Management and Entrepreneurship

1. Management & Entrepreneurship
(Course Code:10AL51)
Department of IEM
JSS Academy of Technical Education, Bengaluru-560060

2. Principles of Management
CHAPTER 3: ORGANIZING AND STAFFING

3. Outline
• Nature and purpose of organization
• Principles of organization
• Types of organization
• Departmentalization
• Committees
• Centralization Vs Decentralization - authority
• Responsibility
• Span of control – MBO and MBE (Meaning Only)
ORGANIZING

4. • Nature and importance of staffing
• Process of Selection & Recruitment (in brief).
Outline
STAFFING

5. The basic concepts of organization design formulated by early management
writers, such as Henri Fayol and Max Weber.
• Henri Fayol -14 Principles of Management and Weber's – Bureaucracy.
• They offered structural principles for managers to follow.
Introduction

6. MEN
MACHINE
MATERIALS
METHODS
MARKET
MONEY
Organization

7. Definition

8. Definition
• Organizing is arranging and structuring work to accomplish organizational
goals.
• The process of arranging people and resources to work together to
accomplish the goal.
• Systematic arrangement of activities.
• Organizing in management refers to the relationship between people, work
and resources used to achieve the common objectives.

9. Definition
Organizing is a process of
• Identifying the activities to be performed.
• Grouping the activities into work units.
• Assigning tasks to the various job position/specialization.
• Defining rules.
• Establishing the relationship of authority and responsibility among individuals.

10. Organizing viewed in relationship with the other management functions

11. Characteristics of Organizations
Deliberate
Structure
Distinct
Purpose
People

12. 1. Consider Plans & Goals
Purposes
Activities
Plans &
Goals

13. 2. Determine Work Activities
Selling
Accounting
Delivery
Quality Control
Advertising
Compensating
Training
Production
Purchasing
Budgeting
Recruitment
Maintaining Personnel

14. 3. Classify & Group Activities
>Selling
>Advertising
>Delivery
>Production
>Purchasing
>Quality control
>Accounting
>Budgeting
>Compensating
>Recruitment
>Training
>Maintaining
personnel
MARKETING OPERATIONS FINANCE
HUMAN
RESOURCES

15. Purposes of Organizing
• Divides work to be done into specific jobs and departments.
• Assigns tasks and responsibilities associated with individual jobs.
• Coordinates diverse organizational tasks.
• Clusters jobs into units.
• Establishes relationships among individuals, groups, and departments.
• Establishes formal lines of authority.
• Allocates and deploys organizational resources.

16. Process of Organizing

17. 1. Organization is always related to certain objectives.
2. An organization implies a group of people.
3. Communication is the nervous system of organization.
4. Organization is a continuous process.
5. Organization implies a structure of relationship
6. Organization involves a network of authority and responsibility relationship.
Nature of Organization

18. The Changing Organization
Traditional New Organization
Stable, Inflexible, Job-focused.
Dynamic, Flexible, Skills-focused.
Work is defined by job positions.
Work is defined in terms of tasks to be
done.
Individual-oriented. Team-oriented.
Permanent jobs. Temporary jobs.
Command-oriented. Involvement-oriented.
Managers always make decisions.
Employees participate in decision
making.
Work at organizational facility during specific
hours.
Work anywhere, anytime.
Hierarchical relationships. Lateral and networked relationships.
Relatively homogeneous workforce. Diverse workforce.

19. Organizational Structure

20. • Organizational structure is the formal arrangement of jobs within an
organization.
• This structure, which can be shown visually in an organizational chart.
Organizational Structure
• Organization structure explains the position and official relationship between
various individuals in the organization.

21. Organizational structure

22. • When managers create or change the structure they’re engaged in organizational design.
• Organizational design is a process that involves decisions about six key elements:
1. Work specialization
2. Departmentalization
3. Chain of command
4. Span of control
5. Centralization and decentralization
6. Formalization
Organizational structure

23. Organizational structure
• Dividing work activities into separate job tasks.
Example: Sporting Goods factory
To meet daily output goals, the workers specialize in job tasks such as molding,
stitching and sewing, lacing, and so forth.
• Individual employees “specialize” in doing part of an activity rather than the
entire activity in order to increase work output. (Division of labour).
1. Work Specialization

24. Organizational structure
Work Specialization

25. Organizational structure
2. Departmentalization
• How jobs are grouped together is called departmentalization.
Example: A hotel might have departments such as front desk operations, sales
and catering, housekeeping and laundry, and maintenance.
• Five common forms of departmentalization are used, although an
organization may develop its own unique classification.

