

Henri Fayol (1841 to 1925), spelt Henry in the papers, was a French mining engineer who spent his whole career in one mining and metals company, Commentry-Fourchambault-Decazeville. He joined it in 1860 and was its managing director from 1888, taking over a firm close to bankruptcy and leaving it financially strong.

His book, General and Industrial Management (in French in 1916, in English in 1949), made him the father of modern management theory and of the administrative, or management process, school.

The evidence behind it. Fayol ran no laboratory experiments like Taylor's: his test bed was the company itself. Rescuing a failing business convinced him that its fortunes turned on how it was managed, not on its mines or machines, and that the same principles would serve any undertaking, industrial, commercial, political or religious.

Six activities of every industrial undertaking. Fayol showed that managing is only one of them, and is different from the rest:

• Technical: production and manufacture.
• Commercial: buying, selling and exchange.
• Financial: raising capital and using it well.
• Security: protecting property and people.
• Accounting: stocktaking, balance sheets, costs and statistics.
• Managerial: planning, organizing, commanding, coordinating and controlling.

His three contributions (the course notes' list):

• Technical and managerial skills are different: the higher a person stands, the more managerial and the less technical ability the job needs (the idea behind managerial skills).
• The management process: the functions that make up a manager's job.
• The principles of management: fourteen of them.

The five functions (elements) of management. To plan (forecast and draw up a plan of action), to organize (build the structure of people and material), to command (direct the staff; the notes call it directing), to coordinate (bind all the activity together) and to control (check that everything happens according to plan): still the functions of management.

Qualities of a manager, in Fayol's list: physical, mental, moral, general education, special knowledge and experience.

The 14 principles

Are the principles applicable today? Yes, most of them, as flexible guides rather than fixed rules. Fayol himself wrote that nothing in management is rigid or absolute: it is all a question of proportion.

• Used almost as written: division of work (specialised teams), authority with responsibility (job descriptions), discipline (codes of conduct), remuneration and equity (pay scales, equal treatment), order (5S housekeeping), initiative (suggestion schemes), esprit de corps (team building).
• Adapted: matrix and project teams give two bosses on purpose; flat structures and email shorten the scalar chain and make the gang plank the everyday rule; centralisation gives way to empowered teams.
• Under pressure: stability of tenure, in an age of contract work and job hopping, so firms now work at retention.
• In Nepal: government offices and public corporations such as the Nepal Electricity Authority keep a strict scalar chain and unity of command, while Kathmandu software firms run flat teams where the gang plank is routine.

Mayo and the Hawthorne studies: the worker is a social being HOT 6/36

81 Bh · 76 Ch · 71 Shr · 66 Bh · 62 Ba · 57 Ch4+4+83+54+4

Why it arose. Classical theory raised output but treated people as parts of a machine, and workers resisted. Researchers measuring how working conditions affect output found that feelings, attention and group relations mattered more. Elton Mayo (1880 to 1949), an Australian at Harvard, led the work with Fritz Roethlisberger and William Dickson.

The Hawthorne experiments took place at the Hawthorne Works of the Western Electric Company near Chicago. The course notes count the three studies Mayo's team ran over five years; the textbooks add the illumination experiments that came first.

Conclusions.

• The Hawthorne effect: special attention raises output more than a change in physical conditions does.
• The organization is a social system, not only a technical one.
• Social needs motivate, not money alone: recognition, belonging and security.
• Informal groups set their own norms of output and behaviour, and can make or break management's plans (see formal and informal organization).
• Group work improves performance, and satisfied workers are more effective.
• Communication across levels, and listening to workers, matter.
• Supervisors need social skills, not only technical ones.

The human relations movement. These findings launched a movement, from the 1930s to the 1950s, that trained supervisors in human relations, counselled employees, encouraged participation and watched morale. Mary Parker Follett and Chester Barnard (for whom authority works only when subordinates accept it) belong to the same line of thought.

The behavioral science approach grew out of it, studying motivation and leadership more rigorously: Maslow's needs, McGregor's Theory X and Theory Y, Herzberg's two factors, and the field of organization behaviour. Together the two are what the syllabus calls the behavioral management approach.

Organization behaviour: many sciences, one workplace HOT 6/36

68 Ch · 68 Ba · 67 Asa · 66 Bh · 65 Ka · 57 Ch4+4+85+4+75+6+5

What it studies. What people do in an organization and how that behaviour affects its performance: productivity, absenteeism, turnover, job satisfaction, and the willingness to do more than the job description asks. It grew out of the behavioral approach, and the older syllabus asked it as a topic of its own.

Three levels of analysis.

• Individual: personality, perception, attitudes, values, learning, motivation and individual decisions.
• Group: communication, leadership, power and politics, conflict, group norms and teams.
• Organization system: structure, culture, HR policies, technology and change.

