Principles of Management unit 3

PRINCIPLES OF MANAGEMENT
MG8591
POM - Unit II
Prepared By,
Mrs.S.SRIDEVI

Functions of
Management
Planning
activities to
achieve the
organization's
objectives
Organizing
resources and
activities to
achieve the
organization’s
objectives
Staffing
the
organization
with qualified
people
Directing
employees’
activities
toward
achievement
of objectives
Controlling
the
organization’s
activities
to keep it
on course
4:23 AM

PRINCIPLES OF
MANAGEMENT
UNIT III ORGANIZING
Nature and purpose – Formal and informal
organization – organization chart – organization
structure – types – Line and staff authority –
departmentalization – delegation of authority –
centralization and decentralization – Job Design –
Human Resource Management – HR Planning,
Recruitment, selection, Training and
Development, Performance Management , Career
planning and management

INTRODUCTION
 Organizing is the process of
identifying and grouping the activities required to
attain the objectives,
delegating authority,
creating responsibilities and
establishing relationships for people to work
effectively.
 Organization refers to the process of
determining, arranging, grouping and assigning
the activities to be performed for the attainment
of objectives.
 The organization is a mechanism or structure
which helps the activities to be performed
effectively. 4:23 AM POM - Unit III

Organizing – Various
Definitions
 “The grouping of activities necessary to attain
objectives, the assignment of each grouping to a
manager with authority necessary to supervise it and
the provision for the co-ordination horizontally and
vertically in the enterprise structure”.
– Koontz and O’Donnel
 “Organizing is the process of defining and grouping the
activities of the enterprise and establishing the authority
relationships among them” –
Haimann.
 “Organizing is the establishment of effective behavioural
relationships among persons so that they may work
together effectively and gain personal satisfaction in
doing the selected tasks under given environmental
conditions for the purpose of achieving some
objectives” - Terry.
4:23 AM POM - Unit III

Organizing – Various
Definitions
 “Organizations are the collection of people
that have been established for the pursuit of
relatively specific objectives being more or
less on continuous basis”. – William Scott.
 “An identified group of people contributing
their efforts towards the attainment of goals is
called an organization” –
Mc.Farland.
 “Organization is the form of every human
association for the attainment of a common
purpose” - James D.Mooney.

ORGANIZING – NATURE
AND PURPOSE

Nature of Organizing
i. Common objectives
ii. Specialization or Division of Labour
iii. Authority of structure or Chain of
command
iv. Group of persons
v. Co-ordination
vi. Communication
vii. Environment
viii. Rules and Regulations

Process of Organizing
Steps in the organization process
i. Determination of activities
ii. Grouping of activities
iii. Assignment of duties
iv. Delegation of authority
v. Establishment of structural relationship
vi. Co-ordination of activities

Purpose / Importance of Organizing
• Organizing activities are important for the success
of an enterprise.
• Organization is the foundation store upon which
the whole structure of management is built.
• It is the backbone of management.
• A sound organizing can contribute to the success of
an organization in many of the following ways:
i. To facilitate administration
ii. To increase the efficiency of management
iii. To facilitate growth and diversification
iv. To ensure optimum use of man and material
resources
v. To facilitate co-ordination and communication
vi. To permit optimum use of technological
innovations
vii. To stimulate creativity and initiative

FORMAL AND INFORMAL
ORGANIZATION

Formal Organization
• Consists of a classical hierarchical structure in which
position,
• responsibility,
• authority,
• accountability and the line of command are clearly
defined and established.
• It is a system of well-defined jobs with a prescribed
pattern of communication, coordination and delegation of
authority.
• According to Allen, “ The formal organization is a system of
well-defined jobs, each bearing a definite measure of
authority, responsibility and accountability”.
• The formal organization must be flexible.
• It creates the co-ordination between workers to achieve
the common goal.
• The inter-relationship of staff members can be shown in
the organization charts and manuals under formal

Characteristics of Formal Organization
i. It is flexible and properly planned.
ii. It is based on the principle of division of labour
and efficiency in operations.
iii. It concentrates more on the performance of jobs
but not on the individuals performing the jobs.
iv. Organization charts are usually drawn.
v. Coordination among members and their control
are well specified through processes, procedures,
rules, etc.
vi. The responsibility and accountability at all levels
of organization should be clearly defined.
vii. Unity of command is normally maintained.

Advantages of Formal Organization
i. The conflict among the workers is automatically
reduced.
ii. Overlapping of responsibility is easily avoided.
iii. More stable organization can be ensured. It
makes the organization less dependent on one
man.
iv. A sense of security arises from classification of
the task.
v. It motivates the employees.

Informal Organization
• It establishes the relationship on the basis of
member’s interaction, communication, personal
likings and dislikings, and social contacts within as
well as outside the organization.
• It arises naturally on the basis of friendship or some
common interest which may or may not be related
with work.
• For example, the typists working in different
departments may form an informal group due to
similarity of work.
• Common language, common hobby, common habits
may also lead to informal organization.
• The informal organization relationship exists under the
formal organization also.
• The informal organization gives a greater job
satisfaction to the individual and results the maximum
production. 4:23 AM POM - Unit III

Characteristics of Informal Organization
i. It arises voluntarily.
ii. It is created on the basis of some similarity among
the members. The bases of similarity may be age,
sex, place of birth, caste, religion,
likings/dislikings, etc
iii. Informal organization has no place in the
organization chart.
iv. It is one part of the total organization
v. It has no structure and definiteness
vi. A person may become a member of several
informal organizations at the same time.
vii. The rules and traditions of informal organization
are not written but they are commonly followed.

Advantages of informal
Organization
i. Since it gives the satisfaction to workers, it
motivates workers and maintains the stability of
the work.
ii. It fills up the gaps and deficiency of the formal
organization.
iii. It fills up the gaps among abilities of the
managers.
iv. The presence of informal organization encourages
the executives to plan the work correctly and act
accordingly.
v. It is one of the useful channels of communication.

Disadvantages of informal Organization
i. Informal organizations may function as counter-
productive. They may be a barricade of achieving
the objectives of the organization.
ii. It indirectly reduces the effort of management to
promote the greater productivity.
iii. It spreads a rumor among workers regarding the
functioning of the organization unnecessarily.

Differences b/w formal & informal Organization

Organizational Chart
• Organizational charts are prepared for the purpose of
describing the organizational structure clearly.
• It shows the organizational relationships and activities
within an organization.
• J.Batty has defined, “An organization chart is
diagrammatic representation of the framework or
structure of an organization”.
• Contents of organization chart:
• Basic organization structure and flow of authority
• Authority and responsibilities of various executives
• Relationship between the line and staff personnel
• Name of components of organization
• Position of various office personnel
• Channel of communication
• Requirements of management development
• Total number of person working in an organization
• Ways of promotion and salary particulars

Types of Organizational Chart
1. Top-down chart or Vertical chart

2. Horizontal chart or Left to Right chart

3. Circular chart or concentric chart

Organisation chart for IT
Companies
4:23 AM POM - Unit 1

Advantages of Organizational
charts
i. It shows clearly the various positions in the
organization and their relationships – vital tool of
the management
ii. Dual reporting relationships and overlapping
positions come to light in the preparation of
organization chart
iii. Shows the line of authority and responsibility from
which individuals can identify the limits of their
authority. So the organizational conflicts may be
reduced.
iv. It is a starting point for planning organizational
changes
v. It serves as a valuable guide to the new personnel
in understanding how their positions fit into the
total organization.
vi. The strength and weakness of an organization are

Advantages of Organizational
charts
vii. It improves both inward communication and
outward communication
viii. It provides good clues to the lines of promotion
ix. It provides a framework for classification and
evaluation of personnel.
x. The outsiders of the organization can have a
quick understanding of each department and
guide as to whom they should contact.

Disadvantages of Organizational charts
i. Omits many important informal and informational
relationships
ii. Creates more rigid formal relationships. Updating
the chart is difficult.
iii. If not prepared correctly, it will lead to misleading
inferences.
iv. Show relationships which are supposed to exist
rather than what they actually exist in the
organization.
v. Fails to show how much authority an individual
can exercise and how far he is responsible.
vi. The words and lines in an organization chart gives
the different meanings to different persons.
vii. It may create psychological problems by providing
the superior or subordinate positions more

Organizational Structure
• Organization structure is the formal pattern of
interactions and coordination designed by
management to link the tasks of individuals and
groups in achieving the organizational goals.
• An organization structure should be designed to
clarify what task is to do, who is to and who is
responsible for what results.
• It is designed both from mechanistic and humanistic
point of views.
• “Organization structure consists simply of those
aspects of pattern of behaviour in the organization
that are relatively stable and change only slowly” –
March & Simon.

