Time M2

Technological Innovation Management & Entrepreneurship- MODULE 2
Syllabus:
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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 welldesigned
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 bestutilized, and retention of these people through
incentives, job training and job enrichment programmes, in order to achieve both individual and
organizational objectives. Thisemphasizes managing human and not material or financialresources.
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
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technology.
From the above definitions, an organization has thefollowing 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.
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
influencethe 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
technologyis adopted so that the set goal can be achieved. The goalgives 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 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.
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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 themwell. 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. Thisdoes 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 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 areexplained 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
organisationmust be specific and realistic
2. Finding activities must for achieving objectives

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After fixing the objectives, the top-level management prepares a list of different activities (or works) which
arerequired to be carried out for achieving these objectives.
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 oflabour 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 employee should be equal to the responsibility given tohim.
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

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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 startworking 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.
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 bea 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 theachievement of these objectives.
(2) Specialisation: Effective organization must promote specialisation. The activities of the enterprise should
bedivided according to functions and assigned to personsaccording 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
shouldbe asked to supervise a reasonable number of subordinates only, say six.
(4) Exception: As the executives at the higher levelhave limited time, only exceptionally complex
problems should be referred to them and routine matters should be dealt with by the lower levels. Thiswill
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
fromthe chief executive at the top to the front - line supervisor at the bottom, must be clearly defined.
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(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 ofauthority.
(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 responsiblefor the acts of his subordinates.
(9) Authority: Authority is a tool by which a manager accomplishes the desired objectives, which
shouldbe clearly defined.
(10) Efficiency: The organization structure should help enterprise to function efficiently to accomplish
theobjectives at lowest cost.
(11) Simplicity: The organization structure should be simple and the levels should be as minimum
aspossible.
(12) Flexibility: Should be flexible, adaptable to changing circumstances, permit expansion, replacement,
without dislocation and disruption of thebasic 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.
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
spanof management.
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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.
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 manufacturesmachines, watches, tractors, bearings etc. (iii) TATAs
that make trucks, cars, steel, machines etc.
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Advantages
 Top management is relieved of operational task enabling them to concentrate more on

commongoals.
 Performance of different product groups can be easily compared enabling the top management to
invest more and more in profitable product groupsand exercise better control on non performers.
 Managers of individual products put better effort toimprove 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 andequipment.
2. Departmentalazation based on functions
The departmentation is based on each major function of the organization. Depending on the nature
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
efficientutilization of people.
 Simplifies training.
 Provides means of right control at top.
Disadvantages
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 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 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 ofshifts as first shift, second shift etc.
Advantages
 Service can be rendered, that goes beyond the normal8 hours shift/day.
 Facilitates use of processes that cannot be stopped orinterrupted.
 Expensive capital equipment can be better utilized.
 Provides part time jobs for people who are otherwisebusy during day time (students going for part time
jobetc.)
 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 communicationfrom people of one shift to next shift.
 Loss of product or service may increase owing to higher payment/ over time payment during nightshift.
4 .Departmentalization based on Territory andGeography
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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 withinsouthern 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 highertargets.
 Provides a region-wise comparison of performance.
 Takes advantage of economics of local operations.
Disadvantages
 Requires more persons with General Manager abilities.

 Requires to maintain similar functional people at allregions.
 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
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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 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 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
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promotesthe 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.
2. Better Co-Ordination:
Committee form of organization brings more co-ordinationamong 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 achievedthrough 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.
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 besolved.
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6. Better Acceptance of Decisions:
The decisions taken by committees are better accepted bysubordinates. 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 arebetter 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 backgroundof 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.
Weakness of Committee Form of Organization:
This form of organization suffers from the followingweaknesses:
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.
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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 accountability is not fixed then it is the
weakness of theorganization.
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 re-
Adressal orinter personal departmental matters are concerned.
Committees may not be effective where policies are to beframed and quick decisions are required. Individual
initiative will be more effective in these cases. Socommittees 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:
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1. The members should ensure that the atmosphere at themeetings is cordial and informal.
2. The members should express their views clearly andlogically and listen to the reactions calmly.
3. Disagreement should not be ignored. They should not compromise just for the sake of harmony. Criticism
shouldbe 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 takenas final.
5. The disagreement in meeting should not be taken in personal level. The spirit of competition should be
avoidedand 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.
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
stepsor 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 mostappropriate definition given to it.
Enterprise and types of authority
An enterprise can be of various types. For each of thattypes there are different types of authority.
Enterprise Authority
1. Public Organization Share holders, Board of All the members

who are Director / Directors, M.D.
2. Partnership firm
Proprietor of the firm.
3. Private Ltd. Committees, Council, Board
4. Proprietor ship
5. Government /PLEASE Organization
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RESPONSIBILITY
It is also called as Accountability or Answerability. It maybe 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 directed. 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 recognition of the obligation to perform managerialfunctions.
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 positionin the organization.
The terms "responsibility"' and "accountability" are often used

dischargeable Strictly speaking accountabilityis 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 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 decentralizationare 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
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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 isthe 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 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 mustbe 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 oftasks.