26. The Five Common Forms of Departmentalization

27. The Five Common Forms of Departmentalization

29. The Five Common Forms of Departmentalization

30. The Five Common Forms of Departmentalization

31. The Five Common Forms of Departmentalization

32. The Five Common Forms of Departmentalization

33. Divisional structures based on product, geography, customer, and process

34. Different forms of Departmentalization in a single company

35. 3. Chain of Command
Organizational structure
The chain of command is the line of authority extending from
upper organizational levels to lower levels.
E.g.: who reports to whom.
To understand the chain of command, three other important concepts to be
understood:
1. Authority
2. Responsibility
3. Unity of command

36. Organizational structure
3. Chain of Command
1. Authority:
Refers to the rights inherent in a managerial position to tell people what to do and
to expect them to do it.
2. Responsibility:
The obligation or expectation to perform the assigned task/work is known as
responsibility.
3. Unity of command:
Principle states that a person should report to only one manager.

37. Chain of Command and Line Authority

38. 4. Span of Control
Organizational structure
The number of employees a manager can efficiently and effectively manage.
Example:
Assume two organizations, both of which have approximately 4,100 employees.
• if one organization has a span of four and the other a span of eight.
• The organization with the wider span will have two fewer levels and approx.
800 fewer managers.

39. 4. Span of Control
Organizational structure

40. Cost: At an average manager’s salary of $42,000 a year, the organization with
the wider span would save over $33 million a year (42%).
(+) Wider spans are more efficient in terms of cost.
(-) Wider spans may reduce effectiveness if employee performance worsens
because managers no longer have time to lead effectively.
4. Span of Control
Organizational structure

41. Wide span of controlNarrow span of control
Organizational structure

42. Organizational structure
5. Centralization and Decentralization
Centralization is the degree to which decision making takes place at upper
levels of the organization.
• If top managers make key decisions with little input from below, then the
organization is more centralized.
• If lower-level employees provide input or actually make decisions, then the
organization is decentralized.

43. • Degree of centralization in an organization depends on the situation.
• Earlier the goal was the optimum and efficient use of employees.
• Traditional organizations were structured in a pyramid.
• Today organizations have become more complex and responsive to
dynamic changes in their environments.
• Many managers believe that decisions need to be made by those individuals closest to
the problems, regardless of their organizational level.
Organizational structure
5. Centralization and Decentralization

44. Top mgt to take
Decision
Exercise of Control
over
Departments and
Divisions
Organizational structure
Centralization
Dept-
2
Dept-3
Dept-
1
Decentralization

45. Centralization Decentralization
Environment is stable. Environment is complex, uncertain.
Lower-level managers are not as experienced
at making decisions as upper-level managers.
Lower-level managers are capable and
experienced at making decisions.
Decisions are relatively minor. Decisions are significant.
Organization is facing a crisis / the risk of
company failure.
Corporate culture is open, allowing managers a
say in what happens.
Company is large. Company is geographically dispersed.
Effective implementation of company
strategies depends on managers retaining say
over what happens.
Effective implementation of company strategies
depends on managers having involvement and
flexibility to make decisions.
Centralization v/s Decentralization

46. 6. Formalization
Organizational structure
Formalization refers to how standardized an organization’s jobs are and
the extent to which employee behaviour is guided by rules and procedures.
In highly formalized organizations,
• There are clear job descriptions.
• Numerous organizational rules.
• Clearly defined procedures and work processes.