Significance of organizational structure
i. Properly designed organization can help to
improve the teamwork and productivity.
ii. It determines the location of decision-making in
the organization.
iii. Sound organization structure facilitates the growth
of enterprise by increasing its capacity to handle
the increased level of authority.
iv. Organization structure provides the pattern of
communication and coordination.
v. It helps a member to know what his role is and
how it relates to other roles.

Types of organizational structure
i. Classification based on power flow within the
organization:
1. Bureaucratic or mechanistic structure
2. Organic or adaptive structure
ii. Classification based on the formation of
departments or groups:
1. Functional Structure
2. Divisional Structure
3. Matrix Structure
4. Team Structure
5. Network Structure

Bureaucratic or mechanistic structure
• A bureaucracy is a form of organization based on logic
order and the appropriate use of formal authority.
• Bureaucracies are meant to be orderly, fair, and highly
efficient.
• Their features include a clear-cut division of labor, strict
hierarchy of authority, formal rules and procedures and
promotion based on competency.
• The mechanistic or bureaucratic structure is a
management system based on a formal framework of
authority which is carefully outlined and precisely
followed.
• Features:
i. Administrative class is responsible for the coordination of members.
ii. Clearly specified tasks using division of work principle.
iii. Precise definitions of the right and obligations of members.
iv. Clearly defined hierarchy or line and staff positions with formal relationships
between these two.

Bureaucratic or mechanistic structure
v. Organization is governed by official written rules and
regulations.
vi. Tendency toward formal communication throughout the
organizational structure.
vii. Maintenance of proper official records of various activities
performed by the people in the organization.
The drawbacks of the mechanistic organization are:
• Only suitable for fairly stable external environmental condition.
• Lack of flexibility may cause an organization to have trouble
adjusting to change and copying with the unexpected.
• Too rigid rules may make organizational objectives secondary.
• Unintended consequences may arise such as conflict between
professionals and bureaucrats, conflict between organization
and individuals.
• Inhumane and denies man’s needs.
• Incompatible with the development of a mature personality.

Organic or adaptive structure
• This structure is opposite in nature to the bureaucratic
structure.
• It maintains the high degree of openness to input from the
internal and external environments.
• This structure tends to work better in dynamic
environments where managers need to react quickly to
change.
• This system is founded on cooperation and knowledge-
based authority.
• It is much less formal and much more flexible than a
mechanistic organization due to which it is amendable to
change, innovation and development.
• Features / Characteristics of organic organization:
• Roles that are not highly defined
• Tasks that are continually redefined
• Little reliance on formal authority
• Decentralized control
• Fast decision-making
• Informal patterns of both delegation and communication

Functional structure
• This structure is the most popular organizational structure
in the business world.
• It groups the positions into work units based on similar
activities, skills, expertise and resources.
• Production, marketing, finance, R&D and human resources
are common groupings within a functional structure.
• Within the functional structure, people of similar skill sets
are grouped together and managed by somebody who
presumably knows a great deal about those skill sets.

Functional structure - Advantages
1. Well-defined channels of communication and
authority/responsibility relationships
2. Faster stability and efficiency
3. It improves the productivity by minimizing duplication of
personnel and equipment
4. It makes employees comfortable and simplifies training
5. High degree of control and coordination of functions
Functional structure - Disadvantages
1. It results the narrowed perspectives because of the
separateness of different department as work groups.
2. Communication and collaboration between the departments is
difficult.
3. Authority is more centralized.
4. Creates line and staff conflict and interdepartmental conflict.
5. It lacks the response necessary to cope up with new and
rapidly changing work requirement
6. It gives managers experience in only their own field.

Divisional structure
• In this structure, the organization is divided into several
fairly autonomous divisions. These divisions are divided
according to their organizational outputs.
• Each division is headed by a manager who is responsible
for all functions within his division.
• Each division has its own production, marketing, R&D and
finance departments.
• The divisional structure is concerned with the placing
groups of people with similar abilities where they are
needed all across the organization.
• For instance, while under the functional structure you
would expect to find accountants only in the accounting
department under the divisional structure you will find
accountants in different divisions of the same company in
separate accounting departments which are dedicated to
separate product lines.

Divisional structure

Divisional structure - Advantages
1. Develops managerial skills and executive skills.
2. Improves the ability of a company to respond to customer
issues as responsibility of division lies with only one person.
3. Organizational size can be increased without any problem.
4. Performance measure is easier as the performance can be
measured in the view of contributions made by the division.
Divisional structure - Disadvantages
1. Redundant effort and resources are due to multiple
departments performing the same tasks across the
organization.
2. Reduction in specialization and occupational skills are within
the division
3. Competition among divisions may develop due to limited
resources
4. It is quite costly because of duplication of departments in each
division.
5. A complex control system is required.

Functional & Divisional structure - Comparison
S.No Functional Structure Divisional Structure
1 It is most logical, scientific, time
proven and natural method of
structure.
It is not time proven and natural
method of structure.
2 It provides specialization of work
which makes the maximum
utilization of manpower and
other resources
It does not provide specialization
of work which makes the less
utilization of manpower and other
resources
3 It ensures the performance
control
It ensures a proper product
control.
4 It facilitates delegation of
authority and therefore, it
reduces the burden of top
executives
It does not facilitate delegation of
authority and therefore, it
increases the burden of top
executives

Matrix structure
• It is a hybrid organizational form containing characteristics of both
functional and divisional structures.
• It is a two-dimensional pattern developed to meet the problems of
growing size and complexity of undertakings.
• Such require an organizational structure which is more flexible and
technical-oriented.
• It violates the principle of unity of command.
• It employs the multiple commands with related support mechanism and
associated organizational culture and behaviour.
• “Any organization that employs multiple command system that includes
not only multiple command structure, but also related support
mechanism and an associated organizational culture and behavioural
pattern” – Stanley Davis & Paul Lawrence.
• In matrix structure, a project manager is usually not assigned complete
responsibility for resources (man and material).
• Instead, he shares them with others in the organization.
• Divisional structure is suitable for small number of major projects where
as the matrix organization is suitable for large number of small projects.

Matrix structure

Matrix structure - Advantages
i. It focuses the resources on a single project that facilitates a
better planning and control. It permits the better utilization of
resources.
ii. It is more flexible than the traditional functional organization. It
can adapt the changes and uncertain environment in a better
way.
iii. Specialized knowledge is available to all projects on an equal
basis. Knowledge and experience can be transferred from one
project to another.
iv. It provides a good motivation to the personnel engaged in the
project.
v. A better balance among time, cost and performance can be
obtained through the built-in checks and balances and the
continuous negotiations carried on between the project and the
functional organization.
vi. Most of the decisions are taken at lower levels. The top
management can concentrate more on long range planning.
vii. Overall responsibilities lies with the project manager.

Matrix structure - Disadvantages
i. Power struggles
ii. Organizational relationship becomes very
complex.
iii. Lack of commitment to project objectives.
iv. The available resources are utilized by the
department for taking the group decisions.
The decisions are very often delayed as
there is lack of understanding and
accommodation among functional and project
manager.
v. Matrix structure may be expensive.

Team structure
• Team structure organizes the separate functions into
a group based on one overall objective.
• These cross-functional teams are composed of
members from different departments who work
together as needed to solve problems and explore
opportunities.
• The intention is to break down the functional barriers
among departments and create a more effective
relationship for solving ongoing problems.
• Managers must be aware that how well team
members work together often depends on the quality
of interpersonal relations, group dynamics and their
team management abilities.

Team structure - Advantages
1. Intradepartmental barriers break down
2. Decision-making and response time speeds up
3. Employees are motivated
4. Levels of managers are eliminated
5. Administrative costs are lowered
Team structure - Disadvantages
1. Conflicting loyalties among team members.
2. Time-management issues
3. Increased time spent in meetings

Network structure

Network structure
• The network structure relies on other organizations to perform critical
functions on a contractual basis.
• In other words, managers can deal a specific work to specialists.
• This is the recent trend in many organizations because of various
advantages it offers.
Network structure – Advantages
• It provides the flexibility and reduces the overhead
• Decision-making and response time speeds up
• Levels of managers are eliminated
• Administrative costs are lowered
Network structure – Disadvantages
• It results the unpredictability of supply and lack of control because
managers are relying on contractual workers to perform important.

