2nd Module

Organisation- an organised group of people with a particular purpose, such as business or

government department

Nature of Organisation:

There are some common features of organisation through which a clear idea about its nature can
be obtained. These are indicated below:

1. Process:

Organisation is a process of defining, arranging and grouping the activities of an enterprise and
establishing the authority relationships among the persons performing these activities. It is the
framework within which people associate for the attainment of an objective.

The framework provides the means for assigning activities to various parts and identifying the
relative authorities and responsibilities of those parts. In simple term, organisation is the process by
which the chief executive, as a leader, groups his men in order to get the work done.

2. Structure:

The function of organising is the creation of a structural framework of duties and responsibilities to
be performed by a group of people for the attainment of the objectives of the concern. The
organisation structure consists of a series of relationships at all levels of authority.

An organisation as a structure contains an “identifiable group of people contributing their efforts

towards the attainment of goals.” It is an important function of management to organise the
enterprise by grouping the activities necessary to carry out the plans into administrative units, and
defining the relationships among the executives and workers in such units.

3. Dividing and Grouping the Activities:

Organising means the way in which the parts of an enterprise are put into working order. In doing
such, it calls for the determination of parts and integration of one complete whole on the other. In
fact, organisation is a process of dividing and combining the activities of an enterprise.

Activities of an enterprise are required to be distributed between the departments, units or sections
as well as between the persons for securing the benefits of division of labour and specialisation, and
are to be integrated or combined for giving them a commonness of purpose.

L. Urwick defines organisation as: ‘determining what activities are necessary to any purpose and
arranging them as groups which may be assigned to individual.

4. Accomplishment of Goals or Objectives:

An organisation structure has no meaning or purpose unless it is built around certain clear-cut goals
or objectives. In fact, an organisation structure is built-up precisely because it is the ideal way of
making a rational pursuit of objectives. Haney defines organisation as: “a harmonious adjustment of
specialised parts for the accomplishment of some common purpose or purposes”.

5. Authority-Responsibility Relationship:

An organisation structure consists of various positions arranged in a hierarchy with a clear definition
of the authority and responsibility associated with each of these. An enterprise cannot serve the

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specific purposes or goals unless some positions are placed above others and given authority to bind
them by their decisions.

In fact, organisation is quite often defined as a structure of authority-responsibility relationships.

6. Human and Material Aspects:

Organisation deals with the human and material factors in business. Human element is the most
important element in an organisation. To accomplish the task of building up a sound organisation, it
is essential to prepare an outline of the organisation which is logical and simple. The manager should
then try to fit in suitable men. Henry Fayol says in this connection: “see that human and material
organisations are suitable” and “ensure material and human order”.

From these features of organisation, it emerges that, an organisation is essentially an administrative

‘process’ of determining what activities are necessary to be performed for the achievement of
objectives of an enterprise, dividing and grouping the work into individual jobs and, a ‘structure’ of
positions arranged in a hierarchy with defined relationships of authority and responsibility among
the executives and workers performing these tasks for the most effective pursuit of common goals
of the enterprise.

Principles of Organisation

1. Principle of Objective:

The enterprise should set up certain aims for the achievement of which various departments should
work. A common goal so devised for the business as a whole and the organization is set up to
achieve that goal. In the absence of a common aim, various departments will set up their own goals
and there is a possibility of conflicting objectives for different departments. So there must be an
objective for the organization.

2. Principle of Specialisation:

The organization should be set up in such a way that every individual should be assigned a duty
according to his skill and qualification. The person should continue the same work so that he
specialises in his work. This helps in increasing production in the concern.

3. Principles of Co-ordination:

The co-ordination of different activities is an important principle of the organization. There should
be some agency to co-ordinate the activities of various departments. In the absence of co-ordination
there is a possibility of setting up different goals by different departments. The ultimate aim of the
concern can be achieved only if proper co-ordination is done for different activities.

4. Principle of Authority and Responsibility:

The authority flows downward in the line. Every individual is given authority to get the work done.
Though authority can be delegated but responsibility lies with the man who has been given the

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work. If a superior delegates his authority to his subordinate, the superior is not absolved of his
responsibility, though the subordinate becomes liable to his superior. The responsibility cannot be
delegated under any circumstances.

5. Principle of Definition:

The scope of authority and responsibility should be clearly defined. Every person should know his
work with definiteness. If the duties are not clearly assigned, then it will not be possible to fix
responsibility also. Everybody’s responsibility will become nobody’s responsibility. The relationship
between different departments should also be clearly defined to make the work efficient and
smooth.

6. Span of Control:

Span of control means how many subordinates can be supervised by a supervisor. The number of
subordinates should be such that the supervisor should be able to control their work effectively.
Moreover, the work to be supervised should be of the same nature. If the span of control is
disproportionate, it is bound to affect the efficiency of the workers because of slow communication
with the supervisors.

7. Principle of Balance:

The principle means that assignment of work should be such that every person should be given only
that much work which he can perform well. Some person is over worked and the other is under-
worked, then the work will suffer in both the situations. The work should be divided in such a way
that everybody should be able to give his maximum.

8. Principle of Continuity:

The organization should be amendable according to the changing situations. Everyday there are
changes in methods of production and marketing systems. The organization should be dynamic and
not static. There should always be a possibility of making necessary adjustments.

9. Principle of Uniformity:

The organization should provide for the distribution of work in such a manner that the uniformity is
maintained. Each officer should be in-charge of his respective area so as to avoid dual subordination
and conflicts.

10. Principle of Unity of Command:

There should be a unity of command in the organization. A person should be answerable to one boss
only. If a person is under the control of more than one person then there is a like-hood of confusion
and conflict. He gets contradictory orders from different superiors. This principle creates a sense of

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responsibility to one person. The command should be from top to bottom for making the
organization sound and clear. It also leads to consistency in directing, coordinating and controlling.

11. Principle of Exception:

This principle states that top management should interfere only when something goes wrong. If the
things are done as per plans then there is no need for the interference of top management. The
management should leave routine things to be supervised by lower cadres. It is only the exceptional
situations when attention of top management is drawn. This principle relieves top management of
many botherations and routine things. Principle of exception allows top management to concentrate
on planning and policy formulation. Important time of management is not wasted on avoidable
supervision.

