Management Module 2

MANAGEMENT & ENTREPRENEURSHIP MODULE 2
Technological Innovation
Management & Entrepreneurship
B.E., V Semester, Electronics & Communication Engineering
[As per Choice Based Credit System (CBCS) scheme]
[Subject code: 18ES51]
MODULE - 2a
ORGANISING AND STAFFING
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MEANING
Meaning of Organization
Organization is a process which integrates different type
of activities to achieve organizational goals and objectives,
to achieve these goals there must be competent
management providing them all those factors to perform
their job efficiently and effectively. Organization is nothing
but is a process of integrating and coordinating the efforts
of men and material for the accomplishment of set
objectives.
Every thinker is of the opinion that an organization is a
process. They further have added that this process leads
identification of work to be performed which for
convenience sake should be objectively grouped and
defined. Then the work should be assigned to individuals
according to their aptitude, technical knowledge, skill and
efficiency. For satisfactory working the individuals should
be given some right and authority. A mutual relationship
between jobs (what to be done) duties (to be performed)
and authority (to be exercised) should be established.
Organization is just like a tool in the hands of
management. Net results will be perfect if the tool is well
designed and handed properly.
Meaning of Staffing:
Staffing is the traditional management function of

attraction and selection of the best people and putting
them on job where their talents and skills can be best
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utilized, and retention of these people through incentives,

job training and job enrichment programmes, in order to
achieve both individual and organizational objectives. This
emphasizes managing human and not material or financial
resources.
Staffing is the function of human relationship in the
organizational structure with competent staff. Staffing in
that part of the management function which is concerned
with people at work and with their relationship within the
organization.
CHARACTERISTICS OF ORGANISATION
Robbins defines Organization as ' a consciously

coordinated social unit, composed of two or more people,
that functions as a relatively continuous basis to achieve
common goals of set of goals.
Agrawal defines organization as ' a goal oriented open
system composed of people, structure and technology.
From the above definitions, an organization has the

following characteristics-
1. It is an open system.
2. It is a goal oriented.
3. It is a collection of people.
4. Organization consists of people.
5. Organization consists of technology, and
6. It has continuity.
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Organization is an open system : An open system

means open to environment. Organization exists and
functions in environment. Environment compels the
organization to acquire right type of people, technology
and structure so that the goals to serve the environment
can be attained. The organization is thus greatly influence
the environment.
Usually the demands or wants of the people determines

the strategies and goals of an organization. What are the
needs in the market and how an organization can bring
new and needy products to the market create an
interaction between the organization and the environment.
Without interaction, organization cannot fulfill required
products or services to the users groups. This way, an
organization is an open system, without which it cannot
survive.
Organization is goal oriented : Without goal or set of

goals, organization is useless. There is nothing for the
organization to do. Therefore, the major characteristic of
any organization is its goal. Type of people or technology
is adopted so that the set goal can be achieved. The goal
gives line of action; acquire required type of people and
uses type of technology so that the goal is achieved in an
anticipated time point. Without goal, organization cannot
be formed.
Organization is a collection of people : People are the

main performers in any organization. In other world, all the
elements of any organization are the same except the
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people. Even with the same age, qualification, experience

and facilities, the output of the people may vary, simply
because the needs and wants of all people are not the
same. What makes them work by heart and head is the
one that differentiate organizations from one to others.
Organization consists of technology : Technology is

the means of doing works. There are various kinds of
doing works. As an organization consists of more people,
its performance procedure should be of a fixed type so
that each individual in the organization can exercise them
well. This is how technology initiates. Technology eases
the work and shortens the time. Technology originates a
certain policy necessary to keep organizational beliefs in
doings of the various people at different structural level.
This saves the integrity of the people in achieving goals.
Organization has continuity: As the organization

involves people, and the people generate different needs,
they can leave the organization or some may die too. This
does not affect the organization to stop or decrease in
size. Hence, it is said that every organization has its own
continuity. A good manager can leave but other better
man can take over the charge of the organization.
The Organizational Process
Organizing, like planning, must be a carefully worked out
and applied process. This process involves determining
what work is needed to accomplish the goal, assigning
those tasks to individuals, and arranging those individuals
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in a decision‐making framework (organizational structure).

The end result of the organizing process is an
organization — a whole consisting of unified parts acting
in harmony to execute tasks to achieve goals, both
effectively and efficiently.
A properly implemented organizing process should result

in a work environment where all team members are aware
of their responsibilities. If the organizing process is not
conducted well, the results may yield confusion,
frustration, loss of efficiency, and limited effectiveness
The stages or steps in the process of organization are

explained below:
1. Fixing the objectives of the organization
At the top level, administrative management first fixes the

common objectives of organisation. At the middle level,
executive management fix the departmental objectives.
Lastly, at the lower level, supervisory management fix the
day-to-day objectives. All the objectives of the organisation
must be specific and realistic
2. Finding activities must for achieving objectives
After fixing the objectives, the top-level management

prepares a list of different activities (or works) which are
required to be carried out for achieving these objectives.
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This list is prepared at random without following any

sequence or order. This is a very important step because it
helps to avoid duplication, overlapping and wastage of
efforts.
3. Grouping the similar activities
All similar or related activities having a common purpose

are grouped together to make departments. For e.g. all
activities or works which are directly or indirectly
connected with purchasing are grouped together to make
the Purchase Department. So various departments such
as Purchase, Production, Marketing, Finance, etc. are
made. The grouping of similar activities leads to division of
labour and specialisation.
4. Defining responsibilities of each employee
The responsibilities (duties) of each employee are clearly

defined. This will result in the selection of a right person for
the right post / job. He / she will know exactly what to do
and what not to do. Therefore, it will result in efficiency.
5. Delegating authority to employees
Each employee is delegated (surrender or given) authority.

Without authority, the employees cannot carry out their
responsibilities. Authority is the right to give orders and the
power to get obedience. The authority given to an
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employee should be equal to the responsibility given to

him.
6. Defining authority relationship
When two or more persons work together for a common

goal, it becomes necessary to clearly define the authority
relationship between them. Each person should know who
is his superior, from who he should take orders, and to
whom he will be answerable. Similarly, each superior
should know what authority he has over his subordinates.
7. Providing employees all required resources
After defining the authority relationships, the employees

are provided with all the material and financial resources,
which are required for achieving the objectives of the
organisation. So in this step, the employees actually start
working for a common goal.
8. Coordinating efforts of all to achieve goals
This is the last stage or step in the process of organisation.

Here, the efforts of all the individuals,
groups, departments, etc. are brought together and co-
coordinated towards the common objectives of the
organisation.
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PRINCIPLES OF ORGANIZATION
The success of a business organization can be
ensured if the following basic principles are used. In order
to develop a sound and efficient organization structure,
there is need to follow certain principles. In the words of
E.F.L. Brech, "If there is to be a systematic approach to
the formulation of organization structure, there ought to be
a body of accepted principles". They are as follows:
(1) Objectives: The objectives of the enterprise influence
the organization structure and hence the objectives of
the enterprise should first be clearly defined. Then
every part of the organization should be geared to the
achievement of these objectives.
(2) Specialisation: Effective organization must promote
specialisation. The activities of the enterprise should be
divided according to functions and assigned to persons
according to their specialisation.
(3) Span of Control: As there is a limit to the number of
persons that can be supervised effectively by one boss,
the span of control should be minimum as far as
possible, the minimum, that means an executive should
be asked to supervise a reasonable number of
subordinates only, say six.
(4) Exception: As the executives at the higher level

have limited time, only exceptionally complex
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problems should be referred to them and routine

matters should be dealt with by the lower levels. This
will enable the executives at higher level to devote
time to more important and crucial issues.
(5) Scalar principle : This principle is sometimes known

as the "chain of command". The line of authority from
the chief executive at the top to the front - line
supervisor at the bottom, must be clearly defined.
(6) Unity of Command: Each subordinate should have
only one supervisor whose command he has to obey.
Dual subordination must be avoided, for it causes
uneasiness, disorder, indiscipline and undermining of
authority.
(7) Delegation: Proper authority should be delegated at
the lower level of organization also to carry out the
work effectively.
(8) Responsibility: The superior should be responsible
for the acts of his subordinates.
(9) Authority: Authority is a tool by which a manager

accomplishes the desired objectives, which should
be clearly defined.
(10)Efficiency: The organization structure should help
enterprise to function efficiently to accomplish the
objectives at lowest cost.
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(11)Simplicity: The organization structure should be

simple and the levels should be as minimum as
possible.
(12)Flexibility: Should be flexible, adaptable to
changing circumstances, permit expansion,
replacement, without dislocation and disruption of the
basic design.
(13)Balance: There should be a reasonable balance in
the size of various departments, between
centralization and decentralization, between the
principle of span of control and short chain of
command and among all types of factors such as
human, technical and financial.
(14)Unity of direction : Should be one objective and one
plan for a group of activities having same objectives.
Unity of direction facilities unification and
coordination of activities at various levels.
(15)Personal Ability: As people constitute an
organization, there is need for proper selection,
placement and training of staff. Organisation
structure must ensure optimum use of human
resources and encourage management development
programme.
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SPAN OF MANAGEMENT
Definition: The Span of Management refers to the

number of subordinates who can be managed efficiently
by a superior. Simply, the manager having the group of
subordinates who report him directly is called as the span
of management.
Span of management is Span of control -the number of

subordinates a supervisor has—is used as a means of
ensuring proper coordination and a sense of accountability
among employees. It determines the number of levels of
management an organization has as well as the number of
employees a manager can efficiently and effectively
manage. In the execution of a task, hierarchical
organizations usually have different levels of task
processes. Workers at various levels send reports on their
progress to the next levels until the work is completed.
In the past it was not uncommon to see average spans of
one to four (one manager supervising four employees).
With the development of inexpensive information
technology in the 1980s, corporate leaders flattened many
organizational structures and caused average spans to
move closer to one to ten. As this technology developed
further and eased many middle-managerial tasks (such as
collecting, manipulating, and presenting operational
information), upper management found they could save
money by hiring fewer middle managers.
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Research Studies of management have found

that this number (span) is usually 4-8 subordinates at
the upper levels of organization and 8-15 or more at the
lower levels. However this is not definite.
DEPARTMENTALISATION
Departmentalization is the process of grouping individuals

into departments and grouping departments into total
organizations.
Horizontal differentiation of tasks or activities into
discrete segments is called departmentalization. There
are several bases for departmentalization depending
upon the nature and size of organization, goals,
strategies and environment.
1. Departmentalization based on Products
This is more suitable for a large organization that
manufactures a vast variety of products. Under this
separate groups or departments are created and each
department is controlled by a manager who will be
responsible for all the activities of that sub group. Each
subgroup will have its own facilities required for
manufacture, purchase, marketing and accounting etc.
This type is advantageous where variety of products
are manufactured for example (i) Godrej, that
manufactures soaps, cosmetics, refrigerators,
machines, furniture etc., (ii) HMT that manufactures
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machines, watches, tractors, bearings etc. (iii) TATAs

that make trucks, cars, steel, machines etc.
Advantages
 Top management is relieved of operational task
enabling them to concentrate more on common
goals.
 Performance of different product groups can be
easily compared enabling the top management to
invest more and more in profitable product groups
and exercise better control on non performers.
 Managers of individual products put better effort to

improve his area compared to others.
Disadvantages
 This calls for duplication of staff and facilities.
 Separate work force are required in sales,
marketing and finance, resulting in extra
expenditure.
 More managers are required.
 May result in under utilization of facilities and
equipment.
2. Departmentalazation based on functions