Determination of organization structure
• “Organization is not an end in itself but a means to the end of business
performance and business results. Organization structure is an
indispensable means and the wrong structure will seriously impair
business performance and may even destroy it. Organization structure
must be designed so as to make possible to attainment of the objectives
of the business for five, ten, fifteen years hence” – Peter F.Drucker.
• Peter Drucker has pointed out three specific ways to find out what kind
of structure is needed to attain the objectives of a specific business.
i. Activities analysis
ii. Decisions analysis
iii. Relations analysis

LINE AUTHORITY & STAFF
AUTHORITY

Line & Staff authority – 2 approaches
i. Functional approach
• According to this approach, functions of an organization are
classified into line and staff functions.
• Line functions are those that are related directly with the
attainment of the organizational objectives.
• Staff functions are those that help line functions in attaining
the objectives.
ii. Authority approach
• According to this approach, line and staff are two kinds of
authority.
• Line authority is defined as a direct authority which a superior
exercises over his subordinates to carry out orders and
instructions.
• Staff authority involves giving advice to line managers to carry
out the operation.
The distinction between line and staff is important because staff
must be provided, if the growing organization is to accomplish
goals. Line and staff relationships are established to guide
people in the way, they work together. But for practical purposes,

Line authority

Line authority
i. As a chain of command:
• In line authorities, officials are in the chain of command from
higher position to lower position in the organization.
• There is a command relationship existing between every
superior and subordinate.
ii. As a chain of communication:
• Line authority can be considered as a channel of
communication between superior and subordinate of the
organization.
• Communication (up and down) in the organization flows
through the line relationship.
• Every member of the organization has someone to report and
other to report him.
iii. As a carrier of responsibility:
• The line relationship carries ultimate responsibility for the work
assigned.
• Each individual in the line is accountable for the proper
performance of the activities assigned to him. Each

Advantages
1. Simple and easy to understand
2. Most economical and effective
3. Delegation of authority is clear which facilitates a prompt decision-making
4. It makes unity of control thus conforming to the scalar principle of
organization
5. Channel of communication is clear
6. It ensures excellent discipline in the enterprise because every individual
knows to whom he is responsible.
7. It is strong in discipline as it insists responsibility on individual.
Disadvantages
1. The organization is rigid and inflexible.
2. It neglects specialists
3. It overloads a few key executives
4. It requires great supervisory personnel
5. It is limited to too small organization
6. It encourages a dictatorial way of working which may not
develop own creative thinking of workers.

Staff authority

Staff authority
• Staff authority is exercised by a man over line
personnel.
• The relationship between a staff manager and a line
manager with whom he works, depends in part on the
staff duties.
• In a management, staff refers those elements of the
organization which help the line to work more
effectively in accomplishing the primary objectives of
the enterprise.
• The nature of the staff relationship is advisory.
• The function of staff is to investigate the research and
give advice to line managers
• Staff personnel having specialized knowledge and
skills reduce the burden of line personnel.

Staff authority
• The staff authority may be of the following forms:
i. Advisory staff authority
 Provides advise, assistance and information to line manager
ii. Compulsory staff consultation
 A staff person must be consulted by a line person before action is taken.
 However, line manager is free to take his own action after consulting staff.
iii. Concurring authority
 A staff person may be granted authority so that no action can be taken until
he agrees it.
 For instance, a quality control inspector must pass on raw materials before
they move to the next stage of production.

Benefits
1. Staff specialists may be allowed the time to think.
2. Staff improves the quality of managerial decisions by
providing accurate and updated information
3. When the operations become more complex, the line
people require advise of staff personnel
4. Staff can help in coordinating various activities and
in ensuring uniformity of action in certain matters
5. Staff experts may be given authority to prescribe
systems and procedures.
6. Staff carries out a critical evaluation of existing
practices and procedures and provides innovative
ideas from time to time

Limitations
1. Danger of undermining line authority
2. Lack of staff responsibility
3. Thinking in vacuum
4. Managerial problems

Line and Staff authority - Comparison
S.No Line authority Staff authority
1 It has the right to decide or
command
It has the right to provide advice,
assistance and information
2 It contributes directly to attain
the organizational objectives
It assists line in effective
attainment of objectives
3 It creates superior-subordinate
relations
Extension of line and supports line
4 It flows from top to download i.e.
superior to subordinate
It flows in any direction depending
upon the situation
5 It provides the channel of
communication
No channel of communication is
provided
6 It makes the operating decision It provides ideas for decision
7 Authority is relatively unlimited Authority is relatively restricted
8 It bears the responsibility for
final results
It does not bear final responsibility

Functional Authority or Functional
organization
 “Functional authority is the right which an individual or
department has delegated to it over specialized
processes, practices, policies or other matters relating
to activities undertaken by personnel in departments
other than its own” – Koontz & O’Donnell
 Functional authority arises because of 3 factors:
1. A superior delegated the authority to staff person to transmit
information, proposal and advice directly to his subordinates
for saving time.
2. Highly experienced and skilled staff person shows the line
managers how the information should be used put into effort.
3. In some cases, staff personnel are given the authority to
prescribe processes, procedures, methods or even policy to
be followed in various departments.

Functional Authority or Functional
organization

Functional Authority – Condition for
effectiveness
1. It should be granted only when an enterprise wants
uniformity in operation
2. It should cover only a minor part of the line authority
3. It should be confined to areas in which line
executives do not possess expertise
4. It should be delegated to the level which is directly
below the position of line personnel.

Advantages
1. Since, a foreman is responsible for one function, he can
perform his duties in a better way
2. This structure makes use of specialists to give expert advice to
workers
3. It relives line executives of routine, specialized decisions which
are sometime boredom
4. Expert guideline reduces the number of accidents and
wastages materials, man and machine hours.
5. It relieves the pressure needed to search a large number of all-
round executives
Disadvantages
1. Coordination is difficult between various functional foreman
2. Functional authority violates the principle of unity of command
3. Maintaining the discipline is difficult
4. It is difficult to find out the responsibility of any one foreman
5. It makes industrial relationship more complex
6. Workers always confused about the authority & activity
7. Workers are not given the opportunity to make use of their
ingenuity, initiative and drive

DEPARTMENTATION
 Definition
 Need & importance
 Departmentation by different strategies
 Departmentation by numbers
 Departmentation by time
 Departmentation by enterprise function
 Departmentation by territory or geography
 Departmentation by customers
 Departmentation by equipment or process
 Departmentation by product or service
 Matrix organization
 Strategic Business Unit (SBU)

DEFINITION
 Departmentation means the process of grouping the similar
activities of the business into departments, divisions or other
homogeneous units. It is used for the purpose of facilitating a
smooth administration at all levels/
 “ A departmentation is a process of dividing the large
monolithic functional organization into small and flexible
administrative units” – Koontz and O’Donnell.
 Departmentation involves the grouping of people or activities
with similar characteristics into a single department or unit. It
facilitates communication, coordination and control, thus
contribution to organizational success.
 It creates semi-autonomous units with independent
responsibilities, providing satisfaction to the manager which in
turn improves the efficiency and effectiveness.
 The appropriate type of department depends upon the
situational factors such as competition, technology, business
cycles, internal environment factors etc.

DEPARTMENTATION – NEED & IMPORTANCE
Departmentation
Increases the operating efficiency of the workers
Helps in fixing the responsibility to various executives of the
organization
Grouping of activities and personnel into departments make it
possible for the enterprise to expand and grow
Provides an opportunity to managers to take initiative in
completing the job effectively, to make independent decisions
By assigning specific tasks to the departmental personnel, it is
easier for the appraisal of managerial performance.
It results the division of enterprise into semi-autonomous unit.
Gives other advantages such as facilitating budget
preparation, effective control of expenditure, attaining
specialization, better co-ordination among the managerial
personal.

DEPARTMENTATION BY NUMBERS
 Departments are created on the basis of
number of persons forming the department.
 Ex. In the army, soldiers are grouped into
squads, battalions, companies, brigades
and regiments on the basis of the number
prescribed for each unit.
 Disadvantages:
 It requires more specialized and different skills
 Groups composed of specialized persons are
frequently more efficient than those based merely
on numbers
 Useful only at the lower level of the organization
structure.

DEPARTMENTATION BY TIME
 Here, the business activities are grouped together on the basis
of the time of performance.
 For example, manufacturing units working in three shifts of
eight hours each per day may group the activities in shift wise
and thus having separate department for each shift.
 The basic idea is to get the advantages of people specialized
to work in a particular shift.
Advantages
1. Service can be rendered around-the-clock basis.
2. It is possible to use processes that cannot be interrupted,
requiring a continuing cycle.
3. Expensive capital equipment can be used effectively .i.e. 24 hrs
/day
4. It provides a part time work for the students those studying
during the day.

DEPARTMENTATION BY TIME
Disadvantages
1. Supervising may be lacking during the night shift
2. Some people may feel difficult to switch from a day shift to a
night shift and vice-versa.
3. As it has several shifts, it may create problems in coordination
and communication.
4. Payment of overtime rates can increase the cost of the product.