12. Principle of Simplicity:

The organizational structure should be simple so that it is easily understood by each and every
person. The authority, responsibility and position of every person should be made clear so that there
is no confusion about these things. A complex organizational structure will create doubts and
conflicts among persons. There may also be over-lapping’s and duplication of efforts which may
otherwise be avoided. It helps in smooth running of the organization.

13. Principle of Efficiency:

The organization should be able to achieve enterprise objectives at a minimum cost. The standards
of costs and revenue are pre-determined and performance should be according to these goals. The
organization should also enable the attainment of job satisfaction to various employees.

14. Scalar Principle:

This principle refers to the vertical placement of supervisors starting from top and going to the lower
level. The scalar chain is a pre-requisite for effective and efficient organization.

Types of Organisation

1. Line Structure Organization

Meaning of Line Structure Organization: – Line structure organization is the simplest and oldest
form of organization structure. It is called as a scalar type of military or divisional or organization.
Under this system, authority flows directly and vertically downward from the top of the managerial
hierarchy to different levels of managers and subordinates, and down to the operative level of
workers. It is also known as the chain of command or scalar principle.

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Advantages of Line Structure Organization: –

 Simple to understand and simple to operate;

 Communication is fast and easy;

 Feedback can be acted upon faster;

 Responsibility is fixed and unified at each level and authority and accountability are clear-
cut, hence each individual knows to whom he is responsible and who is or in truth
responsible to him;

 Since it is especially useful when the company is small in size, it provides for greater control
and discipline in the organization.

 It is a stable form of organization.

Disadvantages of Line Structure Organization: –

 It is a rigid and inflexible form of organization;

 Line authority has a tendency to become dictatorial;

 It overloads the executive with suppressive activities so that long-range planning and policy
making are often neglected;

 A line organization can suffer from a lack of specialization. This is because each department
manager is concerned only with the activities of his own department.

 Different departments may be more interested in their interests rather than overall
organizational interests and welfare;

 This is likely to encourage nepotism;

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  It might stop progress and prevent the unit to work effectively.

 It does not provide any means by which a good worker can be rewarded and a bad one can
be punished.

2. Line and Staff Organization

Meaning of Line and Staff Organization: – Line and staff organization, in management, approach
authorities (For example: – managers) establish goals and instructions that are then met by
employees and other workers. A line and staff organizational structure attempts to present a large
and complex enterprise in a more flexible way without sacrificing managerial authority. Staff groups
support those who are engaged in the central productive activity of the enterprise. They back up
their work. Staff groups help the organisation in analysing, researching, counselling, monitoring, and
in evaluating activities.

Advantages of Line and Staff Organization: –

 Line officers can mainly focus on the task as planning and checking is done by the
employees. Specialization provides expert advice and proficiency in management.

 Since the organization includes line and staff functions, decisions can be made easily.

 Staff officers provide complete factual data to line officers covering activity within and
without their units. This will help to create more coordination.

 It provides ample opportunities for the advancement of workers.

 Staff services provide a training ground for various positions.

 This arrangement is flexible for newcomers in that employees can be forced to make early
adjustments to the line arrangement.

 Staff experts are ideologically oriented to look forward and have time to undertake program
and strategic planning and analyze the potential impacts of future potential events.

Disadvantages of Line and Staff Organization: –

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  Confusion and conflict may arise between the line and the staff. Because the allocation of
authority and responsibility is not clear and the lower level members may be confused with
various line orders and staff advice.

 The staff usually advises the lines, but the line makes decisions and tasks. So employees
often feel powerless.

 Too much reliance on staff officers may not be beneficial to the business as line officers may
have to lose a lot about their decisions and duplication.

 Since staff specialists demand high pay, it is expensive.

 Employees are unable to carry out its plan or recommendations due to lack of authority. So
they sometimes become ineffective, this will make them careless and indifferent to their
jobs.

 As the line is performed, with advice provided by employees, if things go right, the employee
takes credit and if things go wrong, the line gets the blame for it.

3. Functional Structure Organization

Meaning of Functional Structure Organization: – Functional Structure Organization is one of the

most common structures of organization. They are grouped based on their specific skills and
knowledge. Under this structure, the employees are divided into groups by the organization
according to a particular or group of tasks. Where functional structures operate well in stable
environments, where business strategies have little inclination for change or mobility, the level of
bureaucracy makes it difficult for organizations to react quickly to market changes.

Advantages of Functional Structure Organization: –

 The executive or the team leader has the knowledge and experience of that particular field.
For example, the person heading the IT department will have the education and skill
necessary to shoulder this responsibility and successfully run his team.

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  Because the employee has expertise in that particular field, the work is more efficient and
precise. There are fewer mistakes. This also helps with the motivation of the employees of
the company.

 Since all team members come from similar backgrounds it allows them to share ideas and
come up with solutions. There is a sharing of knowledge, which is always beneficial.

 The employees also having a clear idea of the hierarchy of the firm. They need not report or
answer to several managers.

 Also, the employees feel secure in their work. They see that their work and efforts is not
going unnoticed. This sense of security helps them perform better.

Disadvantages of Functional Structure Organization: –

 The work can be quite one dimensional. After a while, the employees may start feeling
monotony or boredom. The lack of new challenges can make them unenthusiastic for the
job at hand.

 In this structure, the manager must take care of the appraisal system. If the correct
approach is not taken then conflicts may arise between the employees
regarding promotions or appraisals.

 Also, this form of organization requires a high degree of specialization which is difficult to
establish

 If there is a necessary change of personnel it can disrupt the whole system and its balance.
Also, it is quite a rigid structure, not leaving a lot of scope for adaptation.

 In Functional Organizational Structure, the employees never gain any knowledge or skills
outside their own department. This can cause difficulties in inter-
departmental communication.

4. Matrix Structure Organization

Meaning of Matrix Structure Organization: – A matrix organizational structure is a structure of

organization in which some individuals report to more than one supervisor or leader, which is
described as solid line or dotted line reporting. More broadly, it can also describe the management
of cross-functional, cross-business groups and other work models that do not maintain rigid business
units or silos grouped by function and geography. For example, an employee may have a primary
manager they report to as well as one or more project managers they work under.

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Advantages of Matrix Organization: –

 Since there is both vertical and horizontal communication, it increases coordination and this
leads to greater and more effective control over operations.

 As the matrix organization is handling many projects, the available resources will be fully
utilized.

 It focuses organizational resources on specified projects, thus enabling better planning and
control.

 It is highly flexible in following rules, procedures etc. Experience here is the best guide for
setting rules and procedures.