A multidisciplinary field. OB is an applied field built from several behavioral sciences, each of which explains a different level:

Some texts add industrial engineering (work measurement, Taylor's legacy) and medicine (stress and health).

How management affects organization behaviour. Behaviour follows what management decides, so a manager changes behaviour all the time, on purpose or not:

Why it matters: it helps a manager understand, predict and influence behaviour; motivate and lead; manage a diverse workforce and change; and cut absenteeism, turnover and conflict.

Nepal example. A hydropower project in a remote district uses every discipline: psychology to keep crews motivated far from home, sociology and anthropology to work with local communities of different castes and ethnic groups, and political science to deal with trade unions tied to political parties.

Comparing the schools, and which one to use HOT 10/36

82 Ba · 81 Bh · 81 Ba · 80 Ba · 79 Ba · 78 Bh · 75 Ash · 74 Ash · 73 Shr · 65 Ka84+45+6+5

Scientific versus behavioral

Administrative versus behavioral

Advantages of behavioral theory over scientific management.

• The whole person: a worker with feelings and social needs, not a machine to be timed.
• Wider motivation: recognition, belonging and participation work even when pay cannot rise.
• The informal group as an ally: management works with group norms instead of fighting them.
• Participation and two way communication: workers who help set targets accept them.
• Higher morale: less absenteeism, turnover, conflict and union hostility.
• Fits skilled and knowledge work, whose output a stopwatch cannot measure.
• Respects dignity: it answered the charge that scientific management exploited workers.

Advantages of behavioral theory over modern theory. Modern theory counts people as one part of the system, so the advantage is one of focus and ease of use rather than completeness:

• People first: it deals with motivation and morale directly, where the systems view is abstract and management science leaves people out of its models.
• Usable at once: any supervisor can listen, recognise, consult and build a team tomorrow; the systems and contingency ideas give no ready prescription.
• Cheap and simple: it needs no models, data or specialists, so it suits small firms.
• Works where numbers fail: in service and knowledge work, whose output is hard to quantify.
• A stable base: human needs change slowly, while a contingency answer changes with every situation.

Which theory is most practical today, and which suits Nepal?

Verdict. No single theory. The contingency approach is the most practical and fruitful, because it lets a manager take scientific management's methods, Fayol's principles and behavioral practice, and fit the mix to the organization. For Nepal I would use it with a strong behavioral core.

• Today's business changes fast: technology, competition and customers shift every year, so fixed rules age quickly and situational judgement wins.
• Nepal's organizations differ widely: ministries, public corporations such as the Nepal Electricity Authority, family businesses, co-operatives, banks and IT start-ups cannot all be run one way.
• Manual work needs Taylor: factories, construction and hydropower sites gain from work study, standard times and incentive pay, and projects from CPM; the long delays of national projects such as the Melamchi Water Supply Project show the cost of weak planning and control.
• Public bodies need Fayol: clear authority and responsibility, unity of command, discipline and equity counter slow, politicised administration.
• People decide the result: Nepali workplaces run on relationships, many young people leave to work abroad, and unions are politically active, so participation, recognition and fair treatment keep good staff and industrial peace.

Example. A Kathmandu software company runs almost wholly on behavioral lines (flat teams, autonomy, recognition), while a cement factory relies on standard times and shift discipline, with welfare and participation to keep its union on side. Same country, different mix: that is the contingency approach at work.

Joint stock company: a legal person owned by shareholders HOT 11/36

81 Ba · 80 Ba · 79 Ba · 76 Ch · 76 Ash · 75 Ash · 70 Ch · 69 Ch · 67 Asa · 61 Ba · 58 Ch4+43+55+4+7

How it works. Many people put money into a common stock (the capital) divided into shares. Shareholders elect a board of directors at the annual general meeting (AGM); the board appoints managers; profit is paid as a dividend in proportion to shares. In Nepal, companies register with the Office of the Company Registrar under the Companies Act 2063 (2006).

Characteristics.

• Artificial person created by law: it exists only because it is registered.
• Separate legal entity: it owns property, makes contracts, and sues and is sued in its own name, apart from its members (the classic case: Salomon v Salomon and Co Ltd, 1897).
• Perpetual succession: members come and go, die or sell out; the company goes on.
• Limited liability: a shareholder can lose at most what he paid, or agreed to pay, for his shares; his personal property is safe.
• Transferable shares: freely in a public company, restricted in a private one.
• Separation of ownership and management: shareholders own it; the elected board and hired managers run it.
• Compulsory registration and a common seal (the seal was its signature under older company law).
• Large capital and public accountability through audited, published accounts.

Private limited and public limited company

Formation, stage by stage

1. Promotion: the promoters discover the idea, investigate it (a feasibility study of market, technology and finance), assemble the people, property and capital needed, and draft the documents. They are personally liable for contracts made before the company exists.
2. Incorporation (registration): the application and documents go to the Registrar (in Nepal, the Office of the Company Registrar), who registers the company and issues a certificate of incorporation. From that day the company is a legal person.
3. Capital subscription (public company): a prospectus invites the public to buy shares; in Nepal the issue is approved by the Securities Board of Nepal and handled by an issue manager, shares are allotted, and they are then listed on the Nepal Stock Exchange.
4. Commencement of business: a private company starts at once; a public company once its capital is raised and the legal conditions are met.