DEPARTMENTATION BY ENTERPRISE FUNCTION

Advantages
1. It is the most logical, scientific, time proven and natural method of
departmentation.
2. It provides the specialization of work which makes maximum
utilization of manpower and other resources.
3. It ensures a proper performance control.
4. It facilitates the delegation of authority, and hence reduces the
burden of top executives.
5. It facilitates a coordination activity within the department and the
organization as a whole.
6. It eliminates costly duplication of efforts
7. More weightage and prestige are given to the departmental
managers and they are respected by top management people.
8. It ensures the performance of all activities necessary for achieving
the organizational objectives
9. It enables the top executives to exercise effective control over a
limited number of functions

Disadvantages
1. Tendency of overspecialization.
2. Functional departmentation discourages communication among
functions so that the workers develop a narrow and technical
point of horizontal conflicts
3. It increases the work load and responsibility of departmental
heads.
4. It does not offer any scope for training for the overall
development of manager.
5. Functional departments may grow in size to justify costs.
Managers may try to build their functional empires.

DEPARTMENTATION BY TERRITORY / GEOGRAPHY
Advantages
1. It places the responsibility at a lower level and improves
coordination of activities at a regional level.
2. The sales may be increases with the help of intimate
knowledge about the tastes and preferences of the customers
in the local market.
3. It reduces the cost of operation and gains saving in time.
4. Every area manager can specialize in peculiar problems of his
region.
5. Better coordination of activities locally through setting up
regional office. It provides an effective span of control.

DEPARTMENTATION BY TERRITORY / GEOGRAPHY
Disadvantages
1. There is a lack of communication due to geographical distance.
2. It increased the number of personnel and involves high cost of
operation.
3. There may be a friction between regional managers.
4. The coordination and control of head office are less effective.
5. There is a duplication of physical facilities due to high cost of
operation.
6. A small business enterprise cannot manage the high cost
operation.
6. It provides opportunities to managers to improve their skill in
various fields.
7. It facilitates the expansion of business to various regions.

DEPARTMENTATION BY CUSTOMERS
Advantages

DEPARTMENTATION BY CUSTOMERS
Disadvantages
1. It requires managers and staff expert in customer’s problems
2. There may be a duplication of activities
3. There may be underutilization of facilities and manpower,
particularly during periods if low demand.
4. Grouping of customers and their definition become difficult.
5. The production activities cannot be organized under this
method of departmentation. If it is so, the cost of operation will
be high.

DEPARTMENTATION BY EQUIPMENT / PROCESS
Advantages
1. This uses specialized technology.
2. There is no duplication of activities.
3. It provides an effective utilization of specialized equipment and
special skills
4. There is economy in operation.
5. There is no interruption of the departments or process
6. The principle of specialization and division of labour are
followed.

DEPARTMENTATION BY PROCESS
Disadvantages

DEPARTMENTATION BY PRODUCT / SERVICE

Advantages

Disadvantages
1. Possibility of duplication of work and hence, the operating cost
may be high
2. It creates the problem of effective control over product divisions
by the top management.
3. Requires more persons with general management abilities.
4. Machines and equipment in each product department may not
be fully utilized.
5. Advantages of centralization such as financing, accounting,
industrial relations etc. are not available.
6. It requires an additional cost for maintaining the sales
personnel for each type of product.

COMPARISON – DEPARTMENTATION BY FUNCTION & BY PRODUCT

MATRIX ORGANIZATION
 Already discussed in this unit

SBU
 In large company such as multi-product or multi-
geographical area companies, divisions are created
in the form of various strategic business unit (SBU).
 SBU concept was earlier used and evolved by
General Electric Company (GEC) of USA to
manage its multi-product business.
 Criteria for SBU:
 It should have its own mission, distinct from the missions of
other SBU.
 It should have a definable group of competitors.
 It should prepare its own integrative plans, fairly distinct from
other SBU’s.
 It manages its resources in key areas and
 It should have a proper size. i.e. neither too large nor too
small.

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.
 Also known as
◦ Span of management
◦ Span of supervision
◦ Span of authority
◦ Span of responsibility

SPAN OF CONTROL
 No. of members is too large it is difficult
to manage and perform effectively
 Effective performance depends on
executive
◦ Not overloaded or idle
 Span varies widely depending on
situations
 L.Urwick – No.of subordinates – 4 for
higher level management and 8 to 12 for
bottom level.
 J.C.Worthy – 20-39 subordinates
 Hamilton – Span of control is related to
the degree of responsibility exercised by
group members 4:23 AM POM - Unit 2

Determination of Span of control
• V.A.Graicunas identified relationship between
superior and subordinates. 3 categories
• Direct single relationships – supervisor has direct
relationship with subordinates individually
• Direct group relationships- supervisor has direct
relationship with subordinates jointly
• Cross relationship- subordinate has relationship with
another subordinates mutually

•Graicunas - given formula for
subordinate relationships

• Effective supervision depends on
• Efficiency of supervisor
• No. of subordinates to be
supervised
• More subordinates increases
relationships
• Fix no.of subordinates based on
nature of work

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) Type of technology:
Firms using mass production and assembly line technology
can have wider span than batch or process production systems
e)Delegation of authority:
Manager clearly delegates authority to undertake well defined
task a well trained subordinate does with minimum of manager’s time
and attention. If task not clearly defined managers spend more time in
guiding.

Factors Affecting Span of control
f) Clarity of Planning:
Plans which can provide rules, procedures in doing the work
higher would be the degree of span of management.
g) Communication Techniques:
Pattern of communication, its means, and media affect the time
requirement in managing subordinates and consequently span of
management.
h)Using of objective standards:
Using standards to find errors and faults in performance of
work requires less time in watching the performance. Span can be
wider.
i) Geographical closeness of employees:
Closer physical location easier will be supervision. Span is more.
j) Direction and coordination :
Span of control determined by degree of coordination within
units and with other divisions. If unit needs continuous directions and
extra time of the manager in coordinating , then fewer subordinates will
be supervised. Span is smaller.

SPAN OF CONTROL
Span of control is of two types:
1. Wide span : Large number of subordinates
2. Narrow span : Few number of subordinates
Wide span :
1.Following factors make it possible to adopt a wider span
 Trends towards decentralization
 Improved communication techniques
 Increasing the size of organization
 New pattern of leadership with democratic style
2.Flat organizational structure with few levels of management
3.Decentralized or loosely controlled
4.Employees have greater autonomy and more varieties of work
5.Job satisfaction is higher
6.Cost effective and Communication is more effective due to fewer levels
7.Not Adaptable to changes
8. Problems of coordination and control

SPAN OF CONTROL
 Advantages of wide span of control
◦ Less layers of management to pass a message and
therefore faster
◦ Costs less money to run a wider span of control
Narrow span of control
1.Tall structure with many management levels
2.Better coordination and adapts to change
3.Effective supervision due to centralised or close
control
4.Better promotion opportunities due to many levels
but Expensive
5.Decision-making process is more tedious
6.Motivation and job satisfaction of employees is low
due to routine and specialized jobs

SPAN OF CONTROL
 Advantages of narrow span of control
◦ Allows manager to communicate quickly with the
employees under them and control them easily
◦ Feedback of ideas from the workers will be more effective
◦ Requires high management skill

Delegation of Authority
 Delegation of authority is a process which
enables a person to assign works to others
and delegate them with adequate
authorities to do it.
 Delegation of Authority means division of
authority and powers downwards to the
subordinate.
 Delegation is about entrusting someone
else to do parts of your job.
 Delegation of authority can be defined as
subdivision and suballocation of powers to
the subordinates in order to achieve
effective results 4:23 AM POM - Unit 2

Delegation of Authority

Features of Delegation
1. Delegation is authorisation to a manager
to act in a certain manner. Degree defines
limits
2. Delegation has dual characteristics.
Subordinate receives authority from his
superior at the same time superior retains
all his original authority
3. Superior cannot delegate entire authority
to his subordinate
4. Delegation does not imply the reduction in
the authority of a manager
5. Delegation can be enhanced, reduced or
withdrawn at any time depending upon
situation and requirement

Features of Delegation
6. Manager cannot delegate the authority
which he does not possess
7. Extend of authority depends upon several
factors
8. Delegation types are specific or general,
written or implied, formal or informal
9. Delegation of authority is always to the
position created through the process of
organizing. An individual may exercise his
authority till he holds the position.