 As any department has to put its efforts towards the completion of any one project,
employees are effectively motivated.

Disadvantages of Matrix Organization: –

 Since, there is more than one supervisor for each worker, this causes confusion and conflict
and reduces effective control.

 There is continuous communication both vertically and horizontally, which increases paper
work and costs.

 It is difficult to achieve downward balance on projects technical and administrative aspects.

5. Project Structure Organization

Meaning of Project Structure Organization: – A project structure organizational structure is used to

determine the hierarchy and authority of people involved in a specific project. This organizational
structure is temporarily created for specific projects for a particular period, for the project to achieve
the goal of developing a new product, specialize in various functional departments such as
production, engineering, quality control, marketing research etc. and will be ready to work together.
These specialists return to their duties as soon as the project is completed.

In fact, the project organization is established with the aim of overcoming the major weakness of
functional organization, such as absence of unity of command, delay in decision making and lack of
coordination.

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Advantages of Project Structure Organization: –

 It is a notable depiction of the relationship between environment, strategy and structure.

 The team can focus properly.

 The clustering of activities on the basis of each project initiates new authorization patterns.

 As experts from different organizations are ready to work together under the project
organization, it helps in coordination.

 This makes for personal control and determination of personal responsibility.

Disadvantages of Project Structure Organization: –

 The uncertainty can be attributed to the diverse background of the professional who is
deputed in the project.

 The project manager finds it difficult to control in the traditional way in order to motivate
and control employees, in the absence of a norm of lines and norms responsible for
communication.

 Project completion may be delayed.

 Effective project management can also be hindered by top management who may not be
fully aware of the problems in the project center.

Centralisation and Decentralisation

1. Centralization and decentralization:

Centralisation:

Meaning and Definitions:

Centralisation implies that a majority of the decisions having to do with the work being performed
are not made by those doing the work but at a point higher in the organisation.

According to Louis A. Allen, “Centralisation is the systematic and consistent reservation of authority
at central points within the organisation.”

Centralisation of authority has following implications:

(a) Reservation of decision-making power at the top level.

(b) Reservation of operating authority with the middle level managers.

(c) Operations at lower levels are closely regulated by the top level.

All important decisions are taken by the top executives and operative decisions and actions at lower
levels in the organisation are subject to the close supervision of the top executives under the
process of centralisation. Unlike decentralisation, most of the decisions are taken not at a point
where work is being done but at a point higher in the organisation. As Fayol put it, “Everything that
goes to increase the importance of the subordinate’s role is decentralisation, everything which goes
to reduce it is centralisation.”

Although centralisation of authority increases the burden on the top managers and hampers the
growth of low level managers, but it has certain merits also. It prevents dilution of authority at lower

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levels. Different organisations follow centralisation in different degrees. It should be noted that
complete decentralisation is also not a feasible proposition of creating an effective organisation
structure. Some authority must be reserved at the highest level of management.

Greater the reservation of authority at the top level, higher is the degree of centralisation and lower
is the degree of decentralisation and vice versa. The issue of centralisation and decentralisation has
to be decided objectively taking into consideration the size and nature of enterprise, diversity of the
company’s product, economies of division of labour, location of markets, nature of services to be
performed, availability of trained and efficient managers, philosophy of management, etc.

Advantages of Centralisation:

1. It Promotes Personal Leadership – In case of small enterprises, personal leadership is an important

factor for the success. Similarly, businesses in early stages have operations relatively on a small scale
therefore top manager can concentrate entire authority with himself. This will help in taking quick
and correct decisions essential for the success of the business.

2. Helps in Achieving Uniformity of Action – Where a company wishes all operative units to perform
certain functions in the same manner and at the same time, there must be centralisation of
appropriate decision-making. This will help in achieving uniformity of actions.

3. To Provide for Integration – Centralised control enables organisation in keeping all the parts of the
enterprise moving harmoniously towards a common objective. A certain degree of centralisation of
authority is necessary to unite and integrate the total operations of the enterprise.

4. To Handle Emergencies – In uncertain business conditions, centralisation of decision-making is

essential as there are chances that emergency conditions may develop to endanger the very
existence of the company. Centralisation facilitate rational decisions from both short- as well as
long-term perspectives to meet such uncertainties.

5. To Overcome Duplication – Centralisation of various functions at the top level avoids duplication
of equipments and efforts and thus leads to economy in operations.

Limitations of Centralisation:

Centralisation of authority has the following demerits:

1. It can delay decision-making process as decision-making is not allowed at the lower levels.

2. It leads to increases the burden on the top managers and hampers the growth of lower level
managers.

3. It reduces motivation and morale of the lower level executives.

4. Success and growth of the enterprise becomes dependent on the capability of top executives

5. The chances of misuse of authority by the top executives increases.

Decentralisation:

Meaning and Definitions:

Most of the time, decentralisation is confused with delegation. But, decentralisation means much
more than simple delegation. According to McFarland, decentralisation is a situation in which

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ultimate authority to command and ultimate responsibility for results is localised as far down in the
organisation as efficient management of the organisation permits

Thus, decentralisation can be understood as retention of some authority (to plan, organise, direct
and control) at the top level and delegation of authority to make routine decisions at points as near
as possible to where action is actually required.

Decentralisation is a philosophy of the organisation and management, which involve both selectively
determining what, authority to push down into the organisation developing standing plans (such as –
policies) to guide subordinates who have this authority delegated to them.

Factors Responsible for Decentralisation:

1. When top management does not want to devote much time in communication, it takes recourse
of decentralisation.

2. Decentralisation is necessary to introduce flexibility in operation during growth and expansion

phase of organisation.

3. Organisation can exploit the benefit of technological advancements through decentralisation of its
activities.

4. When decision are required to be taken on the spot, decentralisation becomes necessity.

5. When the activities are physically located at different places, decentralisation is urgently required
for timely and successful completion of the work.

Advantages:

• Raise morale and promote interpersonal relationships.

• Relieve from the daily administration.

• Bring decision-making close to action.

• Develop Second-line managers.

• Promote employee’s enthusiasm and coordination.

• Facilitate actions by lower-level managers.

• Improves coordination, especially for services.

Disadvantages:

• Top-level administration may feel it would decrease their status.

• Managers may not permit full and maximum utilization of

highly qualified personnel.

• Increased costs. It requires more managers and large staff.