Memorandum of association: the company's charter, which fixes its relation with the outside world. Its clauses: name, registered office, objects, liability of members, capital, and the subscribers' agreement to form the company. An act outside the objects is ultra vires (beyond its powers) and void.

Articles of association: the internal rules: issue and transfer of shares, meetings and voting, appointment and powers of directors, dividends, accounts and audit, and borrowing. They must not go beyond the memorandum.

Registering a private company in Nepal

1. Name approval: propose a name ending in "Private Limited"; the Office of the Company Registrar (OCR) checks that it is not already taken or misleading.
2. Documents: the promoters prepare and sign the documents listed below.
3. Application: file them with the OCR (which also takes applications online) and pay the registration fee, which depends on the authorised capital.
4. Scrutiny and registration: the OCR examines the papers, registers the company and issues its certificate of incorporation with a registration number.
5. After registration: take a PAN (and VAT registration where required) from the Inland Revenue Department, open a bank account, register with the local ward office, and obtain any licence the line of business needs. The company may then start business.

Documents usually required:

• The application in the OCR's form, with the approved name.
• Memorandum of association and articles of association, signed by every promoter.
• Promoters' identity: copies of citizenship certificates for Nepali promoters, and passports for foreign ones.
• A corporate promoter's papers: its registration certificate and its board's decision to invest.
• Any agreement among the promoters, where one has been made.
• Approval of foreign investment from the Department of Industry, where a promoter is foreign.
• A power of attorney, if a representative files on the promoters' behalf.
• The receipt for the registration fee.

Why a joint stock company is better than a partnership.

• Limited, not unlimited, liability: investors risk only their shares.
• A separate legal entity with perpetual succession, where a firm may dissolve when a partner dies or leaves.
• Far larger capital from many shareholders and the public, not a few partners.
• Transferable shares, where a partner's share needs everyone's consent.
• No mutual agency: one shareholder's act does not bind the others.
• Professional management instead of partners who may lack the skills.
• Public confidence and credit from audited accounts, and the scale to keep growing.

Joint stock company versus public corporation.

Organizational structure: who does what, and who reports to whom HOT 10/36

79 Bh · 75 Ch · 72 Ch · 71 Ch · 71 Shr · 70 Asa · 68 Ch · 68 Ba · 64 Ka · 58 Ch44+4+3+52+2+4

Organizing produces it. Organizing, the second function of management, produces a structure, and the organization chart is its picture: boxes are positions, lines are authority and reporting. Robbins describes it as the way job tasks are formally divided, grouped and coordinated.

No single best structure (the notes): each organization evolves its own from the nature of its work and the competence of its people.

Six elements decide the shape of any structure (Robbins):

• Work specialisation: how finely the work is divided into separate jobs (the division of work).
• Departmentation: how jobs are grouped: by function, product, territory, process or customer.
• Chain of command: the unbroken line of authority from top to bottom (scalar chain, unity of command).
• Span of control: how many subordinates one manager directs, which fixes the number of levels (worked out on the line organization card).
• Centralisation: whether decisions are taken at the top or pushed down by delegation.
• Formalisation: how far jobs are fixed by written rules, job descriptions and procedures.

Defining the structure of a particular enterprise

It is designed from the objectives down, then written up:

1. State the objectives and list the activities needed to reach them.
2. Group the activities into jobs, and the jobs into departments.
3. Assign duties and delegate authority to each position, and fix responsibility.
4. Decide the span of control at each level, which fixes the number of levels.
5. Set the relationships: line (command), staff (advice), functional authority, and committees for coordination.
6. Record it in an organization chart, job descriptions and an organization manual.
7. Review it as the enterprise grows, adds products or changes its strategy.

Worked example: a software company of 40 people.

• Activities: development, testing, sales, customer support, accounts, recruitment.
• Grouping: four departments by function: engineering, sales and support, finance, human resources.
• Authority and span: a head over each, under the chief executive; about ten people per head.
• Relationships: an outside lawyer and auditor advise (staff); a monthly meeting of the heads coordinates (a committee).
• Result: a line and staff chart. Once the firm runs several client projects at once, it lays project managers across the departments and becomes a matrix.

Factors that shape the choice. The right structure depends on the situation (the contingency view of modern theory):

The types

Matrix organization and its chart

What it is. A structure that lays project (or product) authority across functional authority, so there are two lines of command. Specialists stay in their functional departments but are lent to project managers for the life of a project.

The chart is a grid: functional heads across the top, project managers down the side, a person or team at each crossing.