Importance of Delegation
1. It relieves manager from his heavy
workload by dividing work and shares
responsibilities with his subordinates
2. It leads to a better and quick decision
3. It enables manager to obtain
specialized knowledge and expertise
of subordinates
4. It helps to improve job satisfaction,
motivation and morale of subordinates
5. Get things done in a best manner
6. It enables discharge of responsibilities
effectively and economically

Types of Delegation
 1. Over delegation :
◦ Some managers burden their
subordinates due to insecure ability to
perform a task and poor time
management for the task
 2. Under delegation :
◦ Frequently false assumptions by
managers due to lack of ability on their
part to complete the job correctly and due
to lack of trust in sub-ordinates

Process of Delegation
 Determination of results expected
 Assignment of duties
 Delegation of authority
 Creation of obligation or Accountability

Art of Delegation
 Lack of receptiveness
 Willingness to let go
 Willingness to let others make
mistakes
 Willingness to trust subordinates
 Willingness to establish and use broad
controls

Making Delegation Effective
 1. Establishment of definite goals
 2. Right person for the right job
 3. Establishment of definite
responsibility
 4. Motivate subordinates
 5. Appropriate environment
 6. Free flow of information
 7. Proper training to subordinates
 8. Establish adequate controls

Comparison between Delegation and
Decentralisation

Centralisation and
Decentralisation
 It refers to the location of decision-
making authority in an organisation
 ‘Centralisation’ means that the authority
for most decisions is concentrated at the
top of the managerial hierarchy whereas
‘Decentralisation’ requires such authority
to be dispersed by extension and
delegation through all levels of
management
 Terms denote the different degrees of
delegation of authority

Centralisation and
Decentralisation
 Louis A.Allen
◦ Centralisation is the systematic and
consistent reservation of authority at central
points within an organisation.
◦ Decentralisation applies to the systematic
delegation of authority in an organisation-
wide context
 Both are opposite but related as
organisation contains both and not
absolute existence in practice
 For effective decentralisation of authority
requires a proper balance between
dispersal of authority among lower levels
and adequate control over them

Advantages of
Decentralisation

Disadvantages of
Decentralisation

Making Decentralisation
Effective
 1. Centralised Top Policy
 2. Appreciation of concept of
decentralisation
 3. Development of managers
 4. Competition among units
 5. Open communication
 6. Effective co-operation

Human Resource Management or
Staffing
 Definition of Staffing
◦ It is defined as filling and keeping filled
positions in the organisation structure. It
includes identification of work force
requirements, inventorying the people
available and recruiting, selecting, placing,
promoting, appraising and training,
developing both candidates and current
jobholders to accomplish tasks effectively
and efficiently.
◦ Staffing is the part of the management
process which is concerned with the
procurement, utilization, maintenance and
development of a large satisfied work force in
the organisation. 4:23 AM POM - Unit 2

Importance or Need Or
Significance of Human Resource
Management
 Management of staffing has become
more complex task due to following
developments

Reasons for Significance of
Human Resource Management
(i) It helps a company to achieve
objective by creating a positive attitude
among workers. Reduces wastage and
making maximum use of resources
(ii) Due to proper HR policies
employees are trained well and makes
ready for future promotions
(iii)It can help the organisation to
maintain co-ordinal relationship with the
unions

Reasons for Significance of
Human Resource Management
(iv) Effective utilization of skills and
potential of the work force
(v) Effective HR practices teach individuals
team work and adjustment which in turn
improve productivity
(vi) Provision of job satisfaction to
employees
(vii) It selects the right people for the right
job
(viii) Development and maintenance of
quality of work life. 4:23 AM POM - Unit 1

Scope of Human Resource
Management
 Human resource planning
 Job analysis and design
 Recruitment and selection
 Orientation and induction
 Training and development
 Performance appraisal
 Compensation planning and
renumeration
 Motivation, welfare, health and safety
 Industrial relations

Factors affecting Human Resource
Management
(i) External factors
1. Political factors
2. Economic factors
3. Social factors
4. Legal factors
5. Customers
(ii) Internal factors
1. Size of the organisation
2. Organizational change
3. Technological factors
4. Changes in employee roles
5. Education

Functions of Human Resource
Management
(i) Managerial Functions
a)Planning
b)Organising
c)Directing
d)Controlling
(ii) Operative Functions
a)Employment
b)Human resource development
c)Compensation
d)Human relations
e)Effectiveness of human resource
management

Managerial Functions
a) Planning :
-number and type of employees
needed to achieve goal is determined
-It requires collection and analysis
of information in order to forecast
human resources supplies and predict
future needs
b) Organising :
-Grouping of personnel activities,
assignment of different groups of
activities to different individuals and
delegation of authority

Managerial Functions
c) Directing :
-Involves supervising and guiding
the personnel
- Motivation and leadership
d) Controlling :
-Measuring employee’s
performance, correcting negative
deviations and assuring
accomplishment of plans effectively

Operative Functions
It is related to specific activities of
personnel management
a) Employment :
-Procuring and employing people
with necessary skill, knowledge,
aptitude
-Covers function like
(i)Job analysis (iv) Selection
(ii) HR planning (v) Placement
(iii) Recruitment (vi) Induction &
orientation

Operative Functions
b) HR development :
-Process of improving, moulding,
changing and developing skills,
knowledge, creativity, aptitude, values,
commitment based on present and future
job and organisational requirements
(i) Performance appraisal
(ii) Training
(iii) Management development
(vi) Career planning and development
(v) Organisational development

Functions of Human Resource Development in
Detail
(i) Performance Appraisal
(ii) Training
(iii)Management Development
(iv)Career Development
(v) Organisational Development

Performance Appraisal
 It is the systematic evaluation of
individuals with respect to their
performance on the job and their
potential for development. It includes

Training
 It is the process of impairing skills to
the employees such as technical,
operating skills and knowledge. It
includes functions

Management Development
 It is the process of designing and conducting
suitable executive development programmes so as
to develop the managerial and human relations
skills of employees. It includes

Career Development
 It is a continuous process in which an
individual progresses through different stages
of career each having a relatively unique set
of issues and tasks
 Comprises of 2 different processes:
◦ Career planning
◦ Career management
 Career planning : Planning of one’s career
and implementation of career plans by means
of educational training, job search and
acquisition of work experiences.
 Career management : It involves the
necessary steps that need to be taken to
achieve that plan
◦ It focuses on career development of the

Organisational Development
 It is an organisation wide , planned
effort, managed from the top, with the
goal of increasing organisational
performance through planned
interventions
 It looks in depth at the human side of
the organisations
 It seeks to change attitudes, values,
organisational structure and
managerial practices in an effort to
improve organisational performance

Operative Functions
c) Compensation :
-Process of providing equitable and
fair renumeration to employees
(i) Job evaluation
(ii) Wage and salary administration
(iii) Incentives
(vi) Bonus
(v) Fringe benefits
(vi) Social security measures

Operative Functions
d) Human relations :
-Process of interaction among human
beings
- Leads in integrating people into
work situation that motivates them to work
together productively, cooperatively and
with economic, psychological and social
satisfaction
e)Effectiveness of HR management:
- It is measured and evaluated by
means of organisational health and HR
accounting

Job Analysis
 It is a systematic process of collecting all
information about the job for preparing of job
description and job specification
 It decides
◦ Duties and responsibilities
◦ Nature of jobs and their qualifications
◦ Skills and knowledge required for a job
 Attempt to match jobs and job-holders
 Provides enough knowledge of
◦ Nature of job
◦ Requirements of job
 It forms a basis for later HR activities for
◦ Effective training program, Selection of
employees, setting performance standards and
assessment of employees, employee
renumeration system or compensation plan

Job Analysis
◦ Consists of 2 major tasks
 Job description
 Job specification
1. Job description
- It is a written statement showing job
title, tasks duties and responsibilities in a
job
- clarifies what an employee is
responsible for and what is expected of
them
-describes required qualifications,
minimum requirements, working conditions
and desirable qualifications

Job Analysis
2. Job specification
-also known as employee specification
- it is a statement of the minimum acceptable
qualities necessary to perform a job properly

Process of Job Analysis

Job Analysis
(i) Planning the job analysis:
- Planning to be done before beginning
to gather data from managers and
employees
- Objective of job analysis
Just to update job descriptions
to revise the compensation programs in the organisation
To redesign the jobs in a department or division of the
organisation
To change the structure in parts of the organisation to
align it better with business strategies
- It is vital to obtain top management support
- Backing of senior managers is needed as
issues arise regarding changes in jobs or
organisational structure

Job Analysis
(ii) Preparing and communicating the job
analysis:
-Begins with identifying the jobs under
review.
eg.hourly jobs, clerical jobs, all jobs in one
division or entire organisation
-People and method for job analysis are
identified
-review existing documentation like
existing job descriptions, organisation charts,
previous job analysis information, and other
industry-related resources
-communicate and explain the process to
Managers. Affected employees, union
representatives

Job Analysis
(iii)Conducting the job analysis:
-Done after preparation
-Relevant information collected
through methods like personal
observation, interview employees,
checklist prepared for analysing the job
and questionnaire
-Then data compiled , sorted by
job. job family and organisational unit. It
allows for comparison of similar jobs
data.