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 orthe results expected. Specific written delegations of
authority are extremely helpful both to the manager whoreceives 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.
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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.
> 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 particularjob 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.
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(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
uponinvestment in personal development.
(iv) Willingness to trust subordinates Trust is the basis of all coordination.

(v) Willingness to establish and use broad controls
To ensure themselves that the authority is being used tosupport 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
themto suit the job, developing the staff to carry out the definedjob effectively and efficiently.
NATURE AND IMPORTANCE OF STAFFING
A business cannot be successfully run without the rightkind 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 jobwhich results in increased production.
(iii) It avoids sudden disruption of the production due to shortage of workers, since it plans and fills the
positions.
(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 timeand levels of a project and cater to it.
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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 tocarry 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
followingare 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 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 forfuture 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 internalsource available with in the organization either by transfer or promotion.
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External sources may be considered for filling a position from outsideorganizations.
(v) Selection:
After having identified the sources of selection, next function is selection process. People are selected
as per specifications and qualifications set earlier and recruited.The selected people are placed on the job.
(vi) Training:
If required, the selected people are given necessarytraining 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 themost 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
personnel officer is present in all selections and keeps an eyeon 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.
 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 shouldbe made to make proper selection.
Techniques of selection
 Application Banks
 Preliminary or Initial Interview
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 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 occupation and earnings.
 Educational background including training.
 Employment record including details about previousemployment if any and present employment.
 Name and address of few persons usually other thanrelation 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 identifyingthe 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.
The interview may follow a structural * pattern or anunstructural pattern.
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> In structural pattern or directive pattern: In structural pattern of Interviewing, a list of questions based on
jobspecification is prepared in advance. The interview maybe 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 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 isgiven 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 selectedor
designated on the basis of a sound job analysisprogramme.
 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 oftest 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 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 typeof persons are available to the concern in right number.
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The numbers of workers required by a concerndepends on
> The scale of production.
> The degree of mechanization.
Following are the various sources from where thepersonnel 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.
 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.
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 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 no doubt very expensive and time
consuming but hasthe advantage of choosing the cream from the lot.
 Employment exchange: The recruitment is also done through the employment exchange of the
persons who are enrolledin the exchange.
The main function of the exchange are:
> To supply information about persons in need of jobsand about jobs that are available.
> To direct persons to factories where suitable jobsexist.
> To develop job specification.
> To procure information about current wage rate.
> To introduce selected employees with personneldepartment and policies of the company.
> To follow up the new recruits for initial adjustments.
> To look-after the employee canceling and operatingthe 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 ofrecruitment.
7. Differentiate between recruitment and selection.
……………………….
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MANAGEMENT & ENTREPRENEURSHIP Module2b
MODULE – 2b
Directing and Controlling
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 theinterpersonal 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 accomplishthe goals.
DEFINITION OF DIRECTION:
"Directing is the interpersonal aspect of managing by which subordinates are led to understand and
contributeeffectively 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
thatoperations are carried on as originally planned". (Haimann)
"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:
29
(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 thegoals of the organization
(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 improvesthe 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 thanthe content.
(vi) Effective control:
The management should monitor the behavior and performance of subordinates to exercise effective
controlover 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
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MANAGEMENT & ENTREPRENEURSHIP
function of direction. Module2b
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.
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 comeup. 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 anorder acceptable. These are:
1. Order should be clear and complete;
2. Order should be compatible with the purpose of theorganization;

3. Order should be compatible with the employee'spersonal 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.
31
A manager may follow four types of methods to ensurecompliance 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.
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 widelyacknowledged formula:
Performance = (Ability + Knowledge) X Motivation Among the three factors which affect performance, we can
see themultiplying 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
32
(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
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 thesame question. The third man replied. "Me, what am Idoing? You see that cathedral up
there. I am helping
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 jobitself 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.
33
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
whom she feared and whose physical appearance was very much like her foreman, with the result that
she had unconsciously transferred to her foreman theunfavorable 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
acceptingresponsibility 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
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
truemotivation 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
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MANAGEMENT
the change & ENTREPRENEURSHIP
in lighting Module2b
because they felt that the new type of lighting had made them look 'simply
ghastly'.
6. Multiple motives make the choice of goals difficultfor an individual

We have been referring to examples of motivations asif they exist one at a time. This is hardly the case.
Thefact 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
following three types of motivational conflicts whichmake 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 differentbehaviors 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 toleave 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
may not like to be scolded by his wife forreaching home late.

MOTIVATION THEORIES
There is no shortage of motivation theories. We canclassify 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
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MANAGEMENT
question how behavior is&caused.
ENTREPRENEURSHIP Module2b
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
determined by his strongest need at a particular moment. Needs that are not satisfied influence his behavior.
But theneeds 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 fiveascending 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 earnsufficient amount of money to fulfill them.
(1) Safety Needs:
Includes security and protection from physical,emotional and economical harm.