Reading the chart. Everyone in a cell has two bosses: the column head decides who is assigned, the technical standards and the person's career; the row head decides what the project needs and by when. When a project ends, its people go back to their columns.

• Advantages: scarce experts are shared, not duplicated; each project has one manager accountable for time, cost and quality; specialists keep a technical home; projects can be started and closed quickly.
• Disadvantages: it breaks unity of command, so the two bosses can give conflicting orders; project and functional managers compete for people; more meetings and overhead; it needs mature staff and clear rules.

Choosing a structure for an engineering project

Verdict: line and staff, built around the project, suits an engineering project best. A project manager commands and specialists advise; a firm running several projects at once extends this into a matrix. The logic follows from what such a project needs:

• Command and discipline on site: safety, deadlines and contract work need orders that flow one way. Line authority from the project manager to site engineers, foremen and workers gives unity of command and quick decisions.
• Many specialisms: civil, electrical, mechanical, geotechnical, environmental, legal and financial knowledge. Staff specialists supply it without giving orders, so decisions improve and command stays clear.
• A fixed goal, budget and deadline: one accountable head answers for time, cost and quality.
• Coordination: committees (a steering committee, a bid evaluation committee) handle the big joint decisions without running the daily work.

Nepal example. A hydropower project organized this way has a project chief with site engineers and foremen in the line; design, geology, environment, contract and finance specialists as staff; and committees for bid evaluation and overall steering.

Why structure matters (the closing points of a short note): it fixes roles and accountability, avoids duplication and gaps, opens clear channels of communication, supports coordination and control, lets people specialise, and makes growth orderly. An informal structure of friendships always grows inside it (formal and informal organization).

Purchasing: the right goods, at the right price, at the right time TOP 12/36

82 Bh · 81 Bh · 78 Bh · 76 Ch · 72 Ka · 71 Ch · 70 Ch · 70 Asa · 67 Asa · 65 Shr · 64 Ka · 57 Ch3+55+3+5+31+3+4

Why it matters. No business can run without inputs, and in a manufacturing firm materials are often the largest single element of cost, so every rupee saved in buying adds to profit.

The aim (the notes): keep a regular flow of inputs so as to keep a regular flow of outputs. Small organizations let each department buy for itself; large ones run a purchasing department that serves the whole organization.

Purchasing and procurement

Procurement is the wider process of obtaining goods and services by any means (buying, hiring, leasing, making), from identifying the need to managing the suppliers. Purchasing is the buying part of it, the commercial transaction: a subset of procurement.

Objectives: the five rights

Further objectives the textbooks add: continuity of supply, the minimum investment in stock, no duplication or waste, steady quality standards, reliable and alternative suppliers and good relations with them, records of prices and sources, and cooperation with other departments.

Principles of purchasing

The rights are the principles: buy the right quality, in the right quantity, at the right price, at the right time, from the right source, delivered to the right place. The working principles that follow from them:

• Buy against a need: every purchase starts from an approved requisition and a clear specification.
• Competitive buying: invite several quotations or tenders so that price and terms are tested (methods).
• Standardisation: buy standard, interchangeable items to cut variety, stock and cost.
• Total cost, not price: count transport, storage and the cost of poor quality, and weigh making against buying.
• Inspection on receipt: accept nothing until it is checked against the order.
• Records and control: keep documents for every order, so every rupee can be traced.
• Integrity and good supplier relations: fair dealing, no personal gifts, prompt payment.

Functions of the purchasing department

1. Receive and check requisitions from departments: need, quantity and budget.
2. Find and select suppliers: keep a list of approved vendors and look for new sources.
3. Invite and compare quotations or tenders, and negotiate price, quality, delivery and terms.
4. Place purchase orders, with copies to stores, accounts and the user.
5. Follow up (expedite) orders so goods arrive on time.
6. Arrange receipt and inspection with stores and quality control; return rejected goods.
7. Check invoices against the order and the receipt, and pass them for payment.
8. Keep records of suppliers, prices, orders and catalogues.
9. Study the supply market: price trends, new materials, substitutes.
10. Support stock control: order quantities and timing that avoid both stock-outs and overstock.
11. Reduce cost through standardisation, value analysis and make or buy studies.
12. Dispose of scrap, surplus and obsolete materials.

Role of the purchasing department in the organization

• Keeps production running: materials arrive on time, so machines and people are never idle.
• Controls cost: better prices and less waste raise profit directly.
• Protects quality: good inputs make good outputs.
• Saves working capital: the right quantities keep money out of idle stock.
• Watches the supply market: it is the organization's window on suppliers, prices and new materials.
• Serves every department, and works hand in hand with marketing, whose sales forecast tells it what and how much to buy (marketing and purchasing).

Example. A cement plant that runs out of coal stops its kiln; one that buys a whole year's stock at once ties up the money it needs for wages. The purchasing department steers between the two.