• It may lead to overlapping and duplication of effort.

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 • It may lead to lack of uniformity and lowering of standards in decision-making. Emergency
decision may not be possible.

SPAN OF CONTROL
Span of Control means the number of subordinates that can be managed efficiently and
effectively by a superior in an organization. It suggests how the relations are designed between a
superior and a subordinate in an organization.

• Factors Affecting Span of control:

• a) Capacity of Superior:
Different ability and capacity of leadership, communication affect management of
subordinates.
• b) Capacity of Subordinates:
Efficient and trained subordinates affects the degree of span of management.
• c) Nature of Work:
Different types of work require different patterns of management.
• d) Degree of Centralization or Decentralization:
Degree of centralization or decentralization affects the span of management by affecting the
degree of involvement of the superior in decision making.
• e) Degree of Planning:
Plans which can provide rules, procedures in doing the work higher would be the degree of
span of management.
• f) Communication Techniques:
Pattern of communication, its means, and media affect the time requirement in managing
subordinates and consequently span of management.
• g) Use of Staff Assistance:
Use of Staff assistance in reducing the work load of managers enables them to manage more
number of subordinates.
• h) Supervision of others:
If subordinate receives supervision form several other personnel besides his direct
supervisor. In such a case, the work load of direct superior is reduced and he can supervise
more number of persons.
• Span of control is of two types:
• 1. Narrow span of control:
• Narrow Span of control means a single manager or supervisor oversees few subordinates.
This gives rise to a tall organizational structure.

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 • types of
span of control
• Advantages:
• Close supervision
• Close control of subordinates
• Fast communication
• Disadvantages:
• Too much control
• Many levels of management
• High costs
• Excessive distance between lowest level and highest level
• 2. Wide span of control:
• Wide span of control means a single manager or supervisor oversees a large number of
subordinates. This gives rise to a flat organizational structure.
• Advantages:
• More Delegation of Authority
• Development of Managers
• Clear policies
• Disadvantages:
• Overloaded supervisors
• Danger of superiors loss of control
• Requirement of highly trained managerial personnel
• Block in decision making

Staffing: It’s Meaning, Nature and Importance!

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Meaning of Staffing:

The term ‘Staffing’ relates to the recruitment, selection, development, training and compensation of

the managerial personnel. Staffing, like all other managerial functions, is the duty which the apex

management performs at all times. In a newly created enterprise, the staffing would come as a. third

step—next to planning and organizing—but in a going enterprise the staffing process is continuous.

Nature of Staffing:

Staffing is an integral part of human resource management. It facilitates procurement and

placement of right people on the right jobs.

The nature of staffing function is discussed below:

1. People Centred:

Staffing is people centred and is relevant in all types of organisations. It is concerned with all

categories of personnel from top to bottom of the organisation.

The broad classification of personnel may be as follows:

(i) Blue collar workers (i.e., those working on the machines and engaged in loading, unloading etc.)

and white collar workers (i.e., clerical employees).

(ii) Managerial and non-managerial personnel.

(iii) Professionals (such as Chartered Accountant, Company Secretary, Lawyer, etc.).

2. Responsibility of Every Manager:

Staffing is a basic function of management. Every manager is continuously engaged in performing

the staffing function. He is actively associated with recruitment, selection, training and appraisal of

his subordinates. These activities are performed by the chief executive, departmental managers and

foremen in relation to their subordinates. Thus, staffing is a pervasive function of management and

is performed by the managers at all levels.

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It is the duty of every manager to perform the staffing activities such as selection, training,

performance appraisal and counseling of employees. In many enterprises. Personnel Department is

created to perform these activities.

But it does not mean that the managers at different levels are relieved of the responsibility

concerned with staffing. The Personnel Department is established to provide assistance to the

managers in performing their staffing function. Thus, every manager has to share the responsibility

of staffing.

3. Human Skills:

Staffing function is concerned with training and development of human resources. Every manager

should use human relations skill in providing guidance and training to the subordinates. Human

relations skills are also required in performance appraisal, transfer and promotion of subordinates. If

the staffing function is performed properly, the human relations in the organisation will be cordial.

4. Continuous Function:

Staffing function is to be performed continuously. It is equally important in the established

organisations and the new organisations. In a new organisation, there has to be recruitment,

selection and training of personnel. In a running organisation, every manager is engaged in various

staffing activities. He is to guide and train the workers and also evaluate their performance on a

continuous basis.

Importance of Staffing:

It is of utmost importance for the organisation that right kinds of people are employed. They should

be given adequate training so that wastage is minimum. They must also be induced to show higher

productivity and quality by offering them incentives.

In fact, effective performance of the staff function is necessary to realize the following benefits:

1. Efficient Performance of Other Functions:

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Staffing is the key to the efficient performance of other functions of management. If an organisation

does not have competent personnel, it can’t perform planning, organisation and control functions

properly.

2. Effective Use of Technology and Other Resources:

It is the human factor that is instrumental in the effective utilisation of latest technology, capital,

material, etc. the management can ensure right kinds of personnel by performing the staffing

function.

3. Optimum Utilisation of Human Resources:

The wage bill of big concerns is quite high. They also spend money on recruitment, selection,

training and development of employees. In order to get the optimum output from the personnel,

the staffing function should be performed in an efficient manner.

4. Development of Human Capital:

The management is required to determine the manpower requirements well in advance. It has also

to train and develop the existing personnel for career advancement. This will meet the requirements

of the company in future.

5. Motivation of Human Resources:

The behaviour of individuals is shaped by many factors such as education level, needs, socio-cultural

factors, etc. that is why, the human aspect of organisation has become very important. The workers

can be motivated through financial and non-financial incentives.

6. Building Higher Morale:

Right type of climate should be created for the workers to contribute to the achievement of the

organisational objectives. By performing the staffing function effectively, management can show the

significance it attaches to the personnel working in the enterprise. This will increase the morale of

the employees.

Management by Objectives: It is the abbreviation for Management By Objectives which is a

comprehensive management system that integrates many key managerial activities in a systematic

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manner and that is consciously directed towards effective and efficient achievement of

organizational and individual objectives.