The departmentation is based on each major
function of the organization. Depending on the nature
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of organization the various functions are as follows:

Marketing, Engineering, Production, Finance,
Personnel, Purchase etc. Functional departmentation
is most widely employed basis of organising activities -
and is present in almost every organization at some
level in its structure.
Advantages
 It is logical reflection of functions.
 Maintains power and prestige of major functions.
 Follows principle of occupational
specifications and thereby facilitates efficient
utilization of people.
 Simplifies training.
 Provides means of right control at top.
Disadvantages
 De-emphases overall company objectives
 Leads to over specialization of people.
 Reduces coordination between functions.
 Slow adoption to changes in environment
 Limits development of general managers.
3. Departmentalization based on time
One of the oldest forms of generally used
departmentalization at lower levels of an organization, is
grouping of activities on the basis of time. The use of
shifts is common in some organizations due to economic or
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technological reasons. For service organizations like

hospitals, fire department, security, steel mills, chemical
plants, round the clock work is essential. All these call for
3 shift working of organization. Then under such
circumstance, the departmentation is made on the basis of
shifts as first shift, second shift etc.
Advantages
 Service can be rendered, that goes beyond the normal
8 hours shift/day.
 Facilitates use of processes that cannot be stopped or
interrupted.
 Expensive capital equipment can be better utilized.
 Provides part time jobs for people who are otherwise
busy during day time (students going for part time job
etc.)
 Higher and continuous production per day.
Disadvantages
 Lacks good and efficient supervision during night shifts.
 Inconvenient for people to work in night shifts and
more difficult during shift changes from day to
night.
 Lack of effective coordination and communication
from people of one shift to next shift.
 Loss of product or service may increase owing to
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higher payment/ over time payment during night

shift.
4 .Departmentalization based on Territory and

Geography
Departmentalization by Territory is common in
organizations that operate over a wide geographical
area. The activities of an enterprise are divided into
territories like, western region, northern region, eastern
region, southern region etc. They may be further divided
into sub regions in main regions like Karnataka region,
Kerala region, Andhra Region, Tamil Nadu region within
southern region etc.
Territorial is especially attractive to large-scale firms
or other enterprises whose activities are physically or
geographically spread over a large area. Banks,
Railways and big manufacturing companies like
petroleum companies (HP, Indian Oil etc.), cosmetic
companies are some of the examples of this.
Advantages
 Places responsibility at lower level.
 Places emphasis on local problems and markets.
 Ensures a better coordination within a region.
 Facilitates direct communication within a region.
 Better involvement of people to achieve higher
targets.
 Provides a region-wise comparison of performance.
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 Takes advantage of economics of local operations.

Disadvantages
 Requires more persons with General Manager abilities.
 Requires to maintain similar functional people at all
regions.
 Difficult to control from top management.
5.Departmentation based on simple numbers

This was one of the most widely used ancient
methods of departmentalization. This is achieved by
tolling of persons performing the same job and grouping
them together under one supervisor. This is not in
common use now.
COMMITTEES
Committee can be defined as a group of organizational

members who discuss and develop solutions to problems.
It can be either line or staff and can be established on a
standing (permanent) or an adhoc basis. In business
enterprises, the board of directors constitutes the
committee at the highest level. The purpose of such
committees is to discuss various problems and
recommend solutions to the management. It is generally
found to co-exist with line and staff type of organization.
The Board of Directors of a company is an example of a
committee organization. This form of organization is
suitable for taking decisions on policy matters or laying
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down broad objective for the enterprise.
TYPES OF COMMITTEES
Ad-Hoc committee – what is an ad-hoc committee? The
word ad-hoc is derived from the Latin language, which
means ‘for a specific purpose’. An ad hoc committee is
therefore a committee that is set up for the main purpose
of performing a specific task or dealing with a specific
situation. Having completed the specific task and
submitted its report, the ad hoc committee is then
dissolved. Majority of committees in business
organizations and other places are ad hoc types.
For example, an ad hoc committee could be formed by the
management of an organization to investigate into the
causes of a particular problem bedeviling the organization.
After the completion of the task and submitting a report,
the ad hoc committee is dissolved.
Executive committee – as the name suggests, this type
of committee is made up of people occupying top positions
in an organization who have the powers to administer the
day to day affairs of the organization. Executive
committees are mainly made up of senior management
personnel, and just like any other committee in a business
organization, the executive committee is given the
mandate to perform special assignments or tasks.
Sub-committee – a sub-committee as the name implies,
is basically a subsidiary committee. This means that it is
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connected with a larger committee that is more powerful

and important than it. A sub-committee is said to be a child
of a parent committee. A large committee can appoint one
or more of its members to form another committee under it
in the name of a sub-committee. The large committee
underneath which the sub-committee is formed is the
parent committee.
Coordinating or Joint committee – this is a type of
committee that acts as a link between two committees and
joins or coordinates their actions together. Such a
committee would normally be composed of
representatives from the other committees whose
activities it is coordinating.
Committees are very important in business organizations
since they help in resolving problems and also promotes
the exchange of opinions among members for the
betterment of the organization.
Advantages:
1. Pooling of Opinions:
The members of committees come from different

background and areas of expertise and have different
viewpoints and values. When persons with varied abilities
sit together and discuss a problem, various aspects of the
case are highlighted and pros and cons are assessed. The
pooled opinion will help in taking a realistic view of the
problem.
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2. Better Co-Ordination:
Committee form of organization brings more co-ordination

among different segments of the organization when
representatives of different departments sit together, they
understand and appreciate the difficulties faced by others.
This type of frank discussions help on fixing the targets of
different departments and better co-ordination is achieved
through this type of decision making.
3. Balancing of Views:
This type of organization helps in balancing the views

expressed by different persons. There is a tendency to
over emphasize the aspects of one’s own department by
ignoring the inter dependent character of problems of
different departments. A committee helps to bring out an
agreed view of the problem by taking into account
divergent views expressed in such meetings.
4. Motivation:
The committees consist of managers as well as

subordinates. The views of subordinates are given
recognition and importance. It gives them encouragement
and makes them feel as an integral part of decision
making process. Such committees boost the morale of
subordinates and motivate them to improve their
performance.
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5. Dispersion of Power:
The concentration of power in few persons may lead to

misuse of authority and wrong decisions. By spreading
powers among committee members this problem can be
solved.
6. Better Acceptance of Decisions:
The decisions taken by committees are better accepted by

subordinates. The decisions of an individual may be
autocratic whereas committees decide in wider
perspective of organization. Since various shades of
people are represented in committees, these decisions are
better accepted.
7. Better Communication:
It is a better forum for discussing matters of mutual

interest and reaching certain conclusions. These decisions
can be properly communicated to subordinates through
committee members. The members will transmit correct
and authentic information and also convey the background
of taking those decisions.
8. Executive Training:
Committees provide a good forum for training executives.

They learn the value of interaction, group dynamics and
human relations. They are exposed to various view points
and learn the art of reaching decisions and solving
organizational problems.
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Weakness of Committee Form of Organization:
This form of organization suffers from the following

weaknesses:
1. Delay:
The main drawback of committee form of organization is

delay in taking decisions. A number of persons express
their view points in meetings and a lot of time is taken on
reaching a decision. The fixing of committee meetings is
also time consuming. An agenda is issued and a
convenience date is fixed for the meeting. The decision
making process is very slow and many business
opportunities may be lost due to delayed decisions.
2. Compromise:
Generally, efforts are made to reach consensus decisions.

The view point of the majority is taken as a unanimous
decision of the committee. The thinking of the minority
may be valid but it may not be pursued for singled out.
They may accept less than an optimal solution, because of
a fear that if their solution proves wrong then they will be
blamed for it.
3. No Accountability:
No individual accountability to be fixed if these decisions

are bad. Every member of the committee tries to defend
himself by saying that he solves a different solution. If
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accountability is not fixed then it is the weakness of the

organization.
4. Domination by Some Members:
Some members try to dominate in the committee

meetings. They try to thrust their view point on others. The
aggressiveness of some members helps them to take
majority with them and minority view is ignored. This type
of decision making is not in the interest to the
organization.
5. Strained Relations:
Sometimes relations among committee members or with

others become strained. If some members take divergent
stands on certain issues, some may feel offended. In case
some issue concerning other persons is discussed in a
committee and members taking stand not liked by those
persons may offend them. The discussions in the
meetings are generally leaked to other employees. Some
unpleasant decisions may not be liked by those who are
adversely affected. It affects relations of employees not
only on the job but at personal level also.
6. Lack of Effectiveness:
The role of committees is not effective in all areas. The

committees may be useful where grievance redressal or
inter personal departmental matters are concerned.
Committees may not be effective where policies are to be
framed and quick decisions are required. Individual
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initiative will be more effective in these cases. So

committees have a limited role to play.
Guidelines for Committee Members:
In order to make the working of committees effective,

the members should follow these guidelines:
1. The members should ensure that the atmosphere at the
meetings is cordial and informal.
2. The members should express their views clearly and
logically and listen to the reactions calmly.
3. Disagreement should not be ignored. They should not
compromise just for the sake of harmony. Criticism should
be directed on the issues and not on persons.
4. It should be ensured that chairman does not
excessively dominate. His views should also be treated in
same way as that of others. His views should not be taken
as final.
5. The disagreement in meeting should not be taken in
personal level. The spirit of competition should be avoided
and co-operation should be enhanced.
All these guidelines will not only smoothen the working
committees but will also make them an effective
instrument of the organization.
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AUTHORITY
It is the formal right given to an individual to command (the

action of others). According to Koontz, it is the tool by
which a manager is able to exercise discretion and to
create an environment for individual performance.
An authority may be defined as the "right to act". It may

also be referred to as the power to take necessary steps
or decisions in order to achieve organization's goals.
An enterprise may have the best of plans, sound

organization structure and efficient management, yet
nothing happens or is achieved. As nothing is done i.e.,
the 'act' is missing and it is the act that influences in the
body structure. Thus, "Authority is the right to act" the most
appropriate definition given to it.
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Enterprise and types of authority