Methods and procedure of purchasing HOT 6/36

81 Bh · 79 Ba · 76 Ash · 74 Ash · 72 Ch · 71 Shr4+43+2+35+3

Two questions that come together: how a supplier is chosen and bought from (the methods), and the sequence of steps from a department's need to paying the supplier (the procedure).

The three procedures in the notes

• Direct purchase: buying straight from a supplier without inviting competition, when the materials are needed immediately, the value is small, or only one supplier exists (a spare part for a particular machine). Fast, but the price is not tested.
• Quotation procedure: price quotations are collected from at least three suppliers, compared in a comparative statement of price, quality, delivery and terms, and the most suitable is chosen. Used for medium value purchases.
• Tender procedure: for large purchases in the open market. The requirement is advertised in local or international media, interested suppliers submit tenders (written offers with price, terms and conditions), and these are evaluated and the order placed with the best supplier.

The tender, step by step:

1. Prepare the specifications, the tender documents and a cost estimate.
2. Publish the notice with the last date for submission.
3. Receive sealed bids, each with a bid security (earnest money).
4. Open the bids in public, at the stated time, in front of the bidders.
5. Evaluate: a committee checks each bid against the requirements, then compares prices.
6. Award: the winner gets a letter of acceptance, gives a performance guarantee and signs the contract.

Open and limited tenders. An open tender lets anyone qualified bid; a limited tender is sent only to pre-qualified or approved suppliers.

Nepal context. Public bodies buy under the Public Procurement Act 2063 (2007): open competitive bidding for large purchases, sealed quotations for smaller ones, and direct purchase only for small or exceptional cases, with the limits set by the rules. Notices appear in national newspapers and on the electronic procurement (e-GP) system of the Public Procurement Monitoring Office.

Other standard methods in the textbooks

The purchasing procedure: ten steps

1. Identify requirements: departments send purchase requisitions stating the item, specification, quantity and date needed.
2. Send inquiries to possible suppliers for prices and terms (a request for quotation, or a tender notice).
3. Receive quotations from the suppliers, at least three.
4. Prepare a comparative statement of price, quality, delivery, payment terms and warranty, and evaluate it.
5. Select and approve the supplier who gives the best overall value.
6. Place the purchase order, with copies to the requesting department, stores and accounts.
7. Follow up the order so the supplier delivers on time.
8. Receive the goods, record them on a goods received note, and inform the users.
9. Inspect and record: check quality and quantity against the order, reject what fails, write an inspection report.
10. Pay and issue: accounts match the order, the receipt and the invoice before paying; the materials go to stores and are issued to users.

Worked example: 30 computers for a private college's lab.

• Steps 1 to 3: the department raises a requisition; purchasing asks five suppliers, and three send quotations.
• Steps 4 and 5: the comparative statement shows supplier B cheapest at the required specification, with a two year warranty, and B is approved.
• Steps 6 to 10: the order goes to B and is followed up; the computers are received, tested and recorded; accounts pay once the invoice matches the order and the receipt.

Drawing the outline. Draw the ten boxes in two rows, finding and choosing a supplier (steps 1 to 5) and ordering, receiving and paying (steps 6 to 10), and name the document at each step: requisition, inquiry, quotation, comparative statement, purchase order, goods received note, inspection report, invoice.

Marketing: start from the customer, end with a satisfied one TOP 20/36

82 Bh · 82 Ba · 81 Bh · 81 Ba · 79 Bh · 79 Ba · 78 Bh · 76 Ch · 76 Ash · 75 Ch · 74 Ash · 73 Shr · 70 Ch · 68 Ch · 68 Ba · 67 Asa · 65 Ka · 63 Ash · 61 Ba · 57 Ch4+43+54

Two textbook definitions. William J. Stanton, quoted in the notes, calls marketing a total system of business activities that plan, price, promote and distribute want-satisfying goods and services to present and potential customers. Kotler's shortest form: meeting needs profitably.

Marketing management is the operative function that finds out what customers need and organizes the supply of goods and services to meet it.

The marketing concept

The idea: the goal is not profit through sales volume but profit through customer satisfaction. Find out what customers want, then make and sell that, rather than make what the factory can and push it. The notes rest it on three beliefs:

• Customer orientation: planning, policy and operations centre on the customer.
• Profit orientation: the goal is profitable sales volume, not volume at any price.
• Customer satisfaction: products are built around what satisfies the customer.

The five marketing philosophies, in textbook order: production (make it cheaply), product (make it best), selling (push it hard), marketing (make what customers want), and societal marketing (satisfy customers while protecting society and the environment).

The four Ps: the marketing mix

The marketing mix is the set of controllable tools a firm blends to satisfy its target market; E. Jerome McCarthy grouped them as the four Ps.

• Product: developed from market research to meet end users' needs: features, quality, design, brand, packaging, service.
• Price (pricing): what the customer pays, set by cost, demand, competition and quality, with discounts and credit terms.
• Place (placement): how the product reaches the buyer (online, retail, wholesale) and which market it serves (businesses, families, youth).
• Promotion: advertising, sales promotion, personal selling, publicity and branding (advertising).