Job Analysis
(iv)Developing job descriptions and job
specifications:
-Job analysts prepares draft job descriptions
and job specifications
-Drafts reviewed by managers and final job
descriptions determined by managerial style and
culture regarding employee participation and
communication
-Reviewed job descriptions are distributed by
HR department to managers, supervisors and
employees.
-Then managers review the description with
individual employee for recommendations from
their side.
-These recommendations are reviewed
carefully and incorporated if necessary and the
final version of job description and specification is
prepared 4:23 AM POM - Unit 1

Job Analysis
(v)Maintaining and updating job
descriptions and job specifications:
-A system developed for keeping
the completed job descriptions and
specifications as current .
-HR department is responsible for
ensuring that job descriptions and
specifications stay current. Periodically
reviews done .
Eg. When vacancy occurs, Before
recruiting and selection efforts begin

Uses of Job Analysis
1. Employment
2. Training and development
programmes
3. Performance appraisal
4. Promotion and transfer
5. Discipline
6. Wage and salary administration
7. Health and safety
8. Induction

Job Design
 Accommodates people’s need and
desires
 Appropriate for exceptional persons in
order to utilize their potential
 People spend more time on job therefore
important to design jobs to make feel
good about their work
 2 Goals
◦ To meet organisational requirements such as
higher productivity, operational efficiency,
quality of product or service
◦ To satisfy the needs of the individual
employees such as interests, challenges,
achievement. 4:23 AM POM - Unit 1

Guidelines for Job designing
 1. Mechanical and technical factors of
the job and simplifications of the
mechanical factors
 2. Providing social interactions, views
and attitudes with superiors,
subordinates and peers.
 3. Providing scope for identifying
psychological needs such as esteem,
need for challenging work and
satisfying them

Techniques for designing jobs
 1. Job Enlargement
 2. Job Rotation
 3. Job Enrichment

Job enlargement
 It is the horizontal experience of a job
 It involves addition of tasks at the same level
of skill and responsibility
 Thus the scope of the job is increased
because there are many tasks to be
performed by the same worker
 It is doing different tasks and not just the
same thing all the time
 It keeps workers from getting bored
 It requires longer training period as more
tasks to be learned
 It is successful if workers are more satisfied

Job enlargement

Job rotation
 It refers the movement of an employee from
one job to another
 Routine job affects employee from boredom
and monotony
 Improves employee’s skills
 Role in motivating people is limited
 Done to decide the final posting of the
employee
◦ eg,. Mr. X assigned to marketing department ,
then shifted to sales and then to finance
department. He is finally placed in the
department in which he shows the best
performance

Job rotation

Job enrichment
 It is the addition to a job or task that
increases the amount of employee
control or responsibility
 It is an attempt to motivate employees by
increasing responsibility and variety in
job
 Herzberg’s two-factor theory of
motivation
 The job itself must provide opportunities
for achievement, recognition and
responsibility
 It is a vertical restructuring method of
moral excellence by giving additional
authority, autonomy and control over the

Job enrichment
 It is contrast to job enlargement
◦ Job enrichment – vertical loading
◦ Job enlargement – horizontal loading
 Employee receives a greater sense of
accomplishment as well as more
authority and responsibility
 It gives more autonomy in job

Job enrichment

HR Planning
 Human resource planning can be defined as
the process of identifying the number of
people required by an organisation in terms
of quantity and quality
 HR management activities start with planning
 Primary activity
 It ensures it has right personnel who are
capable of completing tasks to reach
organisation objective
 It involves forecasting of HR needs and the
projected matching of individuals with
expected vacancies

HR Planning
 E.W.Vetter –
◦ HR planning is the process by which a
management determines how an organisation
should make from its current manpower position
to its desired manpower position. Through
planning, management strive to have right
number and right kind of people at the right
place, at the right time to do things which result
in both the organisation and the individuals
receiving maximum long-run benefit
 It is a process which determines how an
organisation should move from its current
manpower resources position to its desired
position.

Features of HR Planning
 Prepared to assess the future
requirement of manpower in the
organisation. It helps to identify the size
and composition of resources for future
 It is a continuous process
 It focuses on optimum utilization of
resources
 It is a process of determining demand for
and supply of human resources
 Determines the right no. and kind of
people at right time capable of required
jobs
 It is an integral part of overall corporate
plan 4:23 AM POM - Unit 1

Objectives of HR Planning
 Ensure adequate supply of manpower as
and when required
 Ensure best use of existing human
resource
 Forecast future requirement of human
resources available over a specified
period of time
 Meet the requirements of the
programmes of expansion, diversification
 Anticipate the impact of technology or
jobs and requirements for human
resources
 Control the human resources

Objectives of HR Planning
 Provide lead time available to select
and train the required additional
human resources
 Progress knowledge, skill, standards,
ability and discipline
 Estimate the cost of human resources
 Maintain pleasant industrial relations
by maintaining optimum level and
structure of human resource.

Need of HR Planning
 Despite growing unemployment, there has
been shortage of human resources with
required skills, qualification and capabilities
to do work
 To ensure smooth supply of workers without
interruption, new employees to be replaced
due to retirement, leaving organisations,
disabled because of physical and mental
ailments
 Voluntary quits, discharges, marriages,
promotions and seasonal fluctuations in
business lead to workforce turnover.

Need of HR Planning
 Technological changes and globalisation lead
to change in production methods and
distribution of products and services and in
mgmt techniques. It requires change in no. of
employees and skill
 Needed to meet the needs of expansion and
diversification programmes of the organisation
 To identify areas of surplus or shortage of
personal
 To assess the strength and weaknesses of its
employees and personnel policies and take
corrective measures
 To avoid duplication of efforts and conflict
among efforts
 To assess employees for providing promotion,
increase in emoluments and other benefits

Recruitment
 It is the process to discover the sources
of manpower to meet the requirements
of staffing schedule and to employ the
effective measures for attracting that
manpower in adequate numbers to
facilitate effective selection of an efficient
work force.
 B.Flippo -- “the process of searching
prospective employees and stimulating
them to apply for jobs in organization”.

Sources of recruitment
 Classified into two:
◦ Internal Sources
◦ External Sources
Internal Sources:
It includes the following types of
employees
i)Present Employees
ii)Former Employees
iii)Employee Referrals
iv)Previous Applications

 Present Employees:
◦ Promotions and transfers from among the
present employees can be a good source.
 Promotion – upgrading of an
employee to a higher position includes
pay and responsibilities.
 Transfer – Shifting an employee from
one job to another without any change
in position, status and responsibilities

 Former Employee:
◦ Retired employees may be interested to
come back to the company to work on a
part time basis.
 Employee Referrals:
◦ The existing employees refer their family
members, friends and relatives as and
when the vacancies exist in the company.

 Previous Applications:
◦ The applications which are already lying in the
organization.
◦ When the vacancy exist, the organization
contact them through mail or call those
candidates to fill up the vacancy.
• External Sources: Those which are outside
the organization. It includes,
i)Education and training institutes
ii)Private Employment Agencies
iii)Public Employment Exchange
iv)Data Banks

 Education and Training Institutes:
◦ Most of the colleges and universities provide
facilities for campus recruitments. They
maintain bio data and performance record.
• Employment Agencies:
• They serve as a broker between the employers and
the employees.
• Employment Exchange:
•It is setup by the government.
•They provide info about the vacancies to
the candidates and help to find the suitable
candidate 4:23 AM POM - Unit 1

 Data Banks:
◦ The organization collect the bio data of
the candidate from various sources and
feed into the computer and get the
particulars as and when the company
requires.
• Advertisements:
• It is the most widely used method for
generating applications
• This method is used for jobs like clerical,
technical and managerial.

 Casual applicants:
◦ Candidates casually apply for jobs
through mail or submit the application in
personnel department of the
Organization.
• Trade Unions:
• Unemployed persons approach trade union
leaders for getting a suitable employment.

SELECTION
 It is the process which enables the
enterprise to pickup the candidates
with the required qualifications,
training and skill for the job after
careful screening and rejecting the
undesirables at each successive
steps.