An enterprise can be of various types. For each of that
types there are different types of authority.
Enterprise Authority
1. Public Organization Share holders, Board of
2. Partnership firm All the members who are
directors.
3. Private Ltd. Director / Directors, M.D.
partners
4. Proprietor ship Proprietor of the firm.
5. Government / Committees, Council, Board
Organization
Institutional of Directors.
RESPONSIBILITY
It is also called as Accountability or Answerability. It may
be considered as the obligation of a subordinate to his
superior to do a work assigned to him. Each person who is
given responsibility must recognise that the executive
above him will hold him responsible for the quality of his
performance.
Authority and responsibility exist together in a business
organization. They represent the two sides of the same coin
while authority is right to command; responsibility is an
obligation to performance as someone with authority has di-
rected. It accompanies the assignment of work to a
subordinate and becomes increasingly important at
successive higher levels in the hierarchy. It is not merely a
desire to cooperate or to advance group objectives but is a
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recognition of the obligation to perform managerial

functions.
One major and important aspect of responsibility is that
a manager can part with authority but not with
responsibility, which is an inherent property of his position
in the organization.
The terms "responsibility"' and "accountability" are
often used dischargeable Strictly speaking accountability
is used to denote a special kind of responsibility. As
employed in military, an officer is said to be "accountable"
for equipment, but responsible for the action of troops
reporting to him.
CENTRALISATION VS DECENTRALISATION
Concept of Centralization and Decentralization

Organization authority is merely the degree of
discretion conferred on people to make it possible for them
to use their judgment by giving them power to use their
own decisions and issue instructions, how much authority
should be concentrated or dispersed throughout the
organization.
Decentralization is the tendency to disperse decision,
making, authority in an organization structure. It is a
fundamental aspect of delegation, to the extent the
authority is not delegated it is centralized. There can be
absolute centralization of authority in one person; this
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implies that no subordinate managers, and therefore no

structured organization.
Some decentralized authority exists in all organizations.
On the other hand there cannot be absolute
decentralization, for if managers, should delegate all their
authority, their status as managers would cease, their
position will be eliminated and again there would be no
organization structure. Centralization and decentralization
are qualities with various degrees in practice.
When work of an executive increases so much in
volume that he cannot hope to cope with it, he has to
divide it among his subordinates. In doing so he naturally
expects that each subordinate will do the job as he himself
would have done. This process of dividing the job is
referred to as 'delegation'. Delegation is simply a matter of
entrusting part of the work operations or management to
others. "It is the ability to get results through others" - "It is
the dynamics of management". It is a process a manager
follows in dividing the work assigned to him so that he
performs that part which only he, because of his unique
organizational placement, can perform effectively, so that
he can get others to help him with what remains. The
primary purpose of delegation is to make organization
possible.
Just as no one person in an enterprise can do all the
job necessary for accomplishing a group purpose, so it is
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impossible as an enterprise grows for one person to

exercise all the authority for making decisions. There is a
limit to the number of persons that a manager can
effectively supervise and for whom they can make
decisions. Once this limit has been passed, authority must
be delegated to subordinates, who will make decisions
within the area of their assigned duties.
The process of Delegation
 Authority is delegated when superior gives a
subordinate, discretion to make decisions. The entire
process of delegation involves:
 Determination of results expected (MBO)
 Assignment of tasks.
 Delegation of authority for accomplishing these tasks.
 Holding of people responsible for accomplishment of
tasks.
In practice it is impossible to split this process, since
expecting a person to accomplish goals without the
authority to achieve them is meaningless, as the delegation
of authority without knowing for what results it will be used.
Clarity of Delegation
Delegation of authority can be specific or general,
written or unwritten. If the delegation is unclear, a
manager may not understand the nature of the duties or
the results expected. Specific written delegations of
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authority are extremely helpful both to the manager who

receives them and to the person who delegates.
Sometimes, especially, in the upper levels of
management, it is too difficult to make authority
delegation specific and the subordinate, robbed of flex-
ibility, will be unable to develop in the best way.
Recovery of Delegated Authority

A manager who delegates authority, does not
permanently dispose it off; delegated authority can
always be regained.
A shuffle in an organization means that rights are
recovered by the responsible head of the firm to a
department and then re-delegated to new managers to
modified departments, so that head of a new
department may receive the authority held by other
managers.
Difficulties in delegation
Although delegation is apparently a simple process,
but in practice certain difficulties do generally crop up,
hampering the process. They are as follows: .
(i) On the part of the boss
> "I can do it better myself feeling.
> Lack of ability to direct.
> Lack of confidence and trust in subordinates.
> Absence of control that warns of coming troubles.
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> Conservative and canvas temperament.

(ii) On part of the subordinates
> Over dependence on boss for decisions.
> Fear of criticism.
> Lack of information and resources to do a particular
job effectively.
> Lack of self confidence.
> In adequate positive incentives.
Principles of Delegation
(i) Receptiveness
An underlying attribute of managers who will delegate
authority is a willingness to give other people's idea a
choice.
(ii) Willingness to let go
A manager who will effectively delegate authority, must
be willing to release the right to make decisions to
subordinates.
(iii) Willingness to let others make mistakes
As everyone makes mistakes, a subordinate must be
allowed to make them, and they must be considered upon
investment in personal development.
(iv) Willingness to trust subordinates
Trust is the basis of all coordination.
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(v) Willingness to establish and use broad controls

To ensure themselves that the authority is being used to
support enterprise or department goals and plans.
STAFFING
Staffing is defined as "filling and keeping filled, positions

in the organization structure". It is also known as "human
resource management". This includes identifying the
requirement of work-force, taking inventory of people
available, recruiting, selecting, placing, promoting,
appraising, planning the employee's careers, training them
to suit the job, developing the staff to carry out the defined
job effectively and efficiently.
NATURE AND IMPORTANCE OF STAFFING

A business cannot be successfully run without the right
kind of people. It is very important to fill the jobs with
suitable people who will carry out the job effectively. The
staffing is very important because of following reasons.
(i) It helps in discovering talented and competent workers
and developing them to move the organization ladder.
(ii) Staffing is important to put the right person at right job
which results in increased production.
(iii) It avoids sudden disruption of the production due to
shortage of workers, since it plans and fills the positions.
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(iv) It maintains harmony and creates healthy atmosphere

in any organization by planning the promotions, training
needs and additional skills required.
(v) It plans the requirement of man power at various time
and levels of a project and cater to it.
Elements of staffing:
While carrying out the staffing function, the
management should ensure that right people are engaged
for a job. The jobs cannot be changed to suit the people.
The main elements involved in staffing are:
(i) Proper placement of people.
(ii) Rational recruitment and selection.
(iii) Proper positioning and fixation of salaries.
(iv) Providing necessary training for the people to
carry out the job.
(v) Good promotional policies and retirement scheme.
Functions of staffing:
Staffing plays a vital role in organization. It has key roles
to play for the well being of any organization. The following
are some of the functions of staffing.
(i) Man power planning:

The first function of staffing is to plan the requirement of
man power in various levels of organization to achieve the
objectives of the organization. Man power planning involves
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short term and long term. Short term is the immediate

requirement of man power to reach the targets where as
long term planning involves the requirement of people for
future proposed projects.
(ii) Development:
Development means preparing the people of an
organization to develop required skills to perform their tasks.
This involves training of people.
(iii) Fixing employment standards:

The staffing defines and fixes the responsibilities of
people. The specification and qualifications of people to be
put on a particular job are prepared.
(iv) Sources of selection:

The staffing identifies and specifies sources of selection
like internal or external
sources. A position may be filled by people from internal
source available
with in the organization either by transfer or promotion.
External sources may
be considered for filling a position from outside
organizations.
(v) Selection:
After having identified the sources of selection, next
function is selection process. People are selected as per
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specifications and qualifications set earlier and recruited.

The selected people are placed on the job.
(vi) Training:
If required, the selected people are given necessary
training to carry out the specific job.
(vii) Routine functions:

In addition to the above functions, the staffing also
involves in promotion, transfer, punishment, motivation,
welfare, coordination, retirement etc.
SELECTION
Selection of personnel for the organization is one of the
most important managerial responsibilities.
According to the requisition, a primary selection is done
for the suitable candidates, to be called for the interview.
The final selection is done by the executives in the case of
higher posts and for lower posts recruitment, the per-
sonnel officer is present in all selections and keeps an eye
on the recruitment activities with an aim:
 To find out whether the candidate can be suitable
employee. For this, the candidate should be clearly
told about the nature of the job, terms and conditions.
 To know the suitability for the particular jobs, he can
be cross questioned and thus the suitability can be
judged.
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 If the selection of the worker, admitted to the firm is

not working skillfully then the result will be, either
there will be a poor level of work or there will be a
high rate of labour turnover. Both will be harmful to
the firm in the long run. Therefore every effort should
be made to make proper selection.
Techniques of selection
 Application Banks
 Preliminary or Initial Interview
 Interview
 Group discussion
 Employment tests.
(i) Application Bank
It is invariably used as one of the selection tools and
can be helpful at the interview stage. It provides actual
information needed for evaluating the candidate's suitably.
It is also used as a basic record of his personnel data is
about educational qualifications, training, experience etc.
Many large companies use such application forms which
determine, whether the candidate possesses the basic
minimum requirement about the Qualifications,
Knowledge and Skills or not.
Generally they seek information in the following areas:
 Personnel data such as age, sex, marital status.
 Family background, such as father's and mother's
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occupation and earnings.

 Educational background including training.
 Employment record including details about previous
employment if any and present employment.
 Name and address of few persons usually other than
relation to whom references can be made.
 Membership of professional organization.
 Reason for seeking job in the organization.
(ii) Preliminary or Initial interview
This interview is usually of short duration and is aimed at
obtaining certain basic information with a view of identifying
the knowledge and other information not present in
application.
The candidate is asked about his educational skill,
knowledge, job experience, minimum salary acceptable
etc. Sometimes he is also asked that why he is applying for
job in that particular organization. If the candidate seems to
be possessing the basic minimum requirement for efficient
performance, he is given an application form to fill in.
(iii) Interview
It is one of the least reliable and valid selection
techniques. It relies upon a considerable extent in
accepting or rejecting a candidate. The interview is left with
the inevitable personality variables and for this he has
nothing to depend upon except his subjective judgment.
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The interview may follow a structural * pattern or an

unstructural pattern.
> In structural pattern or directive pattern: In structural
pattern of Interviewing, a list of questions based on job
specification is prepared in advance. The interview may
be occasionally separated from the prepared list of
questions and put other questions.
The candidate is supposed only to answer the
questions and the interviewer can learn a lot about the
candidate's ability and knowledge, but this technique
imposes serious limitation in drawing out his
personality. It is not very effective.
> Unstructural or non-directive or unpatterned : It is one of
the most effective interviewing technique. The
interviewer, instead of asking too many questions
initiates the candidate to create a kind of permissive
atmosphere in which the candidates talks usually quite
revealingly about his experiences, aspirations, fear,
weakness etc. This kind of interview requires a high
degree of interviewing skill and it can therefore be
conducted by only trained interviewers.
In some large organizations, the candidate has to go
through a review of two or three panel interviewers.
After each panel interviewer some candidates are
eliminated and only those candidates, who succeed in
the first interview are sent on to the second interviewing
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panel and so on.