47. Formal vs Informal Organizations
FORMAL INFORMAL
• Have planned structure
• Deliberate attempts to create
patterned relationships
• Usually shown by a chart
• Advocated by traditional theory
• Not formally planned
• Arise spontaneously as a result of
interactions
• Not depicted in a chart
• Stressed by human relation theory

48. Principles of Organization

49. The principles are guidelines for planning organization structure.
Principles of Organization
1. Objectives
2. Specialization
3. Span of control
4. Exception
5. Scalar principle / Chain of command
6. Unity of command
7. Delegation
8. Responsibility
9. Authority
10. Efficiency
11. Simplicity
12. Flexibility
13. Balance
14. Unity of direction
15. Personal abilities

50. Types of Organization

51. Types of Organization
1. Military or Line
2. Functional
3. Line and Staff
4. Project
5. Matrix
6. Committee
7. Free-Form

52. Types of Organization
• Vertical line of authority.
• Greater decision making authority - placed at the top.
• Lesser decision making authority - placed at the bottom.
• Line executives – Involved in the basic activities of the organisation.
• Unity of command.
Military or Line Organisation

53. Types of Organization
Military or Line Organisation
(+) Clear division of authority and responsibility and Unity of control
(-) The organization is rigid and inflexible

54. Military or Line Organisation

55. Types of Organization
Line authority - flows down the chain of command.
Examples - Production supervisor gets the rights to direct an employee to operate a particular
machine.
Staff authority is the right to advise or counsel those with line authority.
Examples - HRD employees help other departments by selecting and developing a qualified
workforce.
Line and Staff Organization

56. Types of Organization
Line and Staff Organization

57. Functional Organization
Types of Organization
The work is organised on the basis of specialization.
• Functional organisation at the Top
Whether a worker is in production, finance or marketing department, questions
relating to his salary, promotion etc. will be decided by the personnel manager.
• Functional organisation at the Bottom
The foreman should not be burdened with looking after all the aspects of his
work, instead, the specialists can help him solving technical problems.

58. Functional Organization
Types of Organization
(-) Violates principles of unity of command

59. The matrix structure combines elements of the functional and the divisional
structures, bringing together specialists from different areas of a business to work
on different projects on a short-term basis.
Matrix Structure
Types of Organization
• Each person on the project team reports to two bosses: a line manager and a
project manager.

60. Matrix Structure
Employees
CEO
Project
manager B
Project
manager C
Vice president,
engineering
Vice president,
production
Vice president,
finance
Vice president,
marketing
Project
manager A

61. • Project organizational structure refers to the creation of an independent project
team.
• The team’s management is separated from the parent organization’s, other
units, have their own technical staff and management, enterprise assigns certain
resources to project team, and grant project manager for implementation of the
project .
Project Organization
Types of Organization

62. Project Organization
Types of Organization

63. Committee Organization
• “A committee is a group of persons performing a group task with the object of
solving certain problems”.
• Committee organization brings together individuals from different areas to
consider various organization problems.
Types of Organization
Examples:
• Advisory committees
• Finance committees etc.

64. Committee Organization

65. (+) Committees provide a forum for the pooling of knowledge and experience
of many persons of different skills, ages and backgrounds.
Committee Organization
(-) In case a wrong decision is taken by committee, no one is held responsible
which may results in irresponsibility among members.

66. • Also known as boundary less structure.
• Roles, authority and relationships are not clearly defined.
• Members of organisation jointly exercise authority and are jointly
responsible.
Free form Organization
Types of Organization

67. • The mechanistic organization (or bureaucracy) was the natural result of
combining the six elements of structure.
Mechanistic and Organic Structures
• The organic organization is a highly adaptive form that is as loose and
flexible.

68. Mechanistic and Organic Structures

69. Why do structures differ ?
Strategy
Organization
size
Technology Environment
Global
Implications

70. Organizational structure
Span of control
The number of employees a manager can efficiently and effectively manage.

71. Organizational structure
Factors affecting the Span of Management
1) Ability of the manager
2) Ability of the employees
3) Type of work
4) Geographic location
5) Well-defined authority and responsibility.
6) Level of management
7) Economic considerations

72. Management by Objectives (MBO)

73. Management by Objectives (MBO)
 The father of modern corporate management - Peter
Drucker.
 He is considered to be the world’s most influential
corporate guru.
 He developed Management by Objectives (MBO)
through his 1954 book ‘The Practice of Management’.
Peter Drucker
1909-2005

74. Management by Objectives (MBO)
 MBO, a process/principle/practice by which the objectives of an organization
are agreed to and decided between the management and the employees.
 This way the employees understand what is expected of them.
 By this they attain both their personal goals and the organization’s targets.

75. Management by Objectives (MBO)

76. In MBO goals are expected to be SMART, i.e.
•Specific
•Measurable
•Achievable
•Realistic
•Time bound
Management by Objectives (MBO)

77. Management by Exception (MBE)
• Management by Exception (MBE) is a method of control.
• Managers intervene the work of employees only when they work outside the
prescribed scope or when they can't meet the goals/set targets.
• Manager leaves employee free till they work within the scope and within they
meet the goals."

78. STAFFING

79.  Staffing is the process of filling positions/posts in the organization with
adequate and qualified personnel.
Definition
 Staffing is the process of acquiring, deploying and retaining a workforce of
sufficient quantity and quality to create positive impacts on the organization's
effectiveness.
 Staffing is the function by which managers build an organization through the
recruitment, selection, and development of individuals as capable
employees.

80. Objectives of Staffing
 To understand all function of in an organization.
 To understand manpower planning so that people are available at right time
and at a right place.
 To understand issues related to job analysis and to overcome the problem.

81. Importance of Staffing
Training and Development.
Effective Co-ordination.
Effective Recruitment & Placement.
Building effective human resource.
Optimum Use of Resource.
Enhances Corporate Image.
Job Satisfaction.

82. Elements of Staffing
Manpower planning
Job analysis
Recruitment and selection
Training and Development
Performance appraisal
Staffing
Process
Manpower
Requirements
Recruitment
Selection
Placement &
Orientation
Training &
Development
Performance
Appraisal
Promotions
Compensation

83. Elements of Staffing
Manpower
Requirements
• Involves Forecasting.
• Determining the number and kind of manpower required by the organization in the future.
Recruitment • Process of locating, identifying, and attracting capable candidates.
Selection
• Process of choosing and appointing the right candidates for various job positions in the
organization
Placement
&
Orientation
• Placement refers to the employee occupying the position/post.
• Orientation is introducing the selected employee to other employees and familiarizing him
with the rules and policies of the organization.

84. Elements of Staffing
Training &
Development • Facilitate Employee Learning.
Performance
Appraisal
• Evaluating an employee’s current / past performance as against certain predetermined
standards.

85. Recruitment

86. “Recruitment is the process of searching for prospective employees
and stimulating them to apply for jobs in the organization.”
Definition

87.  Vacancies due to promotions, transfers, retirement, termination, permanent
disability and death.
 Creation of new vacancies due to growth, expansion and diversification of
business activities of an enterprise.
 New vacancies are also possible due to job specification.
Need of Recruitment

88. Recruitment Sources
Internal Sources
Transfers and Promotions
References
Internal Notifications
External Sources
Management trainee schemes
Press Advertisement
Employment agencies / Consultancies
Educational institutions
Walk-ins
Recommendations/References

89. Selection Process
Completing application materials
Conducting an interview
Completing any necessary tests
Doing a background investigation
Deciding to hire or not to hire
Socialization
A series of steps from initial applicant screening to final hiring of the new employee.
Step 1
Step 2
Step 3
Step 4
Step 5
Step 6
Tests
Assessment
Centers
Interviews

90. Step 1 Completing application materials
Gathering information regarding an applicant’s background and
experiences.
Typical application materials includes; Application forms and Résumés
Step 2 Conducting an interview
Interviews can provide rough ideas concerning the person’s fit with the job
and the organization.
Selection Process

91. Selection Process
Step 3 Completing any necessary tests
Administered before or after the interview.
E.g. of employment tests are; Reasoning / Mechanical aptitudes / Personality.
Step 4 Doing a background investigation
Can be used early or late in selection process.
Background investigations include:
Basic level checks.
Reference checks.

92. Selection Process
Step 5 Deciding to hire or not to hire
A physical examination may be required if it is relevant to job performance.
Negotiation of salary and/or benefits for some jobs.
Step 6 Socialization
The final step in the staffing process.
Involves orienting new employees to:
The firm & work units in which they will be working.
The firm’s policies and procedures and organizational culture.

94. End of Module