Importance of marketing

Why it is fundamental. Peter Drucker argued that because the purpose of a business is to create a customer, it has two basic functions only: marketing and innovation. Every other activity is a cost; marketing brings in the revenue that pays for them.

• Revenue and survival: no sale, no income; the notes call marketing the last but most important step of a new unit (small scale unit).
• Guides production: research tells the firm what to make, how much and at what price (production development).
• Growth and competition: it finds new customers and markets and defends existing ones.
• For consumers and society: the right goods at the right place and price, jobs in distribution, advertising and retail, and a higher standard of living.

In the modern digital era it matters even more, and works differently:

• Reach: social media, search engines and video platforms put a small Nepali firm in front of customers anywhere, at low cost.
• Targeting and measurement: advertisements are aimed by age, place and interest, and every view, click and sale is counted, so spending follows results.
• Two way: customers comment, review and compare in public, so a firm must listen and respond.
• Selling online: e-commerce sites such as Daraz and wallets such as eSewa and Khalti let customers find, order and pay from a phone.
• Speed and data: a campaign is launched, tested and changed within hours, and purchase data feed back into research and product decisions.

Marketing research

Marketing research is the systematic gathering and analysis of information about customers and markets to guide marketing decisions. The notes build it on four elements:

The process: define the problem, plan the research, collect data (primary: surveys, interviews, observation, test marketing; secondary: sales records, reports, published statistics), analyse it, and report to the decision makers.

Market structure (older papers)

Market structure is the set of features of a market that decide how firms compete and set prices: the number of sellers, the kind of product, how easily new firms can enter, and each firm's control over price.

Also: two sellers make a duopoly, a single buyer a monopsony. Branding and promotion matter most under monopolistic competition and oligopoly; under perfect competition, where every seller's product is identical, one seller's advertising has no use, and a monopoly advertises mainly to inform. (A marketing department's own structure, by function, product, territory or customer, is a different thing.)

Salesmanship and its place in marketing

Salesmanship is the art of persuading prospective buyers to buy goods or services that give them lasting satisfaction, to the benefit of both buyer and seller. It is exercised in personal selling, the face to face part of promotion: find prospects, prepare, approach, present and demonstrate, meet objections, close the sale, follow up.

Verdict: it is an important ingredient, with one qualification.

• It is where the sale happens: selling turns the rest of the marketing effort into revenue (functions of marketing).
• Two way: a salesperson answers questions, meets objections and fits the offer to the buyer, which an advertisement cannot.
• Essential for technical, costly products: machinery, building materials, business software and insurance need explanation and demonstration.
• Builds relationships and repeat business, which matters in Nepal where buying often rests on personal trust.
• Brings back market information: salespeople hear complaints and competitors' offers first.
• The qualification: one ingredient, not the whole recipe. A product that meets no need is not bought twice however skilled the salesperson, and for simple goods bought online, advertising and the product page do much of the selling.

Marketing and purchasing: difference and relation

The relation. They are the two ends of one chain: purchasing at the input end, marketing at the output end, production between them.

• Marketing starts the purchasing procedure: the sales forecast sets the production plan, and the production plan sets what, how much and when purchasing buys.
• Customers set the specifications: the quality buyers demand decides the quality of the materials bought and the standard used at inspection.
• Purchasing sets what marketing can promise: material cost and supply reliability decide the price and delivery dates marketing can offer.
• Buying is itself a marketing function for traders, and purchasing is marketing in reverse: both study a market, negotiate and manage relations.

Role of the marketing department

It is the firm's link with its customers:

• Research and forecast: studies the market and forecasts sales.
• Product and price: plans products with production and R&D, and sets prices.
• Promotion and sales: runs advertising and the sales force.
• Distribution and service: builds the dealer network and serves customers after the sale.
• Feedback: passes customer information to production, purchasing and finance.

Together with purchasing (its role), it keeps the organization in step with both markets it faces: suppliers on one side, customers on the other.

Challenges of marketing software products in Nepal

• Small, price sensitive market: few businesses and households can pay much.
• Low willingness to pay: pirated and free software are common, and buyers expect software to be cheap or bundled with hardware.
• Low awareness: many firms still keep paper records and do not see what software would save them.
• Trust: buyers prefer foreign brands or vendors they know personally; a start-up has no references.
• An intangible product: it must be demonstrated and explained before anyone buys.
• Long sales cycles: businesses and government offices decide slowly, and public purchases go through tenders where the lowest evaluated price usually wins.
• Global competition: international cloud products are one click away.
• Payments: collecting from foreign customers and paying for global advertising involve foreign exchange formalities.
• Uneven infrastructure and skills: internet quality varies outside the cities, and few engineers are trained to sell.
• Support expectations: customisation, training and on-site support, expected free.