Management by exception (MBE) is a style of business management that focuses on identifying and

handling cases that deviate from the norm, recommended as best practice by the project

management method

Process of Selection and Recrutiment

Recruitment-

 It is the process of attracting candidates to fill the positions in the organization structure

 Recruitment can be done with many sources. They are:

1. Re-employing former employees

2. Friends and relatives of present employees

3. Applicants at the gate

4. College and technical institutions

5. Employment exchange

6. Advertisements

7. Labor unions

8. Consultants and private agencies

Internal Recruitment

 This improves the security of employees

 Loyalty of employees increases

 Training cost is less

 Motivates the employees to perform better

 Employee turnover is reduced

 But this kind of recruitment may:

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  Limit the choice of selection of best candidate

 Biasing of employees may be encouraged

 Unsuitable persons may get promoted

 Results in stagnation as this avoids new blood the organization

External recuirtment

 This kind of recruitment brings new blood the organization which reveals the whole

organization

 Scope of choice becomes wide

 But this may result in:

 Increased turnover of employees

 Reduces the morale of employees

 Sense of security is lost

 Deteriorates the employee-employer relationship

Selection

Steps in Selection process

1. Application blank

Here the applicants fill in the details in the application blank

In this the candidate gives details about his qualification, specialization, experience,etc.

2. Initial interview of the candidate

This is done to clarify the information already furnished in application blank and also to create a

friendly environment for the candidates

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3. Employment tests

 To test further abilities of the candidates, some tests are conducted in this step

 These tests can be Aptitude tests, technical tests, interest tests, performance test,

personality test, intelligence test.

 These tests are conducted to test the traits, abilities, likes and dislikes, mental ability,

adaptability, etc.

4. Checking reference

If the candidate is found satisfactory, then it is very important to get his personal

background, history, character, etc. For this the candidates friends, previous employer, Institutional

heads can be contacted. . Physical or medical examination

 It is done to check the physical fitness of the candidates for the job.

 To prevent the unwarranted claims by the candidates

 To prevent communicable diseases entering the company

6. Final interview

This is just an informal interview wherein the candidate will be intimated about his selection

and briefed about his future prospects in the company.

MEANING AND NATURE OF DIRECTING Direction means issuing of orders, leading and motivating

subordinates as they go about executing orders. It is also defined as the process and techniques

used for issuing instructions to carry out a job and making sure that the operations are carried out as

per the plan. Directing is the interpersonal aspect of managing by which subordinates are led to

understand and contribute effectively and efficiently to the attainment of enterprise objectives. The

direction has two major activities namely 1. Giving orders to employees and 2. Leading and

motivating them to accomplish the goals. DEFINITION OF DIRECTION: "Directing is the interpersonal

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aspect of managing by which subordinates are led to understand and contribute effectively to the

attainment of enterprise objectives. (Harold D Koontz &O’Donnell)

Leadership styles

1. Transactional Leadership

Transactional leadership is a term used to classify a group of leadership theories that inquire the
interactions between leaders and followers. This style of leadership starts with the premise that team
members agree to obey their leader totally when they take a job on. The “transaction” is usually that
the organization pays the team members, in return for their effort and compliance. As such, the leader
has the right to “punish” team members if their work doesn’t meet the pre-determined standard.
Team members can do little to improve their job satisfaction under transactional leadership. The
leader could give team members some control of their income/reward by using incentives that
encourage even higher standards or greater productivity. Alternatively a transactional leader could
practice “management by exception”, whereby, rather than rewarding better work, he or she would
take corrective action if the required standards were not met.

Transactional leadership is really just a way of managing rather a true leadership style, as the focus is
on short-term tasks. It has serious limitations for knowledge-based or creative work, but remains a
common style in many organizations.

2. Autocratic Leadership

Under the autocratic leadership styles, all decision-making powers are centralized in the leader as
shown such leaders are dictators. Autocratic leadership is an extreme form of transactional leadership,
where a leader exerts high levels of power over his or her employees or team members. People within
the team are given few opportunities for making suggestions, even if these would be in the team’s or
organization’s interest.

Autocratic leadership style is often considered the classical approach. It is one in which the manager
retains as much power and decision-making authority as possible. The manager does not consult
employees, nor are they allowed to give any input. Employees are expected to obey orders without
receiving any explanations. The motivation environment is produced by creating a structured set of
rewards and punishments. Autocratic leaders make decisions without consulting their teams. This is
considered appropriate when decisions genuinely need to be taken quickly, when there’s no need for
input, and when team agreement isn’t necessary for a successful outcome.

Many people resent being treated like this. Because of this, autocratic leadership often leads to high
levels of absenteeism and staff turnover. Also, the team’s output does not benefit from the creativity
and experience of all team members, so many of the benefits of teamwork are lost.

For some routine and unskilled jobs, however, this style can remain effective, where the advantages
of control outweigh the disadvantages.

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3. Transformational Leadership

Transformational leadership is a leadership style that is defined as leadership that creates valuable
and positive change in the followers. A transformational leader focuses on “transforming” others to
help each other, to look out for each other, to be encouraging and harmonious, and to look out for
the organization as a whole. In this leadership, the leader enhances the motivation, morale and
performance of his follower group. A person with this leadership style is a true leader who inspires his
or her team with a shared vision of the future. Transformational leaders are highly visible, and spend
a lot of time communicating. They don’t necessarily lead from the front, as they tend to delegate
responsibility amongst their teams. While their enthusiasm is often infectious, they can need to be
supported by “detail people”.

In many organizations, both transactional and transformational leadership are needed. The
transactional leaders (or managers) ensure that routine work is done reliably, while the
transformational leaders look after initiatives that add new value.

4. Servant Leadership

This term, coined by Robert Greenleaf in the 1970s, describes a leader who is often not formally
recognized as such. When someone, at any level within an organization, leads simply by virtue of
meeting the needs of his or her team, he or she is described as a “servant leader”. Servant Leadership’s
focus was on the leader as a servant, with his or her key role being in developing, enabling and
supporting team members, helping them fully develop their potential and deliver their best. In many
ways, servant leadership is a form of democratic leadership, as the whole team tends to be involved
in decision-making.

Supporters of the servant leadership model suggest it is an important way ahead in a world where
values are increasingly important, and in which servant leaders achieve power on the basis of their
values and ideals. Others believe that in competitive leadership situations, people practicing servant
leadership can find themselves “left behind” by leaders using other leadership styles. Followers may
like the idea of servant leadership so there’s something immediately attractive about the idea of
having a boss who’s a servant leader. People without responsibility for results may like it for its
obviously democratic and consensual approach.