(iv) Group Discussion
In this technique candidates are brought together in
group of 6 or 8 persons for informal discussion and the
selectors observe them and evaluate them. There are
two kinds of group discussions, one where a problem is
given to a group to discuss and the individual member
is free to choose his own approach. In the second type,
each individual is given an initial position and supplied
with supporting information to defend his own position.
(V) Employment tests
Most of the large companies use one or other kind
of employment tests. Before a company use
employment test it should take following points into ac-
count.
 Since the tests are aimed at predicting future
success in a job situation, they should be selected
or designated on the basis of a sound job analysis
programme.
 In deciding upon the test to be used as a selection
tool, its specialty should be taken into
considerations.
 Tests should be valid. Before a test is selected for
use as an employment, its validity should be
determined in relation to the specific job.
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Tests are only one of the techniques of selection.

They are not fool proof and therefore instead of using
single test, often a batch of tests is used. A variety of
test are used as selection tools.
The object of these scientific methods of selection is
to ensure that a person selected possesses those
physical and mental qualities in required degrees
which are essential if he is to become an efficient and
successful worker.
> Intelligence Test: It is a measure of an individual's
capacity of reasoning and verbal comprehension.
It is used in the selection and classification of
workers for almost every kind of job from the
unskilled to the highly skilled, administrative and
professional jobs.
> Vocations Aptitude Test : Physical strength and
general intelligence are not enough to enable a
person to perform a task efficiently. Besides, he
must posses the ability for the performance of
that job. Infact from the point of view of future
achievements, a person of high natural ability is
likely to prove more successful than one who
through training and experience has gained more
knowledge but possesses less natural ability. If
this is correct, then it makes it necessary to find
out whether the applicant possesses the
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necessary vocational aptitude or not.

> Analytical Test: In this method, a job is analysed in
terms of key qualities or abilities as speed and
quality of observations, ability to keep one's head
and not get confused when a quick decision is called
for. A test or a combination of tests are then taken
which measure the degree to which these abilities
are present or lacking in the candidate.
> Synthetic Test: In case of jobs which are complex
and for which the analytical tests can't be performed,
synthetic tests may be adopted. It presents the
candidate a complex situation more or less similar to
the one normally present in actual task and his
success or failure in the test is accepted as the
possession or absence of the required vocational
aptitude.
RECRUITMENT
It is an important step in the employment of labour.
Haphazard recruitment of labour brings in a measure of
chances and uncertainty in an industry and may result in
inefficiency and loss of production. This means that
systematic steps should be taken to ensure that right type
of persons are available to the concern in right number.
The numbers of workers required by a concern
depends on
> The scale of production.
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> The degree of mechanization.

Following are the various sources from where the
personnel may be recruited
 Applications introduced by friends and relatives
 Consulting agencies
 Campus recruitment
 Casual callers
 Through advertisement
 Field trip and college recruitment
 Employment exchange
 Labour contractors
 Applications Introduced by friends and relatives: Often

the employees introduce their relative's application to
find a good job for them. Many companies prefer to take
such candidates because their background can be
known. In this way a good worker can bring a good
worker. However this may lead to nepotism and
favoritism.
 Consulting agencies: A consulting agency is commonly

utilised to find specialised executive personnel. It either
helps the personnel department by supplementing its
efforts or work on its behalf. In such a situation, the
agency must understand and estimate correctly the
client's past experiences, history and future projections.
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 Campus recruitment: As a large numbers of

management institutes like IIM, XLRI, IIT etc., are
engaged in giving the professional training, many
companies find it easier to pick up the best talent
straight from the institute to fill its managerial position.
In fact these professional institutes have provided
recruitment source to firms.
 Casual callers: Sometimes on his own initiative, the

applicant sends his application for the job. The
personnel office keeps the record of applications and
the suitable candidates can be selected from the
callers.
 Through advertisements: Companies advertise in the

newspaper for their vacancies. Generally the senior
posts are filled by this method when they can't be filled
by promotions. The advertisement gives a wide range
of choice. It also depends upon the employers fame. If
the name is not reputed one some of the good
personnel do not apply.
 Field trips and college recruitment: This method is

being used for private industrial firms. These firms send
their selecting teams to respective colleges and
universities, interview the candidates who are nearing
completion of their studies and make selection. This is
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no doubt very expensive and time consuming but has

the advantage of choosing the cream from the lot.
 Employment exchange: The recruitment is also done

through the
employment exchange of the persons who are enrolled
in the exchange.
The main function of the exchange are:
> To supply information about persons in need of jobs
and about jobs that are available.
> To direct persons to factories where suitable jobs
exist.
> To develop job specification.
> To procure information about current wage rate.
> To introduce selected employees with personnel
department and policies of the company.
> To follow up the new recruits for initial adjustments.
> To look-after the employee canceling and operating
the system seriously.
> To keep records of employees, hired, resigned,
discharged and transferred.
Labour Contractors: The casual vacancies may be filled up
by the company through labour contractors. Usually
unskilled candidates are appointed in this manner.
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REVIEW QUESTIONS
1. Explain the nature and importance of staffing.
2. What are the various elements of staffing? Explain.
3. Explain the techniques of selection.
4. What are different types of interview techniques?
5. Explain group discussion.
6. What is recruitment? Explain various sources of
recruitment.
7. Differentiate between recruitment and selection.
……………………….
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MANAGEMENT & ENTREPRENEURSHIP Module2b
Technological Innovation
Management & Entrepreneurship
B.E., V Semester, Electronics & Communication
Engineering
[As per Choice Based Credit System (CBCS) scheme]
[Subject code: 18ES51]
MODULE – 2b
Directing and Controlling
47
DIRECTING AND CONTROLLING
DIRECTING
MEANING AND NATURE OF DIRECTING

Direction means issuing of orders, leading and motivating
subordinates as they go about executing orders. It is also
defined as the process and techniques used for issuing
instructions to carry out a job and making sure that the
operations are carried out as per the plan. Directing is the
interpersonal aspect of managing by which subordinates
are led to understand and contribute effectively and
efficiently to the attainment of enterprise objectives. The
direction has two major activities namely
1. Giving orders to employees and
2. Leading and motivating them to accomplish
the goals.
DEFINITION OF DIRECTION:
"Directing is the interpersonal aspect of managing by
which subordinates are led to understand and contribute
effectively to the attainment of enterprise objectives.
(Harold D Koontz &O’Donnell)
"Directing consists of the processes and techniques
utilized in issuing in-structions and making certain that
operations are carried on as originally planned".
(Haimann)
48
"Direction is telling people what to do and seeing that they

do it to the best of their ability. It includes making
assignments, corresponding procedures, see-ing that
mistakes are corrected, providing on-the-job instruction
and issuing orders". (Ernest Dole)
"Directing is the guidance, the inspiration, the leadership
of those men and women that constitute the real core of
the responsibilities of the management". (Urwick and
Breach)
REQUIREMENTS OF DIRECTION:
The role of a manager is to understand the needs, motives
and attitudes of his subordinates. He should use
appreciate strategies according to the people and
situations. The following are some of the principles of
effective direction:
(i)Harmony of objectives:
For an organization to function well, it the goals of
company and goals of individuals are in complete
harmony. It is very uncommon for such a situation to
exist in any organization. Individual goals may differ
from the goals of the organization. The manager should
coordinate the individual goals to be in harmony with the
goals of the organization
49
(ii) Unit direction of command:

This principle implies that an employee should receive
orders and instructions only from one supervisor or boss.
Otherwise, there may be indiscipline and confusion
leading to conflicting orders, divided loyalties and reduced
results.
(iii) Efficiency:
If the superior consults with the subordinates in
decision-making, then there would be a sense of
commitment. This makes the direction easy and improves
the efficiency of subordinates.
(iv) Direct supervision:
Managers should have direct face-to-face contact with
the subordinates. Personal touch with subordinates will
ensure successful direction.
(v) Effective communication:
The supervisor must have good communication skills.
He must clearly communicate the plans, goals, policies,
responsibilities and the duties to the subordinates. In
communication, comprehension is more important than
the content.
(vi) Effective control:
50
The management should monitor the behavior and

performance of subordinates to exercise effective control
over subordinates.
(vii) Follow-through:
Direction is a continuous process. Having given the
directions may not ensure carrying out them. Hence a
manager should follow-through the performance of his
subordinates. Follow up is very important function of
direction.
GIVING ORDERS
The order is a devise employed by a line manager in
directing his immediate subordinates to start an activity,
stop it and modify it. A staff executive does not issue
orders. To some men the matter of giving orders and
having them obeyed seems a very simple affair but the
fact is that it is surrounded by many difficulties. Mary
Parker Follett lays down the following principles which
should be followed in giving orders:
1. The attitude necessary for the carrying out of an order
should be prepared in advance. People will obey an order
only if it appeals to their habit patterns. Therefore, before
giving orders, it should be considered how to form the
habits which will ensure their execution.
51
2. Face-to-face suggestions are preferable to long-

distance orders.
3. An order should be depersonalized and made an
integral part of a given situation so that the question of
someone giving and someone receiving does not come
up. Thus the task of the manager is to make the
subordinates perceive the need of the hour so that the
situation communicates its own message to them.
Chester Barnard lays down four conditions which make an
order acceptable. These are:
1. Order should be clear and complete;
2. Order should be compatible with the purpose of the
organization;
3. Order should be compatible with the employee's
personal interest; and
4. Order should be operationally feasible.
Orders may be communicated verbally or in writing.
Written orders are appropriate when
1. the subject is important;
2. many details are involved; and
3. there is geographical distance between the order-
giver and the recipient.
52
A manager may follow four types of methods to ensure

compliance to his orders:
1. Force
2. Paternalism
3. Bargain, and
4. Harmony of objectives.
The formula followed in "force" is: "Do what I say or else ...
", meaning thereby that an employee will be punished if he
does not follow orders. The results are frustration,
restriction of output, sabotage, militant unionism, etc.
The formula followed in "paternalism" is: "Do what I say
because I am good to you." The result here is that the
employees develop a feeling of gratitude and
indebtedness toward the manager which they do not like.
Further, paternalism operates in violation of the law of
effect. Instead of increased rewards following increased
compliance, the paternalistic manager provides rewards
first and expects the compliance to follow.
The formula followed in "bargain" is: 'You do as I say in
certain respects and I do as you say in certain other
respects.' The result of this method is that the manager's
control is gradually reduced. The formula followed in
"harmony of objectives" is: "If we perform together each
will achieve his goal". This in fact is the best formula for
ensuring compliance to order.
53
MOTIVATION
The success or failure of a business organization depends
on the performance of people working for it. Generally,
performance is determined by three factors ability,
knowledge and motivation which are all related by a widely
acknowledged formula:
Performance = (Ability + Knowledge) X Motivation Among
the three factors which affect performance, we can see the
multiplying effect motivation has on ability and knowledge
in determining performance.
Therefore motivation is a very important factor because it
deals with human behavior. Motivation is nothing but the
task of making someone to act in the desired manner.
Some definitions of motivation
(i) Motivation is a general term applying to the entire class
of drives, desires, needs, wishes and similar forces that
induces an individual or a group of people to work'. -
Koontz and O'Donnell
(ii) 'Motivation is the process of attempting to influence
others to do your work through the possibility of gain or
reward'. - Edwin B. Flippo (iii) 'Motivation means a process
of stimulating people to action to accomplish desired
goals' - Scott
54
Motivation Process
NATURE OF MOTIVATION
Motivation is not an easily observed phenomenon. We
observe an individual's actions and then interpret his
observed behavior in terms of underlying motivation. This
sometimes leaves a wide margin of error. Our
interpretation does not necessarily reveal the individual's
true motivation. The following points reveal the
complexities involved in understanding true motivation:
1. Individuals differ in their motives.
The viewpoint (called -monistic approach") that there
is only one "economic drive" which determines
behavior is untenable. The goals to which individuals
aspire differ and so do their motives. This is well
illustrated by an oft-quoted story. There were three
men cutting stones near a cathedral about three-
fourths completed. A stranger came along and said to
the first man, "My friend, what are you doing?" The
first man replied, "Me, what am I doing? I am working
for 10 shillings a day." He went to the next man and
put to him the same question. The second man said,
"Me, what am I doing? 1 am squaring this stone, see.
I have to make its edge absolutely straight." The
stranger walked on to the third man and repeated the
same question. The third man replied. "Me, what am I
doing? You see that cathedral up there. I am helping
55
to build that. Is not it great?" In this story the major

source of satisfaction to the first man was the wages
he earned. The job itself contributed very little. But job
itself was the outstanding source of satisfaction to the
second man. The third man viewed the completion of
his group goal—the building of the cathedral—as his
primary source of satisfaction. This means that there
is no single motive that determines how all workers
will react to the same job and, therefore, there can be
no single strategy that will keep motivation and
productivity high for everyone everywhere. The
manager has to deal with human diversity.
2. Sometimes the individual himself is unaware of

his motive.
Freud uncovered this phenomenon while analyzing
his critical patients. He found that in many ways man
is like an iceberg. Only a small part is conscious and
visible, the rest is beneath the surface. This below-
the-surface concept is unconscious motive. The
presence of this explains why man cannot always
verbalize his motive to attain certain goals or even tell
what his goals are. An example can be drawn from
the famous Hawthorne experiments. One girl-worker
complained to her counsellor about her foreman.
Later on, it was found that the reason why she
disliked her foreman was that she had a step-father
56
whom she feared and whose physical appearance

was very much like her foreman, with the result that
she had unconsciously transferred to her foreman the
unfavorable characteristics of her step-father.
3. Motives change:
Hierarchy of motives of each individual called
"structure" is not fixed. It changes from time to time.
An individual's primary motive today may not be
primary tomorrow, even though he may continue to
behave in the same way. For example, a temporary
worker may produce more in the beginning to become
permanent. When made permanent he may continue
to produce more—this time to gain promotion, and so
on.
4. Motives are expressed differently.

The ways in which motives are eventually translated
into actions also vary considerably between one
individual and another. One individual with a strong
security motive may play' it safe and avoid accepting
responsibility for fear of failing and being fired.
Another individual with the same security motive may
seek out responsibility for fear of being fired for low
performance. Even the same individual may express
his motive differently at different times. Thus, an
employee who in the beginning works hard to get
57
promotion may, when frustrated, indulge in anti-

management union activities for the same purpose.
Different expressions completely mislead a manager
because he does not know what the employee's true
motivation is.
5. Motives are complex.

It is difficult to explain and predict the behavior of
workers. The introduction of an apparently favorable
motivational device may not necessarily achieve the
desired ends if it brings opposing motives into play. In
a factory, when blue-green lighting was introduced to
reduce eye strain, the output of men workers
increased but that of women workers decreased. On
investigation it was found that the latter disliked the
change in lighting because they felt that the new type
of lighting had made them look 'simply ghastly'.
6. Multiple motives make the choice of goals difficult

for an individual
We have been referring to examples of motivations as
if they exist one at a time. This is hardly the case. The
fact is that multiple motivations operate
simultaneously to influence an individual's behavior.
Furthermore, some of these motivations are
incompatible with one another. This results in the
58
following three types of motivational conflicts which

make the person's choice of goal difficult:
(i) Approach-
approach conflict where the person desires to
do two things which he likes equally well, but it
is possible to do only one. For example, there
is the person who has the choice of either
remaining at his present place of posting with
the present salary, or going to a new place with
a hike in salary. In such situations, two different
behaviors are aroused in him which block each
other.
(ii) Avoidance-
avoidance conflict where the person is forced
to choose between two alternatives, both of
which are considered equally undesirable by
him. For example, there is the person who,
being dissatisfied with his present job, wants to
leave it but also wants to avoid unemployment.
(iii) Approach
avoidance conflict where the person is
attracted to the positive characteristics of his
choice, but wants to avoid its negative
characteristics. For example, a person may be
motivated to work overtime for extra pay but
59
may not like to be scolded by his wife for

reaching home late.
MOTIVATION THEORIES
There is no shortage of motivation theories. We can
classify them under three broad- heads:
1. Content theories
2. Process theories
3. Reinforcement theory The content theories tell us what
motivates an individual. They throw light on the various
needs and incentives which cause behavior. The process
theories, on the other hand, answer the question how
behavior is caused. Reinforcement theory explains the
ways in which behavior is learned, shaped or modified.
THEORIES OF HUMAN MOTIVATION
There are several theories of motivation based on different
structures of human needs and expectations. Some of
them are
1. Maslow's Hierarchy of Needs Theory
2. Herzberg's Motivation - Hygiene Theory
1. MASLOW'S HIERARCHY OF NEEDS THEORY
Abraham Maslow's Need-Hierarchy theory, published in
1943, is one of the most popular theories of motivation.
According to him, the behavior of an individual is
60
determined by his strongest need at a particular moment.

Needs that are not satisfied influence his behavior. But the
needs once satisfied do not serve as a motivator.
According to Maslow, all human needs can be arranged in
an order of priority. In other words, humanneeds have an
hierarchy and they have to be satisfied from the lowest
level moving in the ascending order.
Figure 4.2 Shows Maslow's hierarchy of needs as five
ascending levels.
Physiological Needs:
Includes food, shelter, clothing, water, sleep, sex and
other bodily needs. The physiological needs are the basic
needs in life. These are essential for everybody to remain
alive. These needs motivate the person to work and earn
sufficient amount of money to fulfill them.
(1) Safety Needs:

Includes security and protection from physical,
emotional and economical harm.
Once the physiological needs are satisfied, the
safety needs or security needs become
61
predominant. Physical safety may be protection

from fire and accidents. Economical security may
be in terms of job security, health and insurance
programme, retirement plan etc., Emotional needs
may be the necessity to be happy and be free from
mental disturbances.
(2) Social Needs :
Includes affection, belongingness, acceptance and
friendship. Social needs come into the picture when
the primary needs are taken care of. Since man is a
social animal, he has to interact with the society,
and live with respect in society. He desires to love
and be loved; accept others and be accepted; show
affection and be shown affection an so on. Social
needs make his work enjoyable. (4) Esteem Needs
: Includes self-respect, autonomy, status,
recognition, responsibility, attention, achievement,
prestige, etc., Esteem needs represent an
individual's concern for feeling important and be
respected by others. These needs are primarily
satisfied by the individuals themselves. However,
the management may create a proper climate to
help individuals to fulfill these needs.
(3) Self-Actualization Needs :

Includes Self-advancement, self-fulfillment, self-
development, self-realization etc., Self-actualization
62
is the highest level need in Maslow's hierarchy. It is

the desire to become what is one is capable of
becoming. It is the desire to realize one's own
potential. In an organization, a person attempting to
satisfy these needs seeks challenging work and
looks for opportunities for personal growth.
According to Maslow, if a lower level need is
satisfied, a higher level need emerges. This goes
on till the highest level needs are satisfied. This
theory of human motivation by Maslow has been a
landmark is the field of Management. However, it
has been also criticized on the following grounds:
(i) Needs of every person may not follow Maslow's

hierarchy.
(ii) Most of the human needs are recurring and are
never satisfied fully indeed.
(iii) Most of the needs co-exist and there is no such
hierarchy whatsoever.
(iv) Boundaries between different levels of needs may
be hazy and overlapping.
(v) Although behavior depends on need, or the lack of
it, it may not be fully dependent.
(vi) The concept of self-actualization is theoretical and
academic. No person can ever know his maximum
or best potentials.
63
2. HERZBERG'S MOTIVATION-HYGIENE THEORY OR

THE TWO-FACTOR THEORY
The Motivation-Hygiene theory or the Two-Factor theory
was proposed by Frederick Herzberg in the year 1959. He
carried out a survey on the experiences and feelings of a
group of 200 engineers and accountants working in a few
industries in Pittsburgh, USA. He concluded that people
had two categories of needs which are independent of
each other and affect behaviour in different ways. He said
that satisfaction or dissatisfaction in work arise from these
two different sets of factors. They were
(i) Hygiene factors
(ii) Motivators.
(1) Hygiene-Factors
He found that certain factors did not motivate the
employee when present on the job but their absence
caused dissatisfaction. These factors were called
Hygiene factors because they primarily prevented
dissatisfaction just like hygiene conditions prevent
sickness. These factors are:
(1) Company policy and administration
(2) Supervision
(3) Working conditions
(4) Salary and status
(5) Security in job and personal life
64
(6) Interpersonal relationship with superiors, peers

and sub-ordinates.
Herzberg said that the opposite of satisfaction was not
dissatisfaction but 'No satisfaction' and likewise the
opposite of dissatisfaction was not satisfaction but it was
No dissatisfaction'. Hygiene factors are also known as
maintenance factors or Dissatisfiers and are necessary to
sustain a reasonable level of 'No dissatisfaction' among
employees.
(ii) Motivators: According to Herzberg, Motivational factors
are essential to provide job satisfaction and to maintain
high job performance. Motivators act as stimuli to make
people work hard voluntarily and be happy in the
organization. Motivators or `Satisfiers' include the following
factors :
(1) Challenging work
(2) Responsibility
(3) Recognition
(4) Promotion opportunities
(5) Achievement
(6) Job content.
Herzberg said that these factors helped in increasing job
satisfaction. However a decrease in these factors would
lead to Wo satisfaction' and not dissatisfaction. Motivators
generally help attaining higher output by the employees.
65
Herzberg's Theory in a nut shell can be :

(I) Hygiene Factors:
When absent - increase dissatisfaction.
When present - prevent dissatisfaction.
(ii) Motivators:
When absent - prevent satisfaction.
When present - increases satisfaction.
Criticisms of Herzberg's theory
(i) People may not be accurate in reporting their
satisfying or dissatisfying experiences.
(ii) A factor that causes dissatisfaction is one person
may bring satisfaction to another.
(iii) People are biased and they tend to credit
themselves for successful events while blaming
outside events for their failures.
(iv) The theory does not measure the levels of
satisfaction and dissatisfaction.
Over simplification
Comparison of Theories of Maslow and Herzberg
Both theories concentrate on the factors which motivate
employee's behavior to achieve higher output. Which
Maslow formulated the theory in terms of needs, Herzberg
in terms of goals. While Maslow gave a hierarchy to his
needs, Herzberg divided them into two groups but without
66
hierarchy. While Maslow said that all needs are

motivators, Herzberg said only higher order needs are
motivators. Actually the first three ascending levels of
needs according to Maslow correspond to the Hygiene
factors of Herzberg and the last two higher levels of needs
of Maslow correspond to Motivators as per Herzberg (fig
4.3)
COMMUNICATION
MEANING
Communication has been variously defined by a number
of writers.
According to Newman and summer, it is an exchange of
facts, ideas, opinions or emotions by two or more persons.
67
Allen Louise defines it as the sum of all the things one

person does when he wants to create understanding in the
minds of another.
Simply stated, communication means the process of
passing information and understanding from one person to
another. A proper understanding of information is one very
important aspect of communication. If the information is
not understood by the receiver in the same meaning in
which its sender wants him to understand it, the purpose
of communication is defeated. This may result in
confusion, chaos and organizational inefficiency, leading
to non-fulfillment of business goals.
In short, communication is not merely transmission of
information from one person to another but also correct
interpretation and understanding of the information. It is
not to get something off the mind of the person
transmitting it, but to get something into the mind and
actions of the person receiving it.
IMPORTANCE OF COMMUNICATION
The importance of communication can be elaborated as
under:
1) Communication is fundamental to accomplish work
In any organization, a manager spends most of his time
communicating i.e., reading, writing' Speaking or listening.
68
Communication is the means by which he persuades,

informs, motivates and leads his employees towards
organizational goals through communication that there is a
transmission of information among employ • It is without
communication no work can get accomplished.
2. Communication facilities planning
Planning, the most important function of management
requires extensive communication among the rank and file
of the organization. Planning is done after inputs from key
executives and other personnel.
3. Communication helps in decision-making
Managers rely heavily on the quality and quantity of
information that is available in order to take decisions. It is
communications which provides the right type of
information to a manager and enables him to consider the
pros and cons thoroughly before taking a decision.
4. Communication is the basis of co-ordination
If all the departments and divisions of an organization
have to co-ordinate their efforts to achieve the common
goals, communication is highly essential. A good
communication system is the basis of all inter-dependent
activities. It is the foundation of all group activity. It is only
through communication that people can attain a common
view point and therefore co-operate with each other to
achieve organizational objectives. According to Hick,
69
“When communication stops, organized action comes to

an end.
5. Communication improves relationships between
employees.
Communication builds bridges of relationships between
employees. It binds individuals to a common purpose. A
good communication system helps exchange of facts.,
ideas, feelings and sentiments among the employees.
Apart from work-related information. This results in in a
better understanding among the employees which is what
an organization exactly wants.
6. Communication improves morale and motivation:
When manager listens carefully to employees grievances
and take necessary action, it improves morale and
motivation of the workers. Without communication, it is
impossible to understand others and make them
understand. Good communication helps in addressing
workers problems and therefore keeps their morale and
motivation high.
7. Communication is key to managerial-efficiency:
Good communication skills are a must for modern-day
managers. The growth success or the growth of a
manager largely depends on his communication skills.
70
PURPOSES OF COMMUNICATION
Some important purposes which communication
servers are as under:
1. Communication is needed in the recruitment
process to persuade potential employees of the merits of
working for the enterprise. The recruits are told about the
company's organization structure, its policies and
practices.
2. Communication is needed in the area of
orientation to make people acquainted with peers,
superiors and with company's rules and regulations.
3. Communication is needed to enable employees to
perform their functions effectively. Employees need to
know their job's relationship and importance to the overall
operation. This knowledge makes it easy for them to
identify with the organizational mission. If a nurse in a
hospital knows why she is to follow certain procedures
with a patient and how this relates to the total therapy
programme for him, it is much easier for her to develop an
ideological commitment to the hospital.
4. Communication is needed to acquaint the
subordinates with the evaluation of their contribution to
enterprise activity. It is a matter of some motivational
importance for the subordinates to know from their
superior how they stand and what the future may hold for
them. This appraisal, if intelligently carried out, boosts the
71
subordinates' morale and helps them in building their

career.
5. Communication is needed to teach employees
about personal safety on the job. This is essential to
accidents, to lower compensation and legal costs and to
decrease recruitment and training tor replacements.
6. Communication is of vital importance in projecting
the image of an enterprise in the society. The amount of
support which an enterprise receives from its social
environment is affected by the information which elite
groups and the wider public have acquired about its goals,
activities and accomplishments. During the 1982 blowout
at Bombay High, ONGC took care to keep the country
informed about the steps that were being taken to combat
the crisis. Contrast this with Union Carbide which did
nothing to refurbish its image after the Bhopal Gas leak.
7. Communication helps the manager in his decision
process. There is a spate of varied information produced
in an enterprise. The manager must make a choice of
useful and essential information which should reach him.
The important question before him is 'what do I need to
know?' It should be remembered that no two successive
managers of the same plant will give the same answer to
this question.
8. Communication helps in achieving coordination. In
a large organization, working on the basis of division of
72
labour and specialization, there is need for coordination

among its component parts. This can be achieved only
through communication. A good communication system is
the basis of all interdependent activities which we find
being carried out in different departments of an
organization. By providing information to each unit about
the relevant activities of others, a good system of
communication makes the interdependence of each unit
acceptable to it. In the absence of communication, no unit
would tolerate this interdependence. This will make
coordination difficult. In the words of March and Simon,
"The greater the efficiency of communication within the
organization, the greater the tolerance of a unit for
interdependence."
9. Communication promotes cooperation and
industrial peace. Most of the disputes in an enterprise take
place because of either lack of communication or improper
communication. Communication helps the management to
tell the subordinates about the objectives of the business
and how they can help in achieving them. Similarly,
communication helps the subordinates in putting forth their
grievances, suggestions, etc. before the management.
Thus communication helps in promoting mutual
understanding, cooperation and goodwill between the
management and workers.
10. Communication increases managerial efficiency. It
is said that the world of modem management is the world
73
of communication and the success of a manager in the

performance of his duties depends on his ability to
communicate. Administrators in business and industry
reportedly spend between 75 and 95 per cent of their time
communicating (either sending or receiving messag-es.4)
Naturally then, an effective system of communication is
very essential for the efficiency of a manager. Benjamin
Balinsky has rightly remarked that, if there is any shortcut
to executive effectiveness, it is the mastery of the art of
face to face communication.
" In summary, it can be said that the purposes of
communication are:
1. To provide the information and understanding
necessary for group effort (i.e., the skill to work); and
2. To provide the attitudes necessary for motivation,
cooperation and job satisfaction (i.e., the will to work).
74
LEADERSHIP
MEANING
Leadership is an important aspect of managing.
Leadership is defined as "Influence, that is, the art or
process of influencing people so that they will strive
willingly and enthusiastically towards the achievement of
group goals". (Koontz and Weihrich) In other words,
people should be encouraged to develop not only
willingness to work but also willingness to work with zeal
and confidence.
"The will to do is triggered by leadership and lukewarm
desires for achievements are transformed into burning
passion for successive accomplishment by the skilful use
of leadership" (George R Terry). "Leadership is the lifting
of man's visions to higher sights, the raising of man's
performance to a higher standard, the building of man's
personality be-yond its normal limitation". (Peter Drucker)
"Leadership is the ability to secure desirable actions from
a group of followers voluntarily without the use of
coercion." (Alford and Beatty) "Leadership is the ability to
persuade others to seek defined objectives
enthusiastically. It is the human factor which binds a group
together and motivates it towards goals". (Keith Davis)
Trait is basically a character and early notions about
leadership dealt with personal abilities. It was believed that
some people have leadership qualities by birth or god's
75
gift. The traits that associate with leadership are identified

as: mental and physical energy, emotional stability,
knowledge of human relations, empathy, objectivity,
personal motivation, communication skills, teaching ability,
social skills, technical competence, friendliness and
affection, integrity and faith, intelligence etc. This
approach has several drawbacks: It failed to identify right
traits required for effective leadership. It is difficult to
associate the traits with jobs to be carried out. A leader
who is successful in one area may be a failure in different
area.
Since these are subjective, it is difficult to measure their
effectiveness quantitatively. This approach implies that
leadership is in-built quality and no training can make a
person leader.
DIFFERENCE BETWEEN A LEADER AND A MANAGER

1. A person emerges as a leader. The question whether
he will or will not emerge as leader always depends on a
number of situational factors. A manager, on the other
hand, is always put into his position by appointment.
2. A leader always has some personal power (i.e., ability
to influence) that enables him to lead. He may or may not
have positional power (i.e., the right to command). A
manager, on the other hand, always has some positional
power He may or may not have personal power. If he has
76
also personal power, then he will be that much more

effective as a manager.
3. A leader focuses on people and generally seeks those
very objectives which are the objectives of his followers.
Thus there is mutuality of objectives between the leader
and his followers. A manager, on the other hand, focuses
on systems and structures and seeks those objectives
which his subordinates do not regard as their own. Thus
there is clash of objectives.
4. A leader generally looks at the horizon and not just the
bottom line. He is innovative, challenges the status quo
and believes in doing right things. A manager, on the other
hand, is generally bureaucratic, accepts the status quo
and believes in doing things right, according to the rules,
to cope with complexity.
It should be noted that in today's changing business
environment, notwithstanding the above difference, even
managers are in leadership roles. Therefore, in this
chapter, the terms 'leaders' and managers' are used
interchangeably.
77
CHARACTERISTICS OF LEADERSHIP
Some important characteristics of leadership are as
follows.
1. Leadership implies the existence of followers
We appraise the quality of a person's leadership in
practice by studying his followers. We ask: How many and
what kind of followers does he have? How strong is their
commitment as a result of his leadership? How long will
their commitment last? By answering questions of this
nature we get to know the quality of leadership. We must
not, however, forget that leaders within organizations are
also followers. The supervisor works for a branch head,
who works for a division manager, who works for the vice-
president of a department and so on. Thus, in formal
organizations of several levels, a leader has to be able to
wear both hats gracefully, to be able to relate himself both
upward and downward.
2. Leadership involves a community of interest
between the leader and his followers
In other words, the objectives of both the leader and his
men are one and the same. If the leader strives for one
purpose and his team of workers for some other purpose,
it is no leadership. In the words of G.R. Terry, "Leadership
is the activity of influencing people to strive willingly for
mutual objectives."
78
3. Leadership involves an unequal distribution of