How firms respond: free trials, small monthly subscriptions, Nepali language and mobile first design, case studies from early customers, partnerships with banks and telecom companies, digital marketing aimed at a niche, and export of services. The same risks face IT entrepreneurs (entrepreneurship).

Personnel management: getting, growing and keeping people TOP 21/36

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Flippo's definition, the one textbooks quote: the planning, organizing, directing and controlling of the procurement, development, compensation, integration, maintenance and separation of human resources, so that individual, organizational and societal objectives are accomplished.

Its first four nouns are the managerial functions, the next six the operative functions of 2.2.

The main idea is that people are the one resource that decides how well every other resource is used: machines, money and materials can be bought, but skill and willing effort have to be attracted, developed and kept.

The motive is therefore the effective use of manpower: the right person in the right job, able and willing, at a cost the organization can bear.

In the course notes' words, whoever is concerned with the welfare and performance of individuals in the organization is doing personnel management. It covers company policies, staffing, hiring and firing, orientation, wage fixing, leave, health care programmes, training and appraisal.

The three aspects

Objectives

• Organizational: help the organization reach its goals by using people effectively.
• Functional: keep the personnel department's contribution matched to what the organization needs, neither more costly nor less useful than it should be.
• Societal: act ethically and within the law, for example Nepal's Labour Act, 2074 (2017).
• Personal: help employees reach their own goals of pay, security and growth, which is what keeps them.

Role and importance in the organization

A staff function: the personnel department advises and serves the line managers who supervise people day to day (line and staff). Its role, which is also the part HRM plays in developing an organization:

• Staffing: puts the right number and kind of people in place.
• Building capability: training and development grow the skills the organization will need next.
• Performance: appraisal and incentives raise productivity and tie pay to results.
• Retention: fair pay, welfare and career paths lower turnover and keep knowledge in the firm.
• Industrial peace: good relations with the unions keep work going.
• Culture and change: it spreads the organization's values and prepares people for new technology, restructuring and growth.
• Compliance: it keeps the firm within labour law on hours, leave, social security and bonus.

The HR manager in a modern organization plays the four roles Dave Ulrich named:

Scientific management in practice is also the HR manager's work: standard tasks from job analysis and time study, scientific selection and training, and incentive pay (chapter 1).

Personnel management and HRM

HRM is the modern successor of personnel management. Michael Armstrong calls it a strategic and coherent approach to managing an organization's most valued assets, the people who work there. The course notes treat the two names as one, which is fine for a definition; when a question asks how they differ:

A human resource management system (HRMS), read as software, is the computer system behind this work: records, payroll, attendance, recruitment and appraisal in one database (chapter 5). Personnel management is the function; the HRMS is its tool.

Appropriate and inappropriate human resources

Appropriate human resources are people whose number, skills, qualifications and attitude match what the jobs and the organization need. Inappropriate human resources are a mismatch on any of those counts: too many or too few, wrongly skilled, wrongly placed or unwilling.

• Building appropriate human resources: manpower planning fixes the number, job analysis the specification, scientific selection picks against it, training closes the gaps, and appraisal and fair pay keep people performing.
• Dealing with inappropriate ones: retraining, job rotation or transfer to a better fitting job, counselling, discipline, a voluntary retirement scheme for a surplus, and dismissal only as the last resort, by the procedure the Labour Act lays down.

A Nepali illustration: a criticism often made of the country's public enterprises is exactly this mismatch, many staff taken on outside any manpower plan and too few of the technical specialists the work needs.

Talent poaching

Talent poaching is a rival deliberately luring away an organization's skilled employees, usually with higher pay or a bigger title. The loser loses the skills, the training invested, client relationships and sometimes a whole team.

It is sharpest where skills are scarce, as with experienced software engineers in Kathmandu, whom foreign firms and remote employers also hire. The HR manager tackles it on several fronts:

• Competitive pay: salary surveys keep pay at or above the market rate for scarce skills.
• Retention pay: bonuses that vest over time and long service benefits make leaving expensive.
• Career paths: promotion from within, so the next step is inside the firm.
• Training with a service agreement: costly training is tied to a period of service after it.
• Engagement: recognition, interesting work, flexible hours and a good manager, the non-financial reasons people stay.
• Succession planning and knowledge sharing: no single departure can cripple a project.
• Stay and exit interviews: learn why people leave and fix it before the next one goes.
• Employer brand: a name as a good place to work.

Managerial and operative functions HOT 6/36

80 Ba · 75 Ch · 72 Ka · 71 Ch · 70 Ch · 70 Asa82+4+23+5

Two groups of functions. The managerial functions are the management cycle of chapter 1 applied to the personnel department and its people. The operative functions are the personnel work itself, and they follow an employee's journey from hiring to retention.