5. Charismatic Leadership

The Charismatic Leader and the Transformational Leader can have many similarities, in that the
Transformational Leader may well be charismatic. Their main difference is in their basic focus.
Whereas the Transformational Leader has a basic focus of transforming the organization and, quite
possibly, their followers, the Charismatic Leader may not want to change anything. A charismatic
leadership style can appear similar to a transformational leadership style, in that the leader injects
huge doses of enthusiasm into his or her team, and is very energetic in driving others forward.

However, charismatic leaders can tend to believe more in themselves than in their teams. This can
create a risk that a project, or even an entire organization, might collapse if the leader were to leave
because in the eyes of their followers, success is tied up with the presence of the charismatic leader.
As such, charismatic leadership carries great responsibility, and needs long-term commitment from
the leader.

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6. Democratic Leadership or Participative Leadership

Although a democratic leader will make the final decision, he or she invites other members of the
team to contribute to the decision-making process. This not only increases job satisfaction by involving
employees or team members in what’s going on, but it also helps to develop people’s skills. Employees
and team members feel in control of their own destiny, and so are motivated to work hard by more
than just a financial reward. Democratic leadership can produce high quantity work for long periods
of time. Many employees like the trust they receive and respond with cooperation, team spirit, and
high morale.
As participation takes time, this style can lead to things happening more slowly than an autocratic
approach, but often the end result is better. It can be most suitable where team working is essential,
and where quality is more important than speed to market or productivity.

7. Laissez-Faire Leadership

The laissez-faire leadership style is also known as the “hands-off ¨ style. It is one in which the manager
provides little or no direction and gives employees as much freedom as possible. All authority or power
is given to the employees and they must determine goals, make decisions, and resolve problems on
their own.

This French phrase means “leave it be” and is used to describe a leader who leaves his or her
colleagues to get on with their work. It can be effective if the leader monitors what is being achieved
and communicates this back to his or her team regularly. Most often, laissez-faire leadership works
for teams in which the individuals are very experienced and skilled self-starters. Unfortunately, it can
also refer to situations where managers are not exerting sufficient control. The advantage of this kind
of style is positive only in the case when the employees are very responsible and in case of creative
jobs where a person is guided by his own aspirations. In these cases, less direction is required so this
style can be good. This style has more disadvantages because usually it is the result of the lack of
interest of the leader that leads to his adopting this style. It proves poor management and makes the
employees lose their sense of direction and focus. The disinterest of the management and leadership
causes the employees to become less interested in their job and their dissatisfaction increases.

8. Bureaucratic Leadership

This is style of leadership that emphasizes procedures and historical methods regardless of their
usefulness in changing environments. Bureaucratic leaders attempt to solve problems by adding layers
of control, and their power comes from controlling the flow of information. Bureaucratic leaders work
“by the book”, ensuring that their staff follow procedures exactly. This is a very appropriate style for
work involving serious safety risks such as working with machinery, with toxic substances, at heights
or where large sums of money are involved such as cash-handling.

In other situations, the inflexibility and high levels of control exerted can demoralize staff, and can
diminish the organization’s ability to react to changing external circumstances.

The different leadership styles discussed above proves that leadership styles are the characteristics
that critically define the leaders in organizations. They’re a mix-and-match of various traits, and goes
a long way influence the culture of the whole company and or organization.

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Motivation definition - (i) Motivation is a general term applying to the entire class of drives, desires,

needs, wishes and similar forces that induces an individual or a group of people to work'. - Koontz

and O'Donnell

MOTIVATION THEORIES There is no shortage of motivation theories. We can classify them under

three broad- heads:

1. Content theories

2. Process theories

3. Reinforcement theory

The content theories tell us what motivates an individual. They throw light on the various needs and

incentives which cause behavior.

The process theories, on the other hand, answer the question how behavior is caused.

Reinforcement theory explains the ways in which behavior is learned, shaped or modified.

THEORIES OF HUMAN MOTIVATION

There are several theories of motivation based on different structures of human needs and

expectations. Some of them are 1. Maslow's Hierarchy of Needs Theory 2. Herzberg's Motivation -

Hygiene Theory

1. Maslow’s theory of hierarchical needs

Abraham Maslow postulated that a person will be motivated when all his needs are fulfilled. People
do not work for security or money, but they work to contribute and to use their skills. He
demonstrated this by creating a pyramid to show how people are motivated and mentioned that
ONE CANNOT ASCEND TO THE NEXT LEVEL UNLESS LOWER-LEVEL NEEDS ARE FULFILLED. The lowest
level needs in the pyramid are basic needs and unless these lower-level needs are satisfied people
do not look at working toward satisfying the upper-level needs.

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Below is the hierarchy of needs:

 Physiological needs: are basic needs for survival such as air, sleep, food, water, clothing, sex,
and shelter.
 Safety needs: Protection from threats, deprivation, and other dangers (e.g., health, secure
employment, and property)
 Social (belongingness and love) needs: The need for association, affiliation, friendship, and
so on.
 Self-esteem needs: The need for respect and recognition.
 Self-actualization needs: The opportunity for personal development, learning, and
fun/creative/challenging work. Self-actualization is the highest-level need to which a human
being can aspire.

The leader will have to understand at what level the team members are currently, and seek out to
help them to satisfy those specific needs and accordingly work to help fulfil those needs. This will
help the team members perform better and move ahead with the project. Also, as their needs get
fulfilled, the team members will start performing, till the time they start thinking of fulfilling the next
upper level of need as mentioned in the pyramid.

2. Hertzberg’s two factor theory

Hertzberg classified the needs into two broad categories; namely hygiene factors and motivating
factors:

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  poor hygiene factors may destroy motivation but improving them under most circumstances
will not improve motivation
 hygiene factors only are not sufficient to motivate people, but motivator factors are also
required

Communication

Importance of Communication

1. The Basis of Co-ordination

The manager explains to the employees the organizational goals, modes of their achievement and also
the interpersonal relationships amongst them. This provides coordination between various employees
and also departments. Thus, communications act as a basis for coordination in the organization.

2. Fluent Working
A manager coordinates the human and physical elements of an organization to run it smoothly and
efficiently. This coordination is not possible without proper communication.

3. The Basis of Decision Making

Proper communication provides information to the manager that is useful for decision making. No
decisions could be taken in the absence of information. Thus, communication is the basis for making the
right decisions.

Learn more about Barriers of Communication here in detail.