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MANAGEMENT
Once & ENTREPRENEURSHIP
the physiological Module2b
needs are satisfied, thesafety needs or security needs become
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 frommental 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
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'shierarchy.
(ii) Most of the human needs are recurring and arenever satisfied fully indeed.
(iii) Most of the needs co-exist and there is no suchhierarchy whatsoever.
(iv) Boundaries between different levels of needs maybe hazy and overlapping.
(v) Although behavior depends on need, or the lack ofit, it may not be fully dependent.
(vi) The concept of self-actualization is theoretical and academic. No person can ever know his
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MANAGEMENT
maximum or best&potentials.
ENTREPRENEURSHIP Module2b
2. HERZBERG'S MOTIVATION-HYGIENE THEORY ORTHE 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 saidthat satisfaction or dissatisfaction
in work arise from thesetwo 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
(6) Interpersonal relationship with superiors, peersand 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 followingfactors :
(1) Challenging work
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(2) MANAGEMENT
Responsibility
& ENTREPRENEURSHIP Module2b
(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.
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 theirsatisfying or dissatisfying experiences.
(ii) A factor that causes dissatisfaction is one personmay 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 ofsatisfaction 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, Herzbergin terms of goals. While Maslow gave a hierarchy to
his needs, Herzberg divided them into two groups but without
39
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 needsof Maslow correspond to Motivators as per Herzberg
(fig 4.3)
COMMUNICATION
MEANING
Communication has been variously defined by a numberof writers.
According to Newman and summer, it is an exchange of facts, ideas, opinions or emotions by two or more
persons.
Allen Louise defines it as the sum of all the things one person does when he wants to create understanding in
theminds 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 asunder:

40
MANAGEMENT
1) Communication & ENTREPRENEURSHIP
is fundamental to accomplish work Module2b
In any organization, a manager spends most of his time communicating i.e., reading, writing' Speaking or
listening.
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
fileof 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,
“When communication stops, organized action comes toan end.
5. Communication improves relationships betweenemployees.

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
whatan organization exactly wants.
6. Communication improves morale and motivation:
When manager listens carefully to employees grievances and take necessary action, it improves morale and
41
motivation MANAGEMENT & ENTREPRENEURSHIP
of the workers. Module2b
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-daymanagers. The growth success or the growth of a
manager largely depends on his communication skills.
PURPOSES OF COMMUNICATION
Some important purposes which communicationservers 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 overalloperation. 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 anideological 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
subordinates' morale and helps them in building theircareer.
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
42
amount of MANAGEMENT
support which &an
ENTREPRENEURSHIP
enterprise receives from its social environment isModule2b
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 combatthe 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 tothis question.
8. Communication helps in achieving coordination. In a large organization, working on the basis of

division of 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 theirgrievances, 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 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 shortcutto executive effectiveness, it is the mastery of the art of face to face communication.
" In summary, it can be said that the purposes ofcommunication are:
43
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).
44

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Technological Innovation Management & Entrepreneurship- MODULE 2

From the above definitions, an organization has thefollowing characteristics-

The Organizational Process

The stages or steps in the process of organization areexplained below:

1. Fixing the objectives of the organization

2. Finding activities must for achieving objectives

3. Grouping the similar activities

4. Defining responsibilities of each employee

5. Delegating authority to employees

6. Defining authority relationship

7. Providing employees all required resources

8. Coordinating efforts of all to achieve goals

1. Departmentalization based on Products

 Top management is relieved of operational task enabling them to concentrate more on

 This calls for duplication of staff and facilities.

 More managers are required.

of organization the various functions are as follows:Marketing, Engineering, Production, Finance,

 It is logical reflection of functions.

 Limits development of general managers.

3. Departmentalization based on time

 Higher and continuous production per day.

 Lacks good and efficient supervision during night shifts.

 Places responsibility at lower level.

 Requires more persons with General Manager abilities.

5.Departmentation based on simple numbers

Weakness of Committee Form of Organization:

This form of organization suffers from the followingweaknesses:

4. Domination by Some Members:

Guidelines for Committee Members:

Enterprise and types of authority

1. Public Organization Share holders, Board of All the members

5. Government /PLEASE Organization

It is also called as Accountability or Answerability. It maybe considered as the obligation of a subordinate to

The terms "responsibility"' and "accountability" are often used

Concept of Centralization and Decentralization

Decentralization is the tendency to disperse decision, making, authority in an organization structure. It is a

Some decentralized authority exists in all organizations.

The process of Delegation

 Determination of results expected (MBO)

 Delegation of authority for accomplishing these tasks.

 Holding of people responsible for accomplishment oftasks.

(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.

> 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 particularjob effectively.

> Lack of self confidence.

> In adequate positive incentives.

(iii) Willingness to let others make mistakes

(iv) Willingness to trust subordinates Trust is the basis of all coordination.

NATURE AND IMPORTANCE OF STAFFING

(i) Proper placement of people. (ii)Rational recruitment and selection.

(v) Good promotional policies and retirement scheme.

(i) Man power planning: