PRINCIPLES OF MANAGEMENT

1 DIPLOMA IN INSURANCE SERVICESMODULE - 1 NotesPrinciples of MANAGEMENT Business Environment 524 PRINCIPLES OF INTRODUCTIONIn earlier chapters you have studied how the insurance sectoris developing in Indian economy and in the present scenarioinsurance sector is one of the promising sectors to provideemployment opportunity. Once you have opted your career ininsurance sector and select any form of organization to do theinsurance business, as discussed in the previous chapter andto run any organization one should have the knowledge ofprinciples of MANAGEMENT . In the following paragraphs theprinciples of MANAGEMENT is being discussing the PRINCIPLES of MANAGEMENT it is to explainthat all industrial or business activities can be classified asfollows:1.

2 Technical activities consisting of production activities consisting of buying, selling activities concerning search for optimum use activities concerning protection of property activities concerning with maintenance ofaccounts including activities consisting of planning, organizing,commanding, co-ordaining and controllingMODULE - 1 Business EnvironmentNotes 53 PRINCIPLES of ManagementDIPLOMA IN INSURANCE SERVICESA lthough industrial or business organizations differ from oneanother in nature, size or complexities of operation yet allthese six activities are common in all enterprises. The first fiveactivities are quite well known therefore we are discussingonly the sixth managerial activities.

3 We will explain theseprinciples applicable in any insurance OBJECTIVESAt the end of this lesson you will be ablezTo know the PRINCIPLES of managementzHow to apply these PRINCIPLES in insurance MANAGERIAL ACTIVITIES / PRINCIPLES OFMANAGEMENTThe MANAGEMENT activities are known as PRINCIPLES ofmanagement which are as follows: Forecasting and Planning, Organizing, Commanding, Co-ordaining and ControllingA) Forecasting and PlanningPlanning means looking ahead or to foresee. To foresee means, both to assess the future and make provision for it. To planmeans to foresee and provide means for future. The process ofplanning includes:1. The identification of organizational goals.

4 The aim ofany insurance company is to insure life or property ofthe human being. The goal is to insure maximum numberof person or the property so that the risk can be spreadon number of The line of action to be followed. Once aim is set toinsurer human being or property then the next step ishow to insure human beings or property. The action willbe to create a Marketing Department for a The various stages through which the action wouldpass: To sell the insurance product only marketingDIPLOMA IN INSURANCE SERVICESMODULE - 1 NotesPrinciples of MANAGEMENT Business Environment 54department at one place head office cannot achievethe results therefore various offices at different locationto be set up to sell the insurance The method to be used to achieve the desired goals:The next issue comes how to sell the insurance it should be through Agents or Corporate Agentor Broker.

5 Accordingly the action of the insurance companywill start to recruit the ) OrganizingTo organize means building up the dual structure,material and human of the organization. To organizemeans to provide the organization with everything usefulto its functioning raw material, tools, capital and insurance company may not require the raw materialbut it requires other material tool (computers), capitaland personnel. A sound organization should have thefollowing to achieve the good relationship betweenmaterial and human. A single competent and energetic guiding authority:There should be a single person to be overall in-charge ofthe organization who will report to the Board of Chief Executing Officer (CEO) or Managing Directoris appointed in all organization whether it is insuranceor other type of organization.

6 Irrespective of the size ofthe organization. Efficient selection of personnel: Any organization is runby the human beings therefore it is always endeavor ofthe CEO /Managing Director to recruit the manpowerweather technical or finance or marketing the personshould be intelligent and efficient. It saves the costbecause the efficient people understand the working ofthe organization and take the decisions quickly. In aninsurance industry the trained manpower is requiredbecause the insurance polices ate technical in natureand requires lot of skill to make the understand to thecustomer Clear definition of duties at all levels: The duties of eachemployee should be defined to get the better results formthe employees.

7 If duties are not defined then theemployees will be confused what to do or not to do. In aninsurance company the target should be given to theMODULE - 1 Business EnvironmentNotes 55 PRINCIPLES of ManagementDIPLOMA IN INSURANCE SERVICES marketing personnel to insure so many lives or propertyand being a marketing function, it should not be assignedto Finance Deptt. Moreover there will be many employeesin the department the target should be given to the Headof the Deptt and then he will assign the targets to hisjuniors at different locations. Initiative and responsibility: The MANAGEMENT shouldensure that employees take initiative to complete the jobassigned to them.

8 The employees should be heldresponsible for not doing the things. In an insurancecompany the marketing team should be very strong tosell the insurance products. The team should takeinitiative to meet the number of persons to get theinsurance business. The team should not wait for theinstruction of their superiors to meet the customers. Minimum paper work: In the computer era the paperwork can be reduced and the employees of theorganization should maximum use the computers to savepaper work. In insurance the marketing team should sendthe daily performance report through email which willreduce the paper work.

9 Reward & efficiency: The good performers should beawarded cash or non cash award which boost the moraland efficiency of the employees. Unit of command: Every employee should report to onesuperior not to more than otherwise the performance andcontrolling of the employees will be very difficult. Clear and precise decision making: Any decision takenby any employee should not be ambiguous doublemeaning because it creates confusion. Proper control Disincentives for faults and error: for any fault of anyemployee or non performer should be penalized otherwiseit will affect the working of the performers. Supremacy of general interest in relation to individualetc: Any individual interest should not be clash with theorganization interest.

10 The organization interest shouldbe IN INSURANCE SERVICESMODULE - 1 NotesPrinciples of MANAGEMENT Business Environment 56C) CommandingIt means setting the business going to get the desired optimumresults from the subordinates. The managers must posses therequisites personal qualities and knowledge to commandeffectively. The managers must have a thorough knowledge of his personnel have capacity to spot the right and competent workers soas to eliminate the incompetent set a good example leadership conduct periodic assessment or audit of performance be well versed in agreement binding the business and itsemployees have lively and constant touch with subordinates aim at making unity, energy imitative and loyalty prevailamong personnelD) Co-ordinatingIt means the process developed by a manger to secure anorderly pattern of group effort among his personnel throughunity of action to pursue the common goals.