authority among leaders and group members
Leaders can direct some of the activities of group
members; that is the group members are compelled or are
willing to obey most of the leader's directions. The group
members cannot similarly direct the leader's activities,
though they will obviously affect those activities in a
number of ways.
4. Leadership implies that leaders can influence their
followers or subordinates in addition to being able to
give their followers or subordinates legitimate
directions
In other words, leaders not only tell their subordinates
what to do by way of command but also influence by their
behaviour and conduct. The use of command by leaders
succeeds only in bringing about a temporary behavioural
change in the followers. Permanent attitudinal change in
followers comes through the use of influence only.
According to Hersey and Blanchard6 leadership of the first
type though successful is not effective. The second type of
leadership is both successful and effective.
79
Behavioral approach
Several studies have been made did not agree as to which
traits are leadership traits or their relationship to actual
instances of leadership. It is found that most of these so
called traits are really pattern of behavior. There are
several theories based on leadership behavior and styles.
Some of them are:
(i) Leadership based on the use of authority.
(ii) Likert's four systems of managing.
(iii) The managerial grid and
(iv) Leadership involving a variety of styles and level
of use of power and influence.
Style based on authority: Based on how the authority is

used, the leaders are styled into 3 groups.
 The first is "autocratic leader" who commands and

expects compliance, is dogmatic and positive, and
leads by the ability to withhold or give rewards and
punishment.
 The second is "democratic or participative leader"

who consults with subordinates on proposed
actions and decisions and encourages participation
from them. This type of leaders include the person
who does not take action without the concurrence
80
of subordinates and who makes decisions but

consults with subordinates before doing so.
 The third type is "free-rein" leader who uses his
power very little and gives a high degree of
independence to his subordinates to carry out their
work. Such leaders depend largely on subordinates
to set their own goals and the means to achieve.
Figure below shows the flow of influence in the three

situations of leadership.
81
CO-ORDINATION
MEANING
Some definitions of the term 'co-ordination' would be:
"Co-ordination refers to the orderly arrangement of

individual and group efforts to ensure unity of action in the
realization of common goals." - Mooney and Reiley
"To co-ordinate means, to unite and correlate all

activities." - Henry Fayol
"Co-ordination means balancing and keeping the team

together by ensuring a suitable allocation of working
activities to the various members, and seeing that these
are performed with due harmony among the members
themselves" - E.F.L. Brech
"Co-ordination in an organization by a manager is similar

to directing an Orchestra by the conductor. Just like a
conductor directs his musicians to produce harmony and
melody in music, a manager co-ordinates the activities of
a group to achieve harmonious and united actions"
-IGNOU Manual
82
All the above definitions give a combined good meaning

co-ordination. On the basis of these definitions, we can
state the basic features of co-ordination, which are as
under:
1. Co-ordination implies deliberate actions on the part of

managers to bring about harmony and unity of actions.
2. Co-ordination applies to group efforts, and not to

individual effort. It involves the orderly arrangement of
group efforts.
3. Co-ordination does not result in a one-shot action. It is

continuous action.
4. Co-ordination is all-pervasive. It has to happen along all
verticals and horizontals of an organization.
5. Co-ordination is necessary not only within the

organization but also of the organization with the outside
environment.
83
TYPES OF COORDINATION
Coordination may be variously classified as internal or
external, vertical or horizontal and procedural or
substantive.
Coordination among the employees of the same
department or section, among workers and managers at
different levels, among branch offices, plants, departments
and sections is called internal coordination. Coordination
with customers, suppliers, government and outsiders with
whom the enterprise has business connections is called
external coordination.
Vertical coordination is what exists within a department
where the departmental head is called upon to coordinate
the activities of all those placed below him. On the other
hand, horizontal coordination takes place sideways. It
exists between different departments such as production,
sales, purchasing, finance, personnel, etc.
By procedural coordination is meant the specification of
the organization itself—that is, the generalized description
of the behaviors and relationships of the members of the
organization. Procedural coordination establishes the lines
of authority, and outlines the sphere of activity and
authority of each member of the organization. Substantive
coordination is concerned with the content of the
organization’s activities. In an automobiles factory, an
organization chart is an aspect of procedural coordination,
84
while blueprints for the engine block of the car being

manufactured are an aspect of substantive coordination
IMPORTANCE OF CO-ORDINATION
The importance of co-ordination can be understood
though the following points:
1. Co-ordination increases efficiency

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

Co-ordination improves and maintains harmonious
relationship between individuals between
individuals and the organization. With co-ordination,
members begin to work, understand and adjust with
eacher, develop mutual trust and co-operation and
probably move closer to each other. All these help
improve human relations.
3. Co-ordination resolves conflicts
85
Conflicts in organizations arise usually because of

differences between organizational goals and
individual goals. An individuals perception of an
organizational goal could be different to that of an
another, which again leads to conflicts. Co-
ordination is the only means by which such conflicts
can be avoided.
4. Co-ordination makes all departments focus

together
Different departments in an organizations such as
production, R & D, finance, marketing, accounts
etc., have to jointly focus in order to achieve but
results. Without co-ordination, each department
tends to look only at its needs and necessities,
without caring for other departments. Co-ordination
is the only way of m2king them look for common
cause.
5. Co-ordination helps sharing of resources

In any organization, there is always a shortage of
resources such as manpower, finance, space,
transportation etc. Co-ordination is the only way to
ensure the best distribution of resources among all
individuals and departments of the organization.
86
6. Co-ordination retains and attracts talent

Good all-around co-ordination improves not only
harmonious relationships but also increases profit
to an organization and to its employees. Naturally
talented youngsters are attracted to join such
organizations. There are lists of best employers in
every country where people would love to work,
and this does not necessarily depend on pay
packets alone. Co-ordination plays a great role if a
company comes to be known as a good employer.
TECHNIQUES OF CO-ORDINATION
A variety of techniques are used by managers to achieve
co-ordination. The important ones are:
1. Co-ordination by plans and procedures
If plans and procedures are highly structured and in
place, co-ordination becomes somewhat automatic.
Apart from these, if the other types of plans such as
schedules, rules, budgets, policies etc., are stated in
precise terms so as to avoid confusion, it results in
better co-ordination.
2. Co-ordination by sound and simple organization

If the structure of an organization is sound and
simple, it leads to better co-ordination. If the authority,
87
responsibility and accountability are established in a

clear-cut manner, it improves co-ordination.
3. Co-ordination by chain of command

If it is very clear as to who should report to whom in
an organization, it helps co-ordination. Establishing a
clear chain of command or a superior-subordinate
relationship goes a long way in ensuring co-
ordination.
4. Co-ordination by effective communication

Effective communication plays a vital role in achieving
co-ordination. Communication facilitates proper
understanding between individuals and groups among
whom co-ordination is to be achieved.
5. Co-ordination by committees
Formation of committees to co-ordinate is a sound
management technique. Committees are made up of
Knowledgeable, experienced and responsible
persons entrusted with discharging some functions
collectively as a group. Creation of teams, task forces
and interdepartmental committees are some of the
ways of achieving co-ordination.
88
6. Co-ordination by conference
In large business organizations conferences are
organized at regular intervals to provide a platform for
discussion to the various units which could be
geographically widespread. In such conferences top
management and executives at lower levels
exchange views, identify problems and resolve it
through discussion. Some companies have Open
forums' where any question raised by any employee
should be answered by the appropriate man-in-
charge. Such discussion forums and platforms pave
the way for better co-ordination throughout the
organization.
7. Co-ordination by special co-ordinators

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

Sound leadership of top management is the surest
means of achieving co-ordination. Good leaders may
persuade and convince their subordinates to place
89
company interests above their personal interests.

They may even inspire self-coordination within a
group.
CONTROLLING
Meaning
Some definitions of the term 'Control' with respect to

an organization are:
"Control is checking current performance against pre-

determined standards contained in the plans, in order
to ensure adequate progress and satisfactory
performance". - E.F.L. Brech
"Control consists in verifying whether everything

occurs in conformity with the plans, instructions and
principles established" - Henry Fayol "Control is the
process of regulating organizational activities so that
actual performance conforms to expected
organizational standards and goals." - NewMan
From the above definitions, we can follow that

controlling functions involves-
(i) developing appropriate standards
90
(ii) Compare on-going performance against those

standards.
(iii) Take steps to ensure that corrective actions are
taken when necessary.
It should also to be noted here that a good controlling
system is actually designed to keep things from going
wrong, and not just to correct them afterwards. It is more
about "prevention is better than cure" than about "Crying
over spilt milk"! It’s about `preventive maintenance' rather
than 'breakdown maintenance'.
The general features of controlling functions are:
1. Controlling is a positive force.
2. Controlling is a dynamic and continuous process.
3. Controlling is goal-oriented.
4. Control is forward-looking
5. Control process is universal
6. Control is based on planning
7. Delegation is key to control.
NEED FOR CONTROL SYSTEM
A control system is needed for four purposes:
1. to measure progress;
2. to uncover deviations;
3. to indicate corrective action; and
91
4. to transmit corrective action to the operation.
To Measure Progress
There is a close link between planning and controlling the
organization’s operations. We have discussed in Chapter
4 how in the planning process, the fundamental goals and
objectives of the organization and the methods for
attaining them are established. The control process
continually measures progress towards goals. As Fayol3
so clearly recognized decades ago, "In an undertaking,
control consists in verifying whether everything occurs in
conformity with the plan adopted, the instructions issued
and principles established". As the navigator continually
takes readings to ascertain where he is relative to a
planned course, so does the manager take readings to
see where his enterprise or department is on the charted
and predetermined course.
To Uncover Deviations
Once a business organization is set into motion towards
its specific objectives, events occur that tend to pull it "off
target". Major events which tend to pull an organization
"off target" are as follows:
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Change
Change is an integral part of almost any organization’s
environment. Markets shift, new products emerge, new
materials are discovered and new regulations are passed.
The control function enables managers to detect changes
that are affecting their organization’s products or services.
They can then move to cope with the threats or
opportunities that these changes represent.
Complexity
Today's vast and complex organizations, with
geographically separated plants and decentralized
operations make control a necessity. Diversified product
lines need to be watched closely to ensure that quality and
profitability are being maintained; sales in different retail
outlets need to be recorded accurately and analysed; the
organisation's various markets—foreign and domestic—
require close monitoring.
Mistakes
Managers and their subordinates very often commit
mistakes. For example, wrong parts are ordered, wrong
pricing decisions are made, problems are diagnosed
incorrectly, and so on. A control system enables managers
to catch these mistakes before they become serious.
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Delegation
As we discussed in Chapter 8, when managers delegate
authority to subordinates, their responsibility to their own
superiors is not reduced. The only way managers can
determine if their subordinates are accomplishing the
tasks that have been delegated to them is by
implementing a system of control. Without such a system,
managers will not be able to check on their subordinates'
progress, and so not be able to take corrective action until
after a failure has occurred.
To Indicate Corrective Action
Controls are needed to indicate corrective actions. They
may reveal, for example, that plans need to be redrawn or
goals need to be modified or there is need for
reassignment or clarification of duties or for additional
staffing or for conforming to the way the work should be
done.
To Transmit Corrective Action to the Operation
Controls are needed to transmit corrective action to the
operation while it is progressing so that the transformation
subsystem modifies its inputs or its production plan to
reduce any discrepancy or error and keeps the output "on
course". The thermostat is a classic example of this
operating principle. When the room temperature drops
below a desired level, the control mechanism in the
transformation subsystem at once transmits this
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information (called "feed forward") and the temperature

begins to rise till it reaches the selected level. Control-
related information flows in most of our modern
organizations also follow the above-mentioned thermostat
operating principle. They make available to the
transformation subsystem at all times the information
about operating results in various forms, such as
electronic impulses, written or spoken words, reports, etc.
to serve as the basic input for comparison with the
standards and for automatic decision-making. The
transformation subsystem thus takes the shape of a
closed loop as shown in Fig. 18.1. However, the system is
closed only in the short run. Human intervention is
involved to adjust the system periodically, according to a
subjective impression of the environment. Thus, the
overall system is open, but we have closed loop control
once the system is set.
BENEFITS OF CONTROL
A well-developed control system
 increases productivity
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• reduces defects and mistakes,