Selection Process
 There is no standard selection
process to be followed by all
companies.
 The general selection process
followed by most of the organization is
follows:

Screening of application
 The received application is used to screen
the applicants who are found to be
qualified.
 Based on the screening of the application,
only those candidates will be invited for
the further selection process.
Selection Tests
 Test are generally to measure the
intelligence, ability,aptitude,physical and
mental abilities of an individual candidate.
 These test are help in rejecting some
undesirable candidates

Preliminary Interview
 It is useful as a process of eliminating
unsuitable candidates.
Reference Check
• The persons named in the application
form are contacted to cross check the
candidate’s character and behavior.
Medical Examinations
• Certain jobs require certain physical
qualities such as clear vision, perfect
hearing, clear tone ,etc.,

Final Interview
 Check the information already obtained
and to collect additional information
about the candidate.
Approved by Authority
• The suitable candidates are
recommended by the selection
committee to the approving authority.
• When the approval is received, the
candidates are informed about their
selection

Placement
 After all the formalities are completed,
the candidates are placed on their
jobs initially on probation.
 During the probation period, they will
be keenly observed, on successfully
completing the probation period, they
will become the permanent employee
of the organization

Interview
 Technique for Employee selection
 According to Scott -“It’s a purposeful
exchange of ideas, the answering of
questions and communication between
two or more persons”.
 Employee interviews can be divided into
three categories:
◦ Preliminary interview
◦ Core interview
◦ Decision Making interview
POM - Unit 1

Preliminary Interview
 Its an exchange of basis information
between the candidate and the personnel
manager about the job and the
organization.
Informal interview
◦ It can be conducted at any place by any
person to get the basic and non job related
information.
Unstructured interview
◦ The candidate is allowed to tell about himself
by his family background interests

Core Interview
 Background information interview:
◦ It is to collect the information which is not
available in the application
• Formal and structured interview:
• All formal procedures such as opening and closing
time, panel of interviewers, official information to the
candidates are followed in arranging and conducting
the interview
•Stress Interview:
•It is to test whether the applicant can
perform well in a condition of stress.

Group Interview
 Group of candidates can be brought
together into the room and they may be
interviewed
Panel Interview
◦ A panel of experts interviews each candidate
and judges the performance individually
•Depth Interview
• The candidate’s skills and knowledge
can be examined in this interview

Decision Making Interview
 The interviewer examines the interest of
the candidate in the job
 The personnel manager interviews the
candidate’s acceptance regarding
salary,allowances,benefits,promotion,etc.,
 The interviewers inform their decision to
the top management ,they will finally
make decision of the candidate’s
performance and their ranks in the
interview 4:23 AM POM - Unit 1

Tests
 Aptitude Test
◦ It measures the latent or potential
characteristics.
• Intelligence Test
It measure the capacity for comprehension,
reasoning, verbal reasoning, numbers and
memory
• Psychomotor Test
• It is to find out the physical strength and also
to find whether there is proper coordination
between finger and eye for some operations.

Personality Test
 It is to find out the personal traits and
interest of the individuals.
 Ex: Interpersonal skill, dominance,
submission,
Self-confidence, leadership quality,
patience and ambition
Orientation and Induction
• It involves the activities involved in introducing
the new employees to the organization and its
policies, procedures rules and regulation.
• It enables the new employee to learn the work
values behavior patterns acceptable to the

Training and Development
 “It is the act of increasing knowledge and
skills of an employee for doing a particular
job” – Edwin B.Flippo
Need for Training
◦ To prepare existing employees for higher
positions
◦ When a person is shifting from one job to
another
◦ To make employee mobile and versatile
◦ To bridge the gap between what the employee
has and what the job demands

Importance of Training
 A trained worker can contribute towards
increasing the productivity of the organization.
 Trained employees will be able to make better
and economical use of materials,machines,etc.,
 Training enables employees to secure
promotion easily
 Training provides organization flexibility and
stability
 Training helps in standardizing the methods of
performing the job for employees.
 A well organized training program will help to
reduce the learning time.

Training Input
 Basic types of input in training:
◦ Skills
◦ Attitude
◦ Knowledge
• Skills:
New workers can be trained to achieve the levels of
output trained by experienced workers.
• Attitude:
• Through orientation, organization develops
favorable attitude in new employees towards the
achievement of organization goal
• Knowledge:
The knowledge acquired in training helps to
understand all the peculiar problems in the modern

Training Methods
 Two types of Methods:
◦ On the job Training
◦ Off the job Training
On the job Training:
New employees learn through observing
peers or managers performing the job and
trying to imitate the behavior.
Some of the methods adopted to do the on job
training:
i)Job rotation
ii)Apprenticeship or Coaching
iii)Committee Assignments
iv)Experience
v) Temporary Positions

Job Rotation
 It involves the movement of managers
from one job to another job.
 Purpose – broaden the knowledge of
potential managers.
Apprenticeship or Coaching
◦ The trainee is placed under a particular
supervisor and teaches the job knowledge
and skills to the trainee

Committee Assignment
 The trainee managers are appointed as
members of a committee.
 The committee is assigned a subject
related to the business to discuss and
make recommendations.
Experience:
 It is learning by doing.
 A superior is giving training to a
subordinate as his understudy like an
assistant

Temporary Promotion
 At times in the absence of manager, a
senior staff takes as a charge of
acting as a manager with temporary
promotion
 OFF the job training Methods:
 The trainings are conducted beyond
the job environment
 Given with Study Materials and also
freedom of expression
 Importance of OFF the job training
methods include: 4:23 AM POM - Unit 1

 Lecture
 Conference and Seminar
 Role playing
 Case studies
 Programmed instructions
 Business Game
 In basket Method
 Sensitivity Training

Lecture
 It is the simplest of all techniques
 It explains series of facts, concepts and
principles.
Conference and Seminar
◦ It is a meeting of several people to discuss the
subject of common interest.
Role playing:
◦ A trainee will be assigned a “role” to be played
◦ The role players are given with the written or
oral description of the situation and the role to
play.

Case studies
 A real business problem is presented to
the group of members of the committee.
 They are asked to identify the problem
and generate alternative solutions and
suggest the best one.
Programmed Instructions:
 It is a self learning process.
 It includes teaching mechanisms such as
audio or video instructions and programs.
 Trainee learns through computer
systems,films,books.

In basket Method
 It contains number of correspondences
such as memo, circular letters, report.
 Each describes a real life problem
 The trainees are required to solve each
problem and to record their decisions with
in a time limit.
Sensitivity Training:
 The trainees forms a group, these groups
are allowed to mix up with each other and
communicate with each other thereby
giving a positive or negative feedback.

Areas of Training
 Company Policies and Procedures:
 This is to make new employee fully
conversant with the company
rules,practices,procedures,organization
structure and environment.
Training in specific skills:
◦ The expert trains the employee regarding
various skills required to do the job.
• Problem Solving Training:
• Most of the organizational problems are
common to the employee dealing the same
activity at different levels of the organization

 Managerial and Supervisor Training:
◦ Management has to train the employee in
managerial and supervisory skills.
Apprentice Training:
◦ Used for providing technical knowledge in
areas such as production, assembly ,etc.,

Steps in Training Program
 Identifying Training in Needs:
 Training need is a difference between
standard performance and actual
performance.
 Establish specific objectives:
 Purpose of training – focus to bridge
the gap between standard
performance and actual performance.
 Objective of training – to bring proper
match between job and man.

Select appropriate Methods
 Choose the appropriate training
method which will meet the
organization.
 Acquire Training resources and
preparing schedule:
 Based on the training method
adopted, all training materials should
be acquired.
 It might take few weeks to
complete.Figure out how long it will

Find a trainer
 Recruit an experienced professional to
guide team members.
 This professional will lead trainees, give
lectures, answer questions, providing
feedback and do all necessities that are
required to educate trainee
Implement Programs:
 The prepared plans and program is
implemented to get the desired output.

Evaluate Program
 It refers to the training utility in terms of
effect training on employees performance.
Feedback:
 A feedback mechanism is created in order
to identify the week areas in the training
program and improve the same in future

Evaluation of Training
Program
 The process of training evaluation is to
asses the value of training
 It can be evaluated basis on the
factors
◦ Production factors
◦ Human resource factors
◦ General observations
◦ Performance Test
◦ Cost value relationship

Production Factors
 Productivity rates covering both quality
and quantity are good indicators of the
value of training
 Production rate increases in the
organization, indicates the efficiency of
the training.
Human Resource Factors:
 Improvement of employee morale
 Decrease in absenteeism
 Decrease in no of accidents
 Decrease in disciplinary actions
 Decrease in Employee Turnover

 General Observations:
◦ The immediate supervisor is often a good
judge of the skill level of his subordinates.
• Performance Tests:
• Training can be evaluated in terms of
written and performance test.
• The test can only indicate what the
trainee has learnt theoretically in the
training.