4. Increases Managerial Efficiency

The manager conveys the targets and issues instructions and allocates jobs to the subordinates. All of
these aspects involve communication. Thus, communication is essential for the quick and effective
performance of the managers and the entire organization.

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5. Increases Cooperation and Organizational Peace
The two-way communication process promotes co-operation and mutual understanding amongst the
workers and also between them and the management. This leads to less friction and thus leads to
industrial peace in the factory and efficient operations.

6. Boosts Morale of the Employees

Good communication helps the workers to adjust to the physical and social aspects of work. It also
improves good human relations in the industry. An efficient system of communication enables the
management to motivate, influence and satisfy the subordinates which in turn boosts their morale and
keeps them motivated.

Co ordination meaning

"Co-ordination refers to the orderly arrangement of individual and group efforts to ensure unity of
action in the realization of common goals." - Mooney and Reiley

IMPORTANCE OF CO-ORDINATION

The importance of co-ordination can be understood though the following points:

1. Co-ordination increases efficiency

Co-ordination helps minimizing wastages, overlapping and duplication of work, misuse of resources
etc., and the thus increases efficiency and economy in the organization. Co-ordination enables an
organization to use all its resources in a optimum way.

2. Co-ordination improves human relations

Co-ordination improves and maintains harmonious relationship between individuals between

individuals and the organization. With co-ordination, members begin to work, understand and adjust
with eacher, develop mutual trust and co-operation and probably move closer to each other. All
these help improve human relations.

3. 3. Co-ordination resolves conflicts

Conflicts in organizations arise usually because of differences between organizational goals and
individual goals. An individuals perception of an organizational goal could be different to that of an
another, which again leads to conflicts. Coordination is the only means by which such conflicts can
be avoided.

4. Co-ordination makes all departments focus together

Different departments in an organizations such as production, R & D, finance, marketing, accounts

etc., have to jointly focus in order to achieve but results. Without co-ordination, each department
tends to look only at its needs and necessities, without caring for other departments. Co-ordination
is the only way of m2king them look for common cause.

5. Co-ordination helps sharing of resources In any organization,

there is always a shortage of resources such as manpower, finance, space, transportation etc. Co-
ordination is the only way to ensure the best distribution of resources among all individuals and
departments of the organization

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6. Co-ordination retains and attracts talent

Good all-around co-ordination improves not only harmonious relationships but also increases profit
to an organization and to its employees. Naturally talented youngsters are attracted to join such
organizations. There are lists of best employers in every country where people would love to work,
and this does not necessarily depend on pay packets alone. Co-ordination plays a great role if a
company comes to be known as a good employer.

TECHNIQUES OF CO-ORDINATION

A variety of techniques are used by managers to achieve co-ordination. The important ones are:

1. Co-ordination by plans and procedures

If plans and procedures are highly structured and in place, co-ordination becomes somewhat
automatic. Apart from these, if the other types of plans such as schedules, rules, budgets, policies
etc., are stated in precise terms so as to avoid confusion, it results in better co-ordination.

2. Co-ordination by sound and simple organization

If the structure of an organization is sound and simple, it leads to better co-ordination. If the
authority, responsibility and accountability are established in a clear-cut manner, it improves co-
ordination.

3. Co-ordination by chain of command If it is very clear as to who should report to whom in an

organization, it helps co-ordination. Establishing a clear chain of command or a superior-subordinate
relationship goes a long way in ensuring coordination.

4. Co-ordination by effective communication

Effective communication plays a vital role in achieving co-ordination. Communication facilitates

proper understanding between individuals and groups among whom co-ordination is to be achieved.
5. Co-ordination by committees

Formation of committees to co-ordinate is a sound management technique. Committees are made

up of Knowledgeable, experienced and responsible persons entrusted with discharging some
functions collectively as a group. Creation of teams, task forces and interdepartmental committees
are some of the ways of achieving co-ordination.

6. Co-ordination by conference

In large business organizations conferences are organized at regular intervals to provide a platform
for discussion to the various units which could be geographically widespread. In such conferences
top management and executives at lower levels exchange views, identify problems and resolve it
through discussion. Some companies have Open forums' where any question raised by any
employee should be answered by the appropriate man-incharge. Such discussion forums and
platforms pave the way for better co-ordination throughout the organization.

7. Co-ordination by special co-ordinators

If a manager in an organization has very less time to address issues of co-ordination, he may hire an
assistant or a 'Special coordinator' to do the job for him. This man's job is to collect information
regarding problems, analyze them, list various alternatives available, and suggests steps to be taken
to the manager.

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8. Co-ordination through sound leadership

Sound leadership of top management is the surest means of achieving co-ordination. Good leaders
may persuade and convince their subordinates to place company interests above their personal
interests. They may even inspire self-coordination within a group

Meaning and steps in controlling

The “Controlling Process” is a method that can be used to make sure standards are being met within
an organization. It involves the careful collection of information about a system, process, person, or
group of people in order to make necessary decisions about each.

Definition: “Controlling” assures that the right things are done in the right manner at the right time.
By controlling, a Program Manager checks the progress and compares it to what was planned. If the
planned events are not the same, then corrective actions can be taken.

Controlling Process Steps

A five (5) step controlling process example is detailed below.

Step 1: Establish Clear Standards: Standards are the plans or the targets which have to be achieved
in the course of business function. They can also be called the criteria for judging performance.
Standards generally are classified into two:

 Measurable or tangible: Those standards which can be measured and expressed are
called measurable standards. They can be in form of cost, output, expenditure, time,
profit, etc.
 Non-measurable or intangible: There are standards that cannot be measured
monetarily. For example- performance of a manager, deviation of workers, their
attitudes towards a concern. These are called intangible standards.
 Controlling becomes easy through the establishment of these standards because
controlling is exercised on the basis of these standards.

Step 2: Monitor and Record Performance: The second major step in controlling is to measure the
performance. Finding out deviations becomes easy through measuring the actual performance.
Performance levels are sometimes easy to measure and sometimes difficult. Measurement of
tangible standards is easy as it can be expressed in units, cost, money terms, etc. Quantitative
measurement becomes difficult when the performance of a manager has to be measured. The
performance of a manager cannot be measured in quantities. It can be measured only by:
 The attitude of the workers,
 Their morale to work,
 The development in the attitudes regarding the physical environment, and
 Their communication with the superiors.