• helps meet deadlines,
• facilitates communication,
• improves safety,
• lowers cost, and
• gives the workers control over their environment.
ESSENTIALS OF EFFECTIVE CONTROL SYSTEM
The essentials of an effective control system are as
follows.
Suitable
The control system should be appropriate to the nature
and needs of the activity. Controls used in the sales
department will be different from those used in finance and
personnel. Similarly, a machine-based method of
production requires a control system which is different
from the system that is used in labor intensive methods of
production. Hence, every concern should evolve such a
control system as would serve its specific needs.
Timely and Forward Looking
Although an ideal control system, as in certain electric
controls, should be able to detect deviations before they
occur, the same is not possible in personnel and
marketing controls which always include a time lag
between the deviation and corrective action. In any case,
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the feedback system should be as short and quick as

possible and the information should reach the superior
before it is too late to head off failures.
Objective and Comprehensible
The control system should be both objective and
understandable. Objective controls specify the expected
results in clear and definite terms and leave little room for
argument by the employees. They avoid redtape and
provide employees with direct access to any additional
information which they may need to perform their task.
Employees are not made to go up and down the hierarchy
to get the information. When the precise purposes, for
which the control system exists, are not understood it is
difficult, if not impossible, to establish criteria for its
evaluation and review.
Flexible
The control system should be flexible so that it can be
adjusted to suit the needs of any change in the basic
nature of the inputs and/or the sizes, varieties or types of
the same product or service. One way of introducing
flexibility into a control system is to make the adjustments
automatic. Both flexible budgets and standard costs, for
example, provide a shifting standard for expenses, as the
volume of work goes up or down. A similar type of
adjustment is in effect when the sales quotas are tied to
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general business activity. In all such plans, the basis for

shifting the control standard is built right into the system.
Economical
Economy is another requirement of every control system.
The benefit derived from a control system should be more
than the cost involved in implementing it. To spend a
dollar to protect 99 cents is not control. It is waste. Eighty
years ago this was clearly understood by the men who
built Sears, Roebuck—the world's biggest retail store. In
the early days of the mail-order business, the money in
incoming orders was not counted. The orders were
weighed, unopened. (These were, of course, the days
when currency was still metallic.) Sears, Roebuck had run
enough tests to know what average weights correspond to
overall amounts of money—and this was sufficient control.
Prescriptive and Operational
A control system in order to be effective and adequate
must not only detect deviations from the standards but
should also provide for solutions to the problems that
cause deviations. In other words, the system should be
prescriptive and operational. It must disclose where
failures are occurring, who is responsible for them, and
what should be done about them. It must focus more on
action than on information.
98
Acceptable to Organization Members

The system should be acceptable to organization
members. When standards are set unilaterally by upper
level managers, there is a danger that employees will
regard those standards as unreasonable or unrealistic.
They may then refuse to meet them. Status differences
between individuals also have to be recognized.
Individuals who have to report deviations to someone they
perceive as a lower level staff member may stop taking
the control system seriously.
Reveal Exceptions at Strategic Points
A control system should be such as to reveal exceptions
at strategic points. Small exceptions in certain areas have
greater significance than larger deviations in other areas.
Five per cent deviation from the standard in office labor
cost is more important than 20 per cent deviation from the
standard in cost of postage stamps. That we can quantify
something is no reason for measuring it. The question is
"Is this what a manager's attention should be focused on?"
Take steps to ensure that corrective actions are taken
when necessary It should also to be noted here that a
good controlling system is actually designed to keep
things from going wrong, and not just to correct them
afterwards. It is more about -prevention is better than
cure" than about "Crying over spilt milk"! Its about
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'preventive maintenance' rather than 'breakdown

maintenance'.
The general features of controlling functions are:

1. Controlling is a positive force.
2. Controlling is a dynamic and continuous process.
3. Controlling is goal-oriented.
4. Control is forward-looking
5. Control process is universal
6. Control is based on planning
7. Delegation is key to control.
STEPS IN CONTROLLING
The various steps that are involved in the process of
controlling are as follows:
Step 1:
Setting of standards
The first step in the control process is to establish
standards. Standards are the targets against which
actual performance will be compared. Standards are
nothing but criteria of performance. They serve as
benchmarks as they specify acceptable levels of
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performance. Control standards are broadly divided into

two types.
(i) Quantitative standards:
These are standards which can be quantified.
Eg: Production level, rejection level, labor-hours, speed
of service, sales volume, profit, expenses etc.
(ii) Qualitative standards:
These are standards which cannot be quantified i.e.,
they are qualitative in nature.
Eg: Employee morale, brand image, company image,
goodwill, industrial relations etc.
Step 2:
Measurement of actual performance
The second step in the control process is to measure
actual performances of various individuals, teams and
departments in the background of established
standards. Wherever quantitative measurement is
applicable, it is easy to measure, while qualitative
standards are difficult to measure. Tests, surveys,
employee appraisals, exit interviews, media reports,
open forums etc., are some of the ways employed to
measure qualitative standards.
101
To make any measurement process effective, the

following three aspects have to keep in mind:
(i) Completion
The actual performance measurement has to be
complete in all respects. In other words, all aspects of
the job should be measured and not just the ones that
are more evident.
(ii) Objective
Performances at work should be measured in an
objective manner without fear, favorer bias. Only then
measurement can be effective.
(iii) Responsiveness:
The management of any performance should support
the belief that effort and performance lead to
improvement, both from the personal and organizational
point of view.
Step 3:
Comparison of actual performance with standards
The third step in the control process is to compare the
actual performances with established standards and
ascertaining the causes of deviation. The causes of
deviation may be machine-dependent, process-
dependent, plan-dependent, manpower-dependent etc.
Whatever may the reason, deviation are thoroughly
102
analyzed and properly presented. Statistical methods

are usually adopted to look at deviation from a broader
perspective.
Step 4:
Taking corrective measures
The final step in the control process consists of taking
remedial actions so that deviation may not occur again
in future. Corrective steps are initiated so that any
defects in the actual performance may be rectified.
Corrective actions may include the following activities.
1. Change in methods, rules, procedures strategies etc.
2. Introduce training programs
3. Job redesign
4. Replacement of personnel
5. Re-establishing budgets and standards
6. Better compensation packages to employees
7. Changing machinery and processes
8. Identifying recurring bottle necks and avoiding them
9. Trying to understand the competition better.
10. Looking at raw material resources and suppliers.
103
Review Questions - MOTIVATION

1 Define motivation. Describe its characteristics.
2. Explain Maslow's Need-Hierarchy theory. How does it
compare with the Two-Factor Theory?
3. "Motivation is the core of management.- Discuss. What
can management do to motivate the staff in an industrial
organization?
4. What is meant by morale? How is it related to
productivity?
5. "Morale and productivity move together like the east
and the west sides of an elevator." Comment.
6. Distinguish between motivation and morale. How is
morale related to productivity?
7. How can compliance of an order be ensured?
Review Questions - CONTROL

1. Explain the basic steps in the control process.
2. What are the two main types of control? How is each
type used? Which is more important and why?
3. What are the essentials of effective control systems?
Which essentials do you think are most important?
104
4. What is meant by budgeting? How are budgets drawn,

approved and revised? What are the functional and
dysfunctional aspects of budgets?
Review Questions - LEADERSHIP

1. What is leadership? Describe the functions of a leader.
2. "Leaders are not born but made." Comment.
3. "The successful leader accurately understands himself,
the organization, the individuals and the group he is
dealing with and the broader social environment in which
he operates." Discuss.
4. Is leader the same as manager? Discuss.
5. What factors should govern the selection of a style of
leadership by a manager?
6. Point out some important qualities that make for
successful leadership. Define the concept of empathy.
7. Define leadership and give its characteristics.
8. "Leadership is situational". Comment.
9. "A successful leader is not necessarily effective."
Comment
105
Review Questions - COMMUNICATION

1. Define communication and describe the important
steps involved in a communication process.
2. What is communication? Describe its importance.
3. Distinguish between "formal" and "informal"
communication. Describe the various directions in
which the formal communication generally flows.
4. What is communication? Describe its various forms.
5. Explain the principal barriers to communication and
suggest measures to make communication effective.
6. Explain the principles of effective communication.
THANK YOU
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MANAGEMENT & ENTREPRENEURSHIP MODULE 2

ORGANISING AND STAFFING

CBIT Kolar Page 1

Staffing is the traditional management function of

CBIT Kolar Page 2

utilized, and retention of these people through incentives,

Robbins defines Organization as ' a consciously

From the above definitions, an organization has the

CBIT Kolar Page 3

Organization is an open system : An open system

Usually the demands or wants of the people determines

Organization is goal oriented : Without goal or set of

Organization is a collection of people : People are the

people. Even with the same age, qualification, experience

Organization consists of technology : Technology is

Organization has continuity: As the organization

CBIT Kolar Page 5

in a decision‐making framework (organizational structure).

A properly implemented organizing process should result

The stages or steps in the process of organization are

1. Fixing the objectives of the organization

At the top level, administrative management first fixes the

2. Finding activities must for achieving objectives

After fixing the objectives, the top-level management

CBIT Kolar Page 6

This list is prepared at random without following any

3. Grouping the similar activities

All similar or related activities having a common purpose

4. Defining responsibilities of each employee

The responsibilities (duties) of each employee are clearly

5. Delegating authority to employees

Each employee is delegated (surrender or given) authority.

employee should be equal to the responsibility given to

6. Defining authority relationship

When two or more persons work together for a common

7. Providing employees all required resources

After defining the authority relationships, the employees

8. Coordinating efforts of all to achieve goals

This is the last stage or step in the process of organisation.

CBIT Kolar Page 8

(4) Exception: As the executives at the higher level

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problems should be referred to them and routine

(5) Scalar principle : This principle is sometimes known

(9) Authority: Authority is a tool by which a manager

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(11)Simplicity: The organization structure should be

CBIT Kolar Page 11

Definition: The Span of Management refers to the

Span of management is Span of control -the number of

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Research Studies of management have found

Departmentalization is the process of grouping individuals

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machines, watches, tractors, bearings etc. (iii) TATAs

 Managers of individual products put better effort to

2. Departmentalazation based on functions

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of organization the various functions are as follows:

technological reasons. For service organizations like