Performance Management
 It is a process by which managers and
employee work together to plan, monitor and
review an employee’s work objectives and
overall contribution to the organization.
Objectives of Performance
appraisal:
 To improve employee performance
 To find out individual potential identification
 To plan for the work force
 To improve the effective communication
 To improve the management development
 To help the supervisors to have a proper

Barriers of Performance Appraisal
System
 Faculty Assumptions:
◦ Performance Appraisal is often not effective
due to unrealistic assumptions.
• Psychological Barriers:
• Manager’s feeling of insecurity, appraisal as
an extra burden, their feeling to treat their
subordinates failure as their deficiency, etc.,
• Halo Effect:
•It is the tendency of the raters to depend
excessively on the ratee’s one or two
outstandingly good or bad performances in
rating all other traits

 Personal Prejudice:
◦ If the rater dislikes any work team or informal
group, he may rate the entire group at the
lower end which may distort the training.
•Methods of Performance
Appraisal:
• Trait based appraisal
• Appraisal by results
• Trait based Appraisal:
• Traits – Qualities
• Managers evaluate based on personal traits
and work characteristics. They are,
•Job knowledge
•Leadership Skill

 Graphic Scale Method:
 The traits are broadly grouped under two
factors such as Employee characteristics and
employee contribution.
 It is also referred as Linear rating Scale
 Ranking Method:
 Appraising the subordinate against an absolute
standard with “outstanding” ,”good”, “below
average", ranking acquires the rater to compare
one employee with others.
 Grading:
◦ The grades are excellent, very
good,good,average,poor
◦ The actual performance of employee is
measured against these grades

 Forced Distribution Method:
◦ The appraiser is forced to appraise the appraise
according to the pattern of a normal curve
◦ The assumption is that the employee’s performance
levels confirm to a normal statistical distribution
 Check List Method:
◦ It involves a series of questions related to the
individual behavior. The question is of Yes or No type.
◦ Ex: Does he maintain discipline well? Yes/No
• Critical Incident Method:
• The evaluation is based on some key
incidents.
• His behavior at work is observed as to
whether he becomes upset over work, resists
the change, co-operate the fellow worker.

 Group Appraisal :
 The rating is not made by a single rater
but by a group of supervisors. Its a time
consuming process
II Appraisal by Results:
a)Management By Objectives (MBO):
It is a process whereby superior and
subordinate managers of an organization jointly
identify its common goals.
b)Behaviorally Anchored Rating
Scales(BARS):
It combines the elements of traditional
traits scales and critical incident methods. It is
developed from critical incident’s statements
from both supervisors and the employee who

 C) Assessment Centers:
◦ It is first used for selecting and promoting
lower level supervisors but now they are
applied to middle level managers as well.
◦ It will have the candidates do the following
psychological tests
i)Given management games in small groups
ii)Given various other exercises – like
preparing a report.
iii)The candidate is observed by the
evaluators.
It is meant for evaluating the potential of candidates to
be considered for promotion, training and
development.

PROMOTION
 Shifting the personnel to a higher position
carrying increased wages and
responsibilities.
Objectives of Promotion
◦ Promote the job satisfaction on the part
of the employee
◦ To increase the efficiency of the
employee
◦ Reduces labour Turn over
◦ It is useful in conversing skill, training
and ability 4:23 AM POM - Unit 1

Promotion Policy
i) Promotion from within the Organization:
◦ Promoting the employee within the
organization into the upward position through
the organization structure.
◦ It enhances firm reputation.
◦ It increases moral of the employee
ii)The Policy of open Competition:
This is a better and more honest.
If a person has the ability for a position, he
has the considerable advantage of knowing
organization’s history, problems, policies and
objectives.

Human assets accounting
method
 It deals cost and contribution of human
resources to the organization.
 Cost of human resource may be taken as
standard
 Employee contribution is the money value
of employee service.
 Employee performance can be taken a
positive when contribution is more than
the cost and the performance is negative,
when the cost is more than the
contribution.

Performance Appraisal
 It is a nine step process
 Performance standards are established based
on jobs.
 Performance can be measured by the
appraisers through observation, records and
reports.
 The measured performance may be adjusted
according to the influence of external and
internal factors.
 Comparing the actual performance of other
employees and performance of employee and
others given an idea where the employee
stands.
 Comparing the actual performance with the

 Appraiser discuss with the employees
about the reason for the positive or
negative deviations.
 Appraiser consider the internal and
external factors and suggest necessary
changes in standards.
 Follow up the performance appraisal
report.It is for guiding,directing,coaching
and training the employee.

Systematic Approach to selection
of Managers
Promotion/Depro
motion/Replacme
nt/ Retirement

Career Planning and Management
 Career and its Types:
◦ Career is a series of job held throughout an
individual’s working life time.
◦ Edwin B.Flippo – “Career as a sequence of
separate but related work activities that
provide continuity, order and meaning in a
person’s life”.
Types of Career:
i) Individual Career: It is a sequence of work
related activities in which a person
participates during the span of work life.
ii) Organization Career: It is a relatively
standard set of roles to be performed which

Career Management
 It is the combination of structured planning and
the active management choice of one’s own
professional career.
 It is a process of enabling employee’s to better
understand and develop their career skills and
interests and to use these skills and interests
more effectively both within the company and
after they leave the firm
 It has two essential components:
◦ Career Planning
◦ Career Development
Career Management = Career Planning +
Career Development

Career Planning
 It is the process by which one selects
career goals and path to these goals.
 “The process by which employees obtain
the knowledge about themselves and
information about the working
environment and then making an effort to
achieve a proper match”.
 It is a process of systematically matching
career goals and individual capabilities
with opportunities for their fullfilment

Career Development
 “Ongoing process by which individual
progress through a series of stages of
each of which is characterized by a
relatively unique set of issues, themselves
or tasks”.
 The career development program should:
i) attempt to match individual abilities and
aspirations with the needs of the
organization.
ii)develop people for the long term needs of
the organization and address the dynamic
changes which will take place every time.

Importance of Career development
i) Assures Needed talent : It enables
organization to identify pools of talent so that
the right people will b available for the
organization’s changing staff requirement.
ii) Develops promotable employee: It develops
internal supplies of promotable talent.
iii) Lower employee Turnover: The increased
attention of individual career generates more
organizational loyalty
iv) Taps employee potential: Encourages
employee to tap more of their potential
abilities.
v) Attracts and retains high talented Personnel:
Improves Organization’s ability to attract and
4:23 AM

Purpose of Career development
 It results in increased responsibility,
mobility and acquisition of new skills
 Help an individual to adjust the
significance life career changes whether
they are positive or negative.
 It increase an individual’s life and job
satisfaction, involvement, exposure and
visibility
 Provide better understanding of self and
organization
 Improves the quality of working life

Career Stages (Career
development Cycle)
 John Van Maanen and Edgar H.Schein
have identified 5 career stages that every
individual come across during his/her
career.
i) Exploration Stage
ii) Establishment Stage
iii)Mid Career (advancement) Stage
iv)Late – Career(Maintenance) Stage
v)Decline –(disengagement) Stage

i) Exploration Stage(15 to 25
years)
 This stage is usually from the ages 15 to
25 years during which a person seriously
explores various occupational alternatives
attempting to match these alternatives
with his/her interests and abilities.
 In this stage, individuals will rely on family
members and vocational counselors
advice and personal interests to
determine their directions.
 Thus, this stage is influenced by school,
family and friends.

ii)Establishment Stage( 25 to 35
years)
 It involves individuals entry into the
organization, socialization on the job,
recognition for effective work, possible
promotions and transfers and
achievement of full acceptance by the
work group.
 In this stage, job expectations from new
employees often exceed reality which
causes the feelings of under utilization.

iii)Mid-Career (Advancement Stage)
35 to 45 years
 In this stage, the individual is not
concerned with fitting into the organization
but with moving up in the organization.
 Those who are successful, realize job
satisfaction and self fulfillment.
 Many people remain in this stage for long
period.
 The less successful person never reach
the advancement stage but instead move
to next stage.

iv)Late Career ( Maintenance
Stage) 45 to 65 years
 It begins when the people detect cues that
they are nearing to the limit of their
advancement.
 It is a career state in which individual is no
longer learning about the jobs nor
expected to exceed levels of performance
from previous years.
 In this stage, people seek other means of
personal satisfaction such as helping
younger employees or engaging in
community and society oriented activities.

v)Decline or Disengagement Stage (
from 65 years onwards)
 It may occur at various ages depending on
the person’s degree of success in previous
stages.
 Those who are not very successful may
begin to disengage after they reach a mid
career crisis in the fifties they may go
through the motion of their jobs until they
reach the retirement.
 Successful employee continue to activate
and make productive contributions to their
organizations until their last day on the job
and it may resist retirement.

Principles of Management unit 3

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