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Step 3: Comparison Results Against Standards: Comparison of actual performance with the planned
targets are very important. The deviation can be defined as the gap between actual performance
and the planned targets. The manager has to find out two things here- the extent of deviation and
cause of deviation. The extent of deviation means that the manager has to find out whether the
deviation is positive or negative or whether the actual performance is in conformity with the
planned performance. Once the deviation is identified, a manager has to think about various causes
which have led to a deviation. The causes can be:
 Erroneous planning,
 Co-ordination loosens,
 Implementation of plans is defective, and
 Supervision and communication are ineffective, etc.
Step 4: Communicate Results: Once the results have been determined, all stakeholder needs to be
notified and keep up to date.

Step 5: If needed, Take Corrective Action: Once the causes and extent of deviations are known, the
manager has to detect those errors and take remedial measures for them. There are two
alternatives here:
 Taking corrective measures for deviations that have occurred; and
 After taking the corrective measures, if the actual performance is not in conformity with
plans, the manager can revise the targets. It is here the controlling process comes to an
end. Follow-up is an important step because it is only through taking corrective
measures, a manager can exercise control.

Elements of a good Control System

Every decent control system must possess certain basic elements. Since they all play a major role, the
absence of any one of them can make the whole system weak. Hence, managers must ensure that their
control systems contain the following basic elements and considerations.

1) Feedback
Feedback is the backbone of all control systems. This feedback is nothing but the information that
managers use to correct their organization’s actual performance.

The aim of feedback is basically to adjust future actions using previous experiences. Managers use the
information they receive from feedbacks to implement corrective measures. Such measures generally
help in bridging the gap between the actual performance of the organization and its goals.

Feedback may be either formal or informal. Formal feedback consists of sources like financial
statements, statistics, reports, other written communication, etc. On the other hand, informal feedback
includes personal opinions, informal discussions and an individual’s observations.

2) Control must be objective

The second essential requirement of a good control system is that it must always be objective. A
subjective criterion should never be the basis of evaluating actual performances.

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For example, evaluation of an employee’s performance should comprise of standards like working
hours, productivity, efficiency, etc. Managers should not evaluate employees using subjective
prejudices.

3) Prompt reporting of deviations

This element of the controlling system basically requires quick reporting of deviations and discrepancies.
If some work is not going according to plans, relevant managers must take notice of this immediately.
This is because any delay in reporting problems and taking corrective measures can lead to financial
losses for a business.

4) Control should be forward-looking

Control systems can often suffer from the defect of delays in reporting of deviations and taking of
corrective measures. As we saw above, this problem can lead to financial losses for a business.

Hence, managers must ensure that their control systems are forward-looking. This will help in predicting
deviations in advance as well as giving adequate time for course correction.

5) Flexible controls
A rigid control system can often make it ineffective in extraordinary and unpredictable situations. It
should, thus, be flexible and open to changes. Managers must be able to adapt their control measures
as per the requirements of every possible scenario.

6) Hierarchical suitability
Almost all business organizations possess management hierarchies comprising of managers at various
positions and levels. Since each manager performs controlling functions at his level, the system itself
must suit his organization’s hierarchy. Every manager must have adequate powers for this purpose and
the flow of information for evaluation should be effective.

7) Economical control
Every good controlling system has to be economical when it comes to its implementation and
maintenance. In other words, its benefits should outweigh its costs. An organization must be able to
afford it and also derive all possible advantages from it.

8) Strategic control points

Not all deviations require the same level of attention and importance. For example, if an infrastructure
company loses one government tender for constructing roads, it can work on other projects.

However, if the government blacklists it altogether due to its financial irregularities, this can be a huge
issue.

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A good control system must be able to deal with every deviation as per its seriousness. No organization
can afford to accord equal importance to each and every problem. This is basically the whole aim of
strategic control points.

9) Control must be simple to understand

Sophisticated policies can often make elements of control systems difficult to understand and
implement. A good system, however, is always simple to comprehend and work on.

Thus, before launching controlling measures, managers should first check whether their employees will
be able to understand them. They should also try to resolve any ambiguities and confusion that may
arise later.

10) Control should focus on workers

Good control systems always focus on workers instead of the work itself. Since it is workers who
implement these systems, everybody should be able to work with them effectively.

Methods of Establishing Control (Control Stages)

Control methods are adopted in three stages.

In the first phase, the controls are evolved even before the plans are implemented. These methods
are termed as "Precontrol" operation. In this stage, the proposed operations are devised in such a
way that actual results will compare favourably with planned results. Therefore the important aspect
to be considered is that the management policies are to be fully reflected in action plans. The
policies actually give direction in which the objectives are to be achieved. The methods and
procedure should be framed in accordance with policies.

As actual operation methods and procedure are prepared as per the objectives and
policies, Precontrol becomes an effective control system and facilitate the attainment of desired
results. Resources allocation is another aspect which gets importance in precontrol system. Both
human and non-human (technical financial) resources are to be properly allocated and "monitoring"
devices are to be developed for proper utilisation of these resources. Control devices should see that

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resources are utilised for the purpose for which they are appropriated. Control system should signal
the top management about dangers of diversion of resources immediately.

In the second phase of controlling, the operation managers have to monitor the procedures in
accordance with the plan already laid down. The manager should observe the operations and
instruct subordinates in the proper methods and procedures^ He/She is only a link between top
management and workforce and directs the operations in accordance with the laid policies, methods
and procedures. The relative importance of direction depends upon the nature of task to be
performed by the workforce of that unit. This technique is called "Concurrent control."

In this stage every operation is directed. The director (i.e., manager) should possess "interpersonal
communication skill." The operational aspects are to be properly communicated to the workforce
(Subordinates). If there is no clarity in communication, the subordinates, when they do not
understand clearly the policies and procedures may deviate in their operations. Hence, the manager
should have communication skills to regularly inform the subordinates about their operations. Many
managers think that laid down methods and procedures are clear and there is no necessity for
further clarification to be made to the workforce. But, many a time the workers had failed to
understand their task and had deviated from the set task. Therefore proper communication of

Besides Precontrol and concurrent control systems, post control measures are to be adopted for
successful completion of planning. Historical documents provide a base for post control operations.
The financial statements, the production documents, marketing data etc. available after the
implementation of plan will provide data for correct actions. The routine post control methods used
in several organisations are (i) Standard costing techniques, (ii) Financial Statement analysis, (iii)
Performance appraisal of employees and (iv) Quality control systems.

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