A. Managerial functions

• Planning: deciding the personnel programme in advance: how many people of what kind will be needed, what training, what changes in pay. Example: the staff plan for a new hydropower project.
• Organizing: designing the jobs and the structure of the personnel department, and fixing authority and responsibility. Example: separate sections for recruitment, training and payroll.
• Directing: guiding, motivating and supervising people so that the plans are carried out. Example: briefing line managers on a new appraisal form.
• Coordinating: unifying the efforts of departments so that personnel work fits the rest of the business. Example: fitting the training calendar around production peaks.
• Controlling: checking results against the plan and correcting them. Example: watching absenteeism, turnover and overtime, and auditing the personnel records.

B. Operative functions

The order is the employee's journey: procured, developed, paid, fitted into the group, looked after, and kept keen.

A worked picture: a commercial bank opening ten branches plans for about 60 new assistants, procures them by advertisement and tests, develops them in an induction course, fixes their grade (compensation), gives them a grievance channel (integration), insures them (maintenance) and adds a bonus for deposit targets (motivation).

Controlling closes the loop: a year later the bank checks how many of them are still there, and why the others left.

The personnel policy, or employee handbook HOT 7/36

82 Bh · 80 Ba · 79 Bh · 78 Bh · 75 Ash · 74 Ash · 73 Shr3+54+45+3

A policy is a standing plan: a decision made once, in advance, that guides the many similar decisions that follow, so that any manager decides a case the same way.

Policy, rule and procedure: a policy leaves room for judgement ("we fill vacancies from inside when a qualified employee is available"); a rule leaves none (no smoking in the plant); a procedure gives the steps to follow.

The handbook is given out at hiring or placement and gone through during orientation and training by the personnel manager. It usually opens with a welcome, a short company history, its values and objectives and its structure, and then sets out the workplace rules.

The policies it contains

What a good policy must include

• Welcome: an address by top management.
• The organization: its values, morals, goals and objectives, and its structure.
• Rules and regulations: the hiring and dismissal policy, lay-offs, discipline, attire, the probation period.
• Time: hours of work, rest periods, attendance, leave, sick leave, holidays, paid leave, vacation, allowances.
• Pay and benefits: the pay structure, incentives and bonus, insurance, family benefits, education assistance, pension, disability and health plans.
• Employee assistance: counselling, relocation help, the unions.
• Legal policies: harassment, work accidents, disability, security, the disciplinary procedure, conflicts, administrative dismissal.

In Nepal, the handbook may give more than the Labour Act, 2074 (2017) but never less. Among the Act's minimums:

• Hours: 8 a day and 48 a week.
• Overtime: one and a half times the basic rate.
• Festival allowance: one month's basic pay a year.
• Leave: 12 days of sick leave, 98 days of maternity leave (60 of them paid), 15 days of paid paternity leave.

Why an organization needs one

• Consistency: similar cases get the same decision, whoever the manager is.
• Delegation and speed: managers decide routine people matters themselves, without referring each one upwards.
• Fairness and trust: employees know the rules in advance and see them applied equally.
• Fewer grievances and disputes: most arguments are settled by the written rule.
• Legal compliance: the law's requirements are built in once, not remembered case by case.
• A basis for control: actual practice can be checked against the stated policy.

A sound personnel policy is

• Tied to objectives: it serves the organization's goals.
• Written and clear: easy to read, with no room for two readings.
• Fair and consistent: the same rule for everyone, at every level.
• Stable but flexible: not changed at whim, reviewed when conditions change.
• Lawful: in line with the labour law.
• Made with participation: managers, employees and the union consulted.
• Communicated: every employee has it and has been taken through it.
• Comprehensive: it covers every personnel function.

Developing a personnel policy

1. Study the objectives and the law: the organization's goals, the Labour Act, the Trade Union Act, the Bonus Act and the social security rules.
2. Gather facts: present practice, grievances, turnover, and what similar firms do.
3. Consult line managers, employees and the union.
4. Draft the policy in writing.
5. Approve it at top management or board level.
6. Communicate it: the handbook, orientation, notice boards, the intranet.
7. Apply it consistently and review it periodically, as every Nepali employer had to when the Labour Act, 2074 replaced the old Labour Act of 2048.

Why it is discussed with every new employee

• Expectations both ways: the employee learns the hours, conduct and targets expected, and the pay, leave and benefits due.
• Faster settling in: it is the heart of induction, and it removes first-week confusion and anxiety.
• Fewer disputes: once a rule has been explained at hiring, no one can later claim not to have known it.
• Legal protection: a signed acknowledgement shows the harassment, safety and disciplinary rules were made known.
• Consistency: every new employee hears the same rules, which is itself fair.
• Commitment: values and culture are passed on from the first day.
• Rights and channels: the employee knows whom to approach with a grievance.
• Lower early turnover: a realistic picture of the job keeps those who stay.

Example: a new engineer posted to a remote hydropower site learns on the first day the site safety rules, the leave rules for remote postings and the allowances due, instead of finding them out through